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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 1, 1999
Williams Communications Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-15343 73-1462856
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Williams Center, Tulsa, Oklahoma 74172
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: 918-573-2000
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Williams Communications Group, Inc. (the "Company") has closed an
initial public offering ("IPO") to sell 29,600,000 shares of the Company's Class
A Common Stock ("Common Stock") to the public. In addition, the IPO
underwriters, Salomon Smith Barney, Inc., Lehman Brothers, Inc. and Merrill
Lynch & Co., exercised their option and purchased 4,440,000 additional shares of
the Company's Common Stock to cover over-allotments. Also, in separate private
placements, SBC Communications, Intel Corporation and Telefonos de Mexico, S.A.
de C.V. ("Telmex") each purchased a portion of the Company's Common Stock. SBC
Communications acquired 20,226,812 shares of the Company's Common Stock for an
investment of approximately $438.5 million; Intel Corporation invested $200
million to acquire 9,225,093 shares of the Company's Common Stock; and Telmex
invested $100 million to acquire 4,612,546 shares of the Company's Common Stock.
Item 7. Exhibits.
The Company files the following exhibits as part of this report:
Exhibit 1.1 Underwriting Agreement dated October 1, 1999 between the
Company and Salomon Smith Barney, Inc., Lehman Brothers, Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporation, as Representatives of several U.S.
Underwriters identified therein, and Lehman Brothers International (Europe),
Salomon Brothers International Limited, Merrill Lynch International, as
Representatives of several International Underwriters identified therein [a form
of which was previously filed as Exhibit 1.1 to Registration Statement No.
333-76007 on Form S-1 relating to an equity offering (the "Equity Registration
Statement")].
Exhibit 1.2 Purchase Agreement [a form of which was previously filed as
Exhibit 1.1 to Registration Statement No. 333-76877 on Form S-1 relating to a
debt offering (the "Debt Registration Statement")].
Exhibit 3.1 Restated Certificate of Incorporation of the Company (a
form of which was previously filed as Exhibit 3.1 to the Equity Registration
Statement).
Exhibit 3.2 Restated By-laws of the Company (a form of which was
previously filed as Exhibit 3.2 to the Equity Registration Statement).
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Exhibit 4.1 Certificate of designation of Series A Junior Participating
Preferred Stock (a form of which was previously filed as Exhibit 4.3 to the
Equity Registration Statement).
Exhibit 4.2 Indenture governing notes dated October 6, 1999 between the
Company and The Bank of New York, Trustee (a form of which was previously filed
as Exhibit 4.4 to the Debt Registration Statement).
Exhibit 10.1 Administrative Services Agreement dated September 30, 1999
between the Company and its Subsidiaries as identified therein and The Williams
Companies, Inc. ("TWC") and its Subsidiaries as identified therein (a form of
which was previously filed as Exhibit 10.39 to the Equity Registration
Statement).
Exhibit 10.2 Service Agreement September 30, 1999 between Williams
Information Services Corporation ("WISC") and the Company (a form of which was
previously filed as Exhibit 10.40 to the Equity Registration Statement).
Exhibit 10.3 Tax Sharing Agreement dated September 30, 1999 between TWC
and the Company (a form of which was previously filed as Exhibit 10.41 to the
Equity Registration Statement).
Exhibit 10.4 Indemnification Agreement dated September 1, 1999 between
TWC and the Company (a form of which was previously filed as Exhibit 10.42 to
the Equity Registration Statement).
Exhibit 10.5 Rights Agreement (a form of which was previously filed as
Exhibit 10.43 to the Equity Registration Statement).
Exhibit 10.6 Registration Rights Agreement dated September 30, 1999
between TWC and the Company (a form of which was previously filed as Exhibit
10.44 to the Equity Registration Statement).
Exhibit 10.7 Separation Agreement dated September 30, 1999 between TWC
and the Company (a form of which was previously filed as Exhibit 10.45 to the
Equity Registration Statement).
Exhibit 10.8 Cross License Agreement dated September 30, 1999 between
WISC, TWC and the Company (a form of which was previously filed as Exhibit 10.47
to the Equity Registration Statement).
Exhibit 10.9 Technical, Management and Administrative Service Agreement
dated May 27, 1999 between Williams International Company and the Company (a
form of which was previously filed as Exhibit 10.48 to the Equity Registration
Statement).
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Exhibit 99.1. Copy of the Company's News Release, dated October 1,
1999, publicly announcing the information reported herein.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WILLIAMS COMMUNICATIONS GROUP, INC.
/s/ SHAWNA L. GEHRES
--------------------------------------
Name: Shawna L. Gehres
Title: Secretary
Date: October 18, 1999
----------------------
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Index to Exhibits
Exhibit 1.1 Underwriting Agreement dated October 1, 1999 between the
Company and Salomon Smith Barney, Inc., Lehman Brothers, Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporation, as Representatives of several U.S.
Underwriters identified therein, and Lehman Brothers International (Europoe),
Salomon Brothers International Limited, Merrill Lynch International, as
Representatives of several International Underwriters identified therein [a form
of which was previously filed as Exhibit 1.1 to Registration Statement No.
333-76007 on Form S-1 relating to an equity offering (the "Equity Registration
Statement")].
Exhibit 1.2 Purchase Agreement [a form of which was previously filed as
Exhibit 1.1 to Registration Statement No. 333-76877 on Form S-1 relating to a
debt offering (the "Debt Registration Statement")].
Exhibit 3.1 Restated Certificate of Incorporation of the Company (a
form of which was previously filed as Exhibit 3.1 to the Equity Registration
Statement).
Exhibit 3.2 Restated By-laws of the Company (a form of which was
previously filed as Exhibit 3.2 to the Equity Registration Statement).
Exhibit 4.1 Certificate of designation of Series A Junior Participating
Preferred Stock (a form of which was previously filed as Exhibit 4.3 to the
Equity Registration Statement).
Exhibit 4.2 Indenture governing notes dated October 6, 1999 between the
Company and The Bank of New York, Trustee (a form of which was previously filed
as Exhibit 4.4 to the Debt Registration Statement).
Exhibit 10.1 Administrative Services Agreement dated September 30, 1999
between the Company and its Subsidiaries as identified therein and The Williams
Companies, Inc. ("TWC") and its Subsidiaries as identified therein (a form of
which was previously filed as Exhibit 10.39 to the Equity Registration
Statement).
Exhibit 10.2 Service Agreement September 30, 1999 between Williams
Information Services Corporation ("WISC") and the Company (a form of which was
previously filed as Exhibit 10.40 to the Equity Registration Statement).
Exhibit 10.3 Tax Sharing Agreement dated September 30, 1999 between TWC
and the Company (a form of which was previously filed as Exhibit 10.41 to the
Equity Registration Statement).
Exhibit 10.4 Indemnification Agreement dated September 1, 1999 between
TWC and the Company (a form of which was previously filed as Exhibit 10.42 to
the Equity Registration Statement).
Exhibit 10.5 Rights Agreement (a form of which was previously filed as
Exhibit 10.43 to the Equity Registration Statement).
Exhibit 10.6 Registration Rights Agreement dated September 30, 1999
between TWC and the Company (a form of which was previously filed as Exhibit
10.44 to the Equity Registration Statement).
Exhibit 10.7 Separation Agreement dated September 30, 1999 between TWC
and the Company (a form of which was previously filed as Exhibit 10.45 to the
Equity Registration Statement).
Exhibit 10.8 Cross License Agreement dated September 30, 1999 between
WISC, TWC and the Company (a form of which was previously filed as Exhibit 10.47
to the Equity Registration Statement).
Exhibit 10.9 Technical, Management and Administrative Service Agreement
dated May 27, 1999 between Williams International Company and the Company (a
form of which was previously filed as Exhibit 10.48 to the Equity Registration
Statement).
Exhibit 99.1. Copy of the Company's News Release, dated October 1,
1999, publicly announcing the information reported herein.
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EXHIBIT 1.1
29,600,000 SHARES
WILLIAMS COMMUNICATIONS GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
October 1, 1999
SALOMON SMITH BARNEY INC.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the several
Underwriters named in Schedule 1,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SALOMON BROTHERS INTERNATIONAL LIMITED
MERRILL LYNCH INTERNATIONAL
As Representatives of the several
Underwriters named in Schedule 2,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Williams Communications Group, Inc., a Delaware corporation (the
"COMPANY"), proposes to sell 29,600,000 shares (the "FIRM STOCK") of the
Company's Common Stock, par value $0.01 per share (the "COMMON STOCK").
It is understood that, subject to the conditions hereinafter stated,
23,680,000 shares of the Firm Stock (the "U.S. FIRM STOCK") will be sold to the
several U.S. Underwriters named in Schedule 1 hereto (the "U.S. UNDERWRITERS")
in connection with the offering and sale of such U.S. Firm Stock in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 5,920,000 shares of the Firm Stock (the "INTERNATIONAL FIRM
STOCK") will be sold to the several International Underwriters named in Schedule
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2 hereto (the "INTERNATIONAL UNDERWRITERS") in connection with the offering and
sale of such International Firm Stock outside the United States and Canada to
persons other than United States and Canadian Persons. Salomon Smith Barney
Inc., Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall act as representatives (the "U.S. REPRESENTATIVES") of the
several U.S. Underwriters, and Lehman Brothers International (Europe), Salomon
Brothers International Limited and Merrill Lynch International shall act as
representatives (the "INTERNATIONAL REPRESENTATIVES") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the "UNDERWRITERS." The
U.S. Representatives and the International Representatives are hereinafter
collectively referred to as the "REPRESENTATIVES."
In addition, the Company proposes to grant to the U.S. Underwriters an
option to purchase up to an additional 4,440,000 shares of the Common Stock on
the terms and for the purposes set forth in Section 3 (the "OPTION STOCK"). The
Firm Stock and the Option Stock, if purchased, are hereinafter collectively
called the "STOCK." This is to confirm the agreement concerning the purchase of
the Stock from the Company by the Underwriters.
It is understood that as of the Closing Date (as defined below), the
Company will consummate a series of transactions pursuant to which (i) the
Company will issue and sell the Stock pursuant to this Agreement and shall issue
and sell $2.0 billion aggregate principal amount of its 10.70% Senior Redeemable
Notes due 2007 (the "10.70% NOTES") and its 10.875% Senior Redeemable Notes due
2009 (the "10.875% NOTES," and together with the 10.70% Notes, the "NOTES")
pursuant to a purchase agreement (the "DEBT PURCHASE AGREEMENT") of even date
herewith and (ii) the Company will have entered into a strategic alliance (the
"STRATEGIC ALLIANCE") with SBC Communications, Inc. ("SBC") and in connection
therewith SBC will make an investment of at least $425 million in the Common
Stock as of the Closing Date pursuant to a Securities Purchase Agreement dated
as of February 8, 1999, as amended as of September 24, 1999 (the "SECURITIES
PURCHASE AGREEMENT") (all such transactions, as more fully described in the
Prospectus (as defined below), shall collectively be referred to herein as the
"TRANSACTIONS").
It is further understood that up to 2,072,000 shares of the Firm Stock
(the "DIRECTED STOCK") will initially be reserved by the several Underwriters
for offer and sale, upon the terms and conditions set forth in the Prospectus
and in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "DIRECTED STOCK PROGRAM"), to regular domestic
employees and independent directors of the Company and its affiliates and
subsidiaries and selected suppliers and customers of the Company (collectively,
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"PARTICIPANTS") who have heretofore delivered to the Representatives offers or
indications of interest to purchase shares of Directed Stock in form
satisfactory to the Representatives, and that any allocation of such Directed
Stock among such persons will be made in accordance with timely directions
received by the Representatives from the Company; provided, that under no
circumstances will the Representatives or any Underwriter be liable to the
Company or to any such person for any action taken or omitted in good faith in
connection with such offering to any Participant. It is further understood that
any shares of Directed Stock which are not orally confirmed for purchase by any
Participant by the end of the business day on which this agreement is executed
will be offered by the Underwriters to the public upon the terms and conditions
set forth in the Prospectus.
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Stock has
(i) been prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and the rules and regulations (the "RULES AND REGULATIONS") of the Securities
and Exchange Commission (the "COMMISSION") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. The registration statement contains two prospectuses to be used
in connection with the offering and sale of the Stock: the U.S. prospectus, to
be used in connection with the offering and sale of Stock in the United States
and Canada to United States and Canadian Persons, and the international
prospectus, to be used in connection with the offering and sale of Stock outside
the United States and Canada to persons other than United States and Canadian
Persons. The international prospectus is identical to the U.S. prospectus except
for the outside front and back cover pages. Copies of such registration
statement and each of the amendments thereto have been delivered by the Company
to you. As used in this Agreement, "EFFECTIVE TIME" means the date and the time
as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "EFFECTIVE
DATE" means the date of the Effective Time; "PRELIMINARY PROSPECTUS" means each
prospectus included in such registration statement, or amendments thereto,
before it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "REGISTRATION STATEMENT"
means such registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part of
the registration statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations; and
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"PROSPECTUS" means the U.S. prospectus and the international prospectus in the
respective forms first used to confirm sales of Stock. If the Company has filed
an abbreviated registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Securities Act (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Registration Statement. To
the best of the Company's knowledge, the Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms in all material respects, and
the Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do not and
will not, as of the applicable Effective Date (as to the Registration Statement
and any amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) 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; provided
that no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein.
(c) The Company and each of its significant subsidiaries (as defined in
Rule 1-02 of Regulation S-X under the Securities Act) (each, a "SIGNIFICANT
SUBSIDIARY" and collectively, "SIGNIFICANT SUBSIDIARIES"), which are listed on
Schedule 3 hereto, have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification, except where failure to have such qualifications would not,
singly or in the aggregate, have a material adverse effect on the consolidated
financial position, results of operation, business or prospects of the Company
and its subsidiaries, taken as a whole, and have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged.
(d) The Company has an authorized capitalization as set forth in the
Prospectus and all of the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus; and all of the
issued shares
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of capital stock of each Significant Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(e) The shares of the Stock to be issued and sold by the Company to the
Underwriters hereunder and the shares of Common Stock to be issued and sold by
the Company to SBC on the Closing Date in connection with the Strategic Alliance
have been duly authorized and, when issued and delivered against payment
therefor in accordance with this Agreement and the Securities Purchase
Agreement, respectively, will be validly issued, fully paid and non-assessable;
and the Stock and the Common Stock will conform in all material respects to the
descriptions thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered by
the Company.
(g) The execution, delivery and performance of this Agreement and each
of the other documents to be entered into in connection with the Transactions by
the Company and the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its Significant Subsidiaries is a party or by which the
Company or any of its Significant Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Significant Subsidiaries is
subject, other than such conflicts, agreements, breaches, violations or defaults
which, singly or in the aggregate, would not have a material adverse effect on
the consolidated financial position, results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole, nor will such
actions result in any violation of the provisions of the charter or by-laws of
the Company or any of its Significant Subsidiaries or any statute or any order,
rule or regulation known to the Company of any court or governmental agency or
body having jurisdiction over the Company or any of its Significant Subsidiaries
or any of their properties or assets; and except for the registration of the
Stock and the Notes under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Securities
Act, applicable state securities laws and securities laws of foreign
jurisdictions in connection with the purchase and distribution of the Stock by
the Underwriters and the purchase and distribution of the Notes by the
underwriters named in the Debt Purchase Agreement, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
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performance of this Agreement and the consummation of the transactions
contemplated hereby.
(h) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include any securities of the
Company in the securities registered pursuant to the Registration Statement.
(i) Neither the Company nor any of its Significant Subsidiaries has
sustained, since the respective dates as of which information is given in the
Prospectus, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree that has resulted in,
or is reasonably likely to result in, a material adverse change in the
consolidated financial position, results of operations, business or prospects of
the Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus; and, since such date, there has not been any
material change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus.
(j) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly, in all material respects, the financial condition
and results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be indicated in the notes
thereto.
(k) Ernst & Young, who have certified certain financial statements of
the Company, whose report appears in the Prospectus and who have delivered the
initial letter referred to in Section 7(f) hereof, are independent public
accountants as required by the Securities Act and the Rules and Regulations; and
Deloitte & Touche, whose report appears in the Prospectus, were independent
accountants as required by the Securities Act and the Rules and Regulations
during the periods covered by the financial statements on which they reported.
(l) The Company and each of its Significant Subsidiaries have good
title to all real property and good title to all personal property owned by
them, in each
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case free and clear of all liens, encumbrances and defects, except such as are
described in the Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the conduct of business of
the Company and its subsidiaries, taken as a whole; and all assets held under
lease by the Company and its Significant Subsidiaries are held by them under
valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the conduct of business of the Company and
its subsidiaries, taken as a whole.
(m) The Company and each of its Significant Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the Company
believes is adequate for the conduct of their respective businesses and the
value of their respective properties and as the Company believes is customary
for companies engaged in similar businesses in similar industries.
(n) The Company and each of its Significant Subsidiaries own or
possess, or can acquire on reasonable terms, adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names, copyrights
and licenses necessary for the conduct of their respective businesses and have
no reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of conflict with,
any such rights of others which, singly or in the aggregate, in the judgment of
the Company, is reasonably likely to result in any material adverse change in
the consolidated financial position, results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole.
(o) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its Significant
Subsidiaries is a party or of which any property or assets of the Company or any
of its Significant Subsidiaries is the subject which, if determined adversely to
the Company or any of its Significant Subsidiaries, might have a material
adverse effect on the consolidated financial position, results of operations,
business or prospects of the Company and its subsidiaries, taken as a whole; and
to the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(p) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration Statement.
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(q) No business or related party transaction exists which is required
by Item 404 of Regulation S-K to be described in the Prospectus which is not so
described.
(r) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "REPORTABLE EVENT" (as defined in ERISA) has occurred
with respect to any "PENSION PLAN" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "PENSION PLAN" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "PENSION PLAN" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(s) The Company has filed all material federal, state and local income
and franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon, other than those filings or payments being contested
in good faith, and the Company has not received notice that any tax deficiency
has been determined adversely to the Company or any of its Significant
Subsidiaries which has had or is reasonably likely to have a material adverse
effect on the consolidated financial position, results of operations, business
or prospects of the Company and its subsidiaries, taken as a whole.
(t) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus or with respect to the subsequent issuance of shares of Common Stock,
if any, pursuant to employee or director benefit plans, the Company has not (i)
issued or granted any securities, (ii) incurred any liability or obligation,
direct or contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction not in
the ordinary course of business, except, in case of (ii) and (iii), for such
liabilities, obligations or transactions that have not had or are not reasonably
expected to have, a material adverse effect on the consolidated financial
conditions, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole or (iv) declared or paid any dividend on its
capital stock.
(u) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable assurance
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that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(v) Neither the Company nor any of its Significant Subsidiaries (i) is
in violation of its charter or by-laws, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it is a party
or by which it is bound or to which any of its properties or assets is subject
or (iii) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business except, in
case of (ii) and (iii), for such defaults, violations, or failures to obtain
such authorizations or permits that have not had or are not reasonably expected
to have, a material adverse effect on the consolidated financial condition,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole.
(w) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
Significant Subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or previously
owned or leased by the Company or its Significant Subsidiaries in violation of
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not be reasonably
likely to have, singularly or in the aggregate with all such violations and
remedial actions, a material adverse effect on the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole; there has been no material spill, discharge,
leak, emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic wastes,
medical wastes, solid wastes, hazardous wastes or hazardous substances due to or
caused by the Company or any of its Significant Subsidiaries or with respect to
which the Company or any of its Significant Subsidiaries have knowledge, except
for any such spill, discharge, leak, emission,
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injection, escape, dumping or release which would not have or would not be
reasonably likely to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases, a
material adverse effect on the consolidated financial position, results of
operations, business or prospects of the Company and its subsidiaries, taken as
a whole; and the terms "HAZARDOUS WASTES", "TOXIC WASTES", "HAZARDOUS
SUBSTANCES" and "MEDICAL WASTES" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with respect to
environmental protection.
(x) Neither the Company nor any subsidiary is, or, as of the Closing
Date after giving effect to the Transactions and the application of the net
proceeds therefrom as described in the Prospectus, will be, an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(y) On or prior to the Closing Date, each of the documents to be
entered into in connection with the Transactions (other than this Agreement)
will have been duly authorized, executed and delivered by the Company in
substantially the form previously provided to the Underwriters and will conform
to the descriptions thereof in the Prospectus.
(z) The Registration Statement and the Preliminary Prospectus
distributed in connection with the Directed Stock Program conform in all
material respects with applicable laws or regulations of foreign jurisdictions
in which they were distributed, and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they become effective or are
filed with any applicable regulatory agencies, conform in all material respects,
with applicable laws or regulations of foreign jurisdictions in which they are
distributed in connection with the Directed Stock Program.
(aa) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained or that will be
obtained by the Closing Date, is required in connection with the offering of the
Directed Stock in any jurisdiction where the Directed Stock is being offered.
SECTION 2. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 29,600,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set forth opposite that Underwriter's name in Schedule 1 and 2 hereto. The
respective purchase obligations of the Underwriters with respect to the Firm
Stock
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shall be rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the U.S. Underwriters an option to
purchase up to 4,440,000 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the U.S. Underwriters in proportion to the number
of shares of Firm Stock set forth opposite the name of such U.S. Underwriters in
Schedule 1 hereto. The respective purchase obligations of each U.S. Underwriter
with respect to the Option Stock shall be adjusted by the U.S. Representatives
so that no U.S. Underwriter shall be obligated to purchase Option Stock other
than in 100 share amounts.
The price of both the Firm Stock and any Option Stock to be paid by the
Underwriters shall be $21.68 per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), except upon payment for
all the Stock to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
SECTION 4. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017, at 10:00 A.M., New
York City time, on the third full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the "FIRST DELIVERY DATE." On the First Delivery Date, the
Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Representatives for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer in immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Firm Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates
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for the Firm Stock, the Company shall make the certificates representing the
Firm Stock available for inspection by the Representatives in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
the First Delivery Date.
The option granted in Section 2 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the U.S. Representatives. Such
notice shall set forth the aggregate number of shares of Option Stock as to
which the option is being exercised, the names in which the shares of Option
Stock are to be registered, the denominations in which the shares of Option
Stock are to be issued and the date and time, as determined by the U.S.
Representatives, when the shares of Option Stock are to be delivered; provided,
however, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as a "SECOND DELIVERY DATE"
and the First Delivery Date and any Second Delivery Date are sometimes each
referred to as a "DELIVERY DATE".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the U.S.
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Stock to the U.S.
Representatives for the account of each U.S. Underwriter against payment to or
upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each U.S. Underwriter hereunder. Upon delivery, the Option
Stock shall be registered in such names and in such denominations as the U.S.
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the U.S. Representatives in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to such
Second Delivery Date.
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SECTION 5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than Commission's close of business on the second business day following
the execution and delivery of this Agreement or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to the
Prospectus except as permitted herein; to advise the Representatives, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of the
Stock for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, to use promptly its
reasonable best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Stock or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Representatives and, upon their request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as the
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<PAGE> 14
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing, which consent shall not be unreasonably
withheld;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to furnish
to the Representatives or make publicly available copies of all materials
furnished by the Company to its shareholders and all public reports and all
reports and financial statements furnished by the Company to the principal
national securities exchange upon which the Common Stock may be listed pursuant
to requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder;
(h) Promptly from time to time to take such action, with the
cooperation of the Representatives, as the Representatives may reasonably
request to qualify the Stock for offering and sale under the securities laws of
such jurisdictions as the Representatives may reasonably request and to comply
with such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be reasonably necessary to complete the
distribution of the Stock; provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of
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<PAGE> 15
Common Stock or securities convertible into or exchangeable for Common Stock
(other than (a) the Stock, (b) shares of Common Stock issued and sold to SBC in
connection with the Strategic Alliance as described in the Prospectus, (c)
shares of the Company's Class B Common Stock issued to The Williams Companies,
Inc. in connection with the Company's exercise of the Lightel Option (as defined
and on the terms described in the Prospectus), (d) shares of Common Stock issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights and (e) shares of Common Stock used as
consideration for acquisitions or issued in connection with strategic alliances,
provided that the recipient of any such shares of Common Stock agrees to be
bound by the transfer restrictions set forth herein for the unexpired remaining
term thereof), or sell or grant options, rights or warrants with respect to any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (other than the grant of options pursuant to option plans existing on the
date hereof), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of Salomon Smith Barney Inc. and Lehman Brothers Inc. on behalf
of the Underwriters; and to cause each shareholder, officer and director of the
Company to furnish to the Representatives, prior to the First Delivery Date, a
letter or letters, substantially in the form of Exhibit A hereto, pursuant to
which each such person shall agree not to, directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or (2) enter into
any swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case for a period of 180 days from the date of the
Prospectus, without the prior written consent of Salomon Smith Barney Inc. and
Lehman Brothers Inc. on behalf of the Underwriters;
(j) To apply for the listing of the Stock on the New York Stock
Exchange, and to use its reasonable best efforts to complete that listing,
subject only to official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the Transactions as set forth in the
Prospectus;
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(l) To take such steps as shall be necessary to ensure that neither the
Company nor any subsidiary shall become an "investment company" as defined in
the Investment Company Act of 1940, as amended;
(m) To place stop transfer orders on any Directed Stock that has been
sold to Participants subject to the three month restriction on sale, transfer,
assignment, pledge or hypothecation imposed by NASD Regulation, Inc. under its
Interpretative Material 2110-1 on free-riding and withholding to the extent
necessary to ensure compliance with the three month restrictions; and
(n) To comply with all applicable securities and other laws, rules and
regulations in each jurisdiction in which the Directed Stock is offered in
connection with the Directed Stock Program.
SECTION 6. Expenses. The Company agrees to pay (a) the costs incident
to the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement, the Agreement Between U.S. Underwriters and International
Managers, any Supplemental Agreement Among U.S. Underwriters and any other
related documents in connection with the offering, purchase, sale and delivery
of the stock; (e) the filing fees incident to securing the review by the
National Association of Securities Dealers, Inc. of the terms of sale of the
Stock; (f) any applicable listing or other fees; (g) the fees and expenses (not
in excess, in the aggregate, of $10,000) of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 5(h) and of
preparing, printing and distributing a Blue Sky Memorandum (including related
fees and expenses of counsel to the Underwriters); (h) all reasonable costs and
expenses of the Underwriters, including the reasonable fees and disbursements of
counsel for the Underwriters, directly attributable to the Directed Stock
Program; (i) the costs and expenses of the Company relating to investor
presentations on any "ROAD SHOW" undertaken in connection with the marketing of
the offering of the Stock, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered (with the approval of the Company) in connection
with the road show and (j) all other
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<PAGE> 17
costs and expenses incident to the performance of the obligations of the Company
under this Agreement; provided that, except as provided in this Section 6 and in
Section 11, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters.
SECTION 7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a); no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) All corporate proceedings and other legal matters incident to the
authorization of this Agreement, the Stock, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement, the
transactions contemplated hereby and the Transactions shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
(c) Skadden, Arps, Slate, Meagher & Flom LLP shall have furnished to
the Representatives their written opinion, as counsel to the Company, addressed
to the Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(i) The Company has an authorized capitalization as set forth
in the Prospectus under the "Actual" column under the caption
"Capitalization," and all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid
and non-assessable and conform in all material respects to the
description thereof contained in the Prospectus, provided, however,
that in rendering the preceding opinion, counsel may rely on a review
of the Restated Certificate of Incorporation and By-Laws of the
Company, minutes of the Company's Board of Directors, an officer's
certificate regarding the
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<PAGE> 18
outstanding capital stock and a certificate of the transfer agent for
the capital stock;
(ii) The shares of the Stock being delivered on such Delivery
Date to the Underwriters hereunder and the shares of Common Stock being
delivered on such Delivery Date to SBC in connection with the Strategic
Alliance have been duly authorized and, when issued and delivered
against payment therefor will be validly issued, fully paid and
non-assessable;
(iii) Except as described in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of the Stock
pursuant to the Company's charter or by-laws or any agreement or other
instrument listed on a Schedule to counsel's opinion as an "APPLICABLE
CONTRACT";
(iv) At the time the Registration Statement became effective,
the Registration Statement, and the Prospectus, as of its date (except
for the financial statements and financial schedules and other
financial data included therein or excluded therefrom or the exhibits
to the Registration Statement, as to which such counsel need express no
belief) appear on their face to be appropriately responsive in all
material respects with the requirements of the Securities Act and the
Rules and Regulations and counsel does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus (other than as set
forth in clause (v) below);
(v) The statements contained in the Prospectus under the
caption "Description of Capital Stock," insofar as they constitute
summaries of matters of law or summaries of provisions of the Stock,
fairly summarize such laws or such provisions in all material respects;
the statements contained in the Prospectus under the captions
"Regulation -- General regulatory environment"; " -- Federal
regulation"; " -- State regulation" (as to Illinois law, with the
exception of the sentences "We are currently authorized to provide
intrastate services, at least to some extent, in 50 states." and "In a
number of states, we have pending applications for additional authority
or are awaiting tariff approval."); and " -- Local regulation" (as to
Illinois law, with the exception of the sentence "We cannot guarantee
that fees will remain at their current levels following the expiration
of existing franchises), insofar as they purport to constitute
statements of law or legal conclusions, are correct in all material
respects; and the statements contained in the Prospectus under the
caption "Important United States Federal Tax Consequences of Our Common
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<PAGE> 19
Stock to Non-U.S. Holders," insofar as they purport to constitute
statements of law or legal conclusions, have been reviewed by counsel
and fairly present the information disclosed therein in all material
respects;
(vi) To the best of such counsel's knowledge based solely on
discussions with officers of the Company responsible for such matters
and review by counsel of documents furnished by them, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company; and each of the other documents listed on a
Schedule to counsel's opinion as a "TRANSACTION DOCUMENT" has been duly
authorized, executed and delivered by the Company;
(viii) To the best of such counsel's knowledge, the issue and
sale of the shares of Stock being delivered on such Delivery Date by
the Company pursuant to this Agreement and the issue and sale of the
shares of Common Stock being delivered on such Delivery Date to SBC in
connection with the Strategic Alliance, and the execution, delivery and
compliance by the Company with all of the provisions of this Agreement
and each of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any Applicable Contract, except to the
extent such conflict, breach, violation or default has not resulted in
or would not reasonably be expected to result in, a material adverse
change in the consolidated financial condition, results of operations,
business or prospects of the Company and its subsidiaries, taken as a
whole, nor will such actions result in any violation of the provisions
of the charter or by-laws of the Company or any of its Significant
Subsidiaries or any Applicable Law or Applicable Order, or, with
respect to this Agreement and the transactions contemplated hereby, the
Securities Act, the Rules and Regulations, the Exchange Act or the
rules and regulations thereunder; provided however, that such counsel
shall express no opinion in this paragraph (viii) with regard to the
anti-fraud or anti-manipulation provisions of the Securities Act, the
Rules and Regulations, the Exchange Act or the rules and regulations
thereunder or the information contained in, the accuracy, completeness
or correctness of, or the adequacy of the disclosure contained in, the
Prospectus or the Registration Statement or the responsiveness thereof
to the requirements of the Securities Act and the
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Rules and Regulations, which matters are addressed elsewhere in such
counsel's opinion; and, except for the registration of the Stock and
the Notes under the Securities Act and such consents, approvals,
filings, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws,
as to which counsel need express no opinion, in connection with the
purchase and distribution of the Stock by the Underwriters and the
purchase and distribution of the Notes by the underwriters named in the
Debt Purchase Agreement, no Governmental Approval is required for the
execution, delivery and performance of this Agreement or any of the
Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, except for such Governmental Approvals
as have been obtained or made; and
(ix) The Company is not an "investment company" as defined in
the Investment Company Act of 1940, as amended.
The term "APPLICABLE CONTRACTS" means those agreements which are
specifically identified to counsel by the Company and listed on a Schedule to
counsel's opinion and "APPLICABLE LAWS" means the Delaware General Corporation
Law and those laws, rules and regulations of the State of New York and the
federal laws of the United States of America which, in counsel's experience, are
normally applicable to transactions of the type contemplated by this Agreement
but without counsel's having made any special investigation concerning any other
laws, rules or regulations; provided that the term "APPLICABLE LAWS" does not
include securities or antifraud laws of any jurisdiction or the rules and
regulations of the National Association of Securities Dealers Inc. The term
"APPLICABLE ORDERS" means those orders or decrees of governmental authorities
specifically identified to counsel by the Company and listed on a Schedule to
counsel's opinion. The term "TRANSACTION DOCUMENTS" means those agreements which
are listed on a Schedule to counsel's opinion. The term "GOVERNMENTAL APPROVALS"
means any consent, approval, license, authorization or validation of, or notice
to, any filing, recording or registration with, any New York, Delaware or
federal executive, legislative, judicial, administrative or regulatory body
pursuant to Applicable Laws.
In rendering the opinion set forth in clause (viii) with respect to
conflicts with, defaults under, and breaches or violations of, Applicable
Contracts, counsel need not express any opinion with respect to compliance with
any covenant, restriction or provision of any Applicable Contract that requires
satisfaction of a financial ratio or test or any aspect of the financial
condition, results of operations, business or prospects of the Company or any of
its subsidiaries.
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Such counsel shall also state that they have been advised that the
Registration Statement was declared effective under the Securities Act as of the
date and time specified in such opinion, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date specified therein and, to the
knowledge of counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending by the Commission.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
to the extent specifically referred to therein, the laws of the State of New
York and the General Corporation Law of the State of Delaware. Such opinion
shall also be to the effect that (x) such counsel has acted as special counsel
to the Company in connection with the preparation of the Registration Statement
and (y) based on the foregoing, no facts have come to the attention of such
counsel which lead them to believe that the Registration Statement (except for
the financial statements and financial schedules and other financial data
included therein, as to which such counsel need express no belief) as of the
Effective Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus (except as
stated above), as of its date and as of the Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel is not passing upon and is not assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and has not made any
independent check or verification thereof (other than as set forth in clause (v)
above).
(d) William von Glahn, Senior Vice President, Law of the Company, shall
have furnished to the Representatives his written opinion, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company and each of its Significant Subsidiaries have
been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires
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such qualification, except to the extent such failure to be qualified
or in good standing would not have a material adverse effect on the
consolidated financial position, results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole, and
have all corporate power and authority necessary to own or hold their
respective properties and conduct the businesses in which they are
engaged as described in or contemplated by the Registration Statement;
and all of the issued shares of capital stock of each Significant
Subsidiary have been duly and validly authorized and issued and are
fully paid, non-assessable and (except for directors' qualifying shares
and as disclosed in the Prospectus) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims;
(ii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its Significant
Subsidiaries is a party or of which any property or assets of the
Company or any of its Significant Subsidiaries is the subject which, if
determined adversely to the Company or any of its Significant
Subsidiaries, could reasonably be expected to have a material adverse
effect on the consolidated financial position, results of operations,
business or prospects of the Company and its subsidiaries, taken as a
whole; and, to the best of such counsel's knowledge, no such
proceedings are threatened or pending by governmental authorities or
threatened by others;
(iii) Except as described in the Prospectus, to the best of
such counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement;
(iv) The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; no "reportable
event" (as defined in ERISA) has occurred with respect to any "PENSION
PLAN" (as defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "PENSION PLAN" or (ii) Sections 412 or 4971 of
the Code; and each "PENSION PLAN" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in
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<PAGE> 23
all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification;
(v) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its Significant Subsidiaries (or, to the knowledge of
such counsel, any of their predecessors in interest) at, upon or from
any of the property now or previously owned or leased (but not
including property on which the Company had or has easements or similar
rights) by the Company or its Significant Subsidiaries in violation of
any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not
have, or could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a material
adverse effect on the consolidated financial position, results of
operations, business or prospects of the Company and its subsidiaries,
taken as a whole; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its Significant
Subsidiaries or with respect to which the Company or any of its
Significant Subsidiaries have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which
would not have or would not be reasonably likely to have, singularly or
in the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material adverse effect
on the consolidated financial position, results of operations, business
or prospects of the Company and its subsidiaries, taken as a whole; and
(vi) The statements contained in the Prospectus under the
captions "Relationships and Related Party Transactions," "Relationship
Between our Company and Williams" and "Description of Indebtedness and
Other Financing Arrangements," insofar as they constitute summaries of
legal matters and the documents listed on a Schedule to such counsel's
opinion, fairly summarize such legal matters and documents in all
material respects.
In rendering such opinion, such counsel may state that his opinion is
limited to matters governed by the Federal laws of the United States of America,
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<PAGE> 24
the laws of the State of New York and the State of Oklahoma and the General
Corporation Law of the State of Delaware.
(e) The Representatives shall have received from Davis Polk & Wardwell,
counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(f) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "COMFORT LETTERS" to underwriters in
connection with registered public offerings.
(g) With respect to the letter of Ernst & Young referred to in the
preceding paragraph and delivered to the Representatives concurrently with the
execution of this Agreement (the "INITIAL LETTER"), the Company shall have
furnished to the Representatives a letter (the "BRING-DOWN LETTER") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letters and (iii)
confirming in all material respects the conclusions and findings set forth in
the initial letter.
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<PAGE> 25
(h) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President, a Vice President or its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 7(a), 7(i) and 7 (j) have been
fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective Date,
the Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.
(i) Since the date of the latest audited financial statements included
in the Prospectus (A) neither the Company nor any of the Significant
Subsidiaries shall have sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus or (B)
there shall not have been any material change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (A) or
(B), is, in the judgment of the Representatives, so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery Date on the terms and in
the manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (a) (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange, or
trading in any securities of the Company on any exchange, shall have been
suspended or minimum prices shall have been established on any such exchange by
the Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a general banking moratorium in New York
shall have been declared by Federal or New York state authorities, (iii) the
United
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<PAGE> 26
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred a change in general economic, political or financial
conditions (or the effect of international conditions on the financial markets
in the United States shall be such) that in the judgment of the Representatives
is material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (a)(iv) above, such event, singly or together with any
other such event, makes it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the public offering or delivery of
the Stock being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(k) The New York Stock Exchange, Inc. shall have approved the Stock for
listing, subject only to official notice of issuance.
(l) You shall have received evidence satisfactory to you that the
investment by SBC of at least $425 million in Common Stock pursuant to the
Securities Purchase Agreement shall have occurred or will occur simultaneously
with the offering of the Stock on the Closing Date as described in the
Prospectus without modification, change or waiver, except for such
modifications, changes or waivers as have been specifically identified to the
Underwriters and which in the judgment of the Underwriters do not make it
impracticable or inadvisable to proceed with the offering and delivery of the
Stock on the Closing Date on the terms and in the manner contemplated in the
Prospectus.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (ii)
the omission or alleged omission to state
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<PAGE> 27
in any Preliminary Prospectus, the Registration Statement or the Prospectus, or
in any amendment or supplement thereto, any material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information consists solely of the
information specified in Section 8(e); and, provided further, that the Company
will not be liable to any Underwriter with respect to any Preliminary Prospectus
to the extent the Company shall sustain the burden of proving that any such
loss, claim, damage or liability resulted from the fact that such Underwriter,
in contravention of a requirement of applicable law, sold Stock to a person to
whom such Underwriter failed to send or give, at or prior to the Closing Date, a
copy of the Prospectus, as then amended or supplemented, if: (i) the Company has
previously furnished copies thereof (sufficiently in advance of the Closing Date
to allow for distribution by the Closing Date) to the Underwriter and the loss,
claim, damage or liability of such Underwriter resulted from an untrue statement
or omission of a material fact contained in or omitted from the Preliminary
Prospectus which was corrected in the Prospectus as, if applicable, amended or
supplemented prior to the Closing Date and such Prospectus was required by law
to be delivered at or prior to the written confirmation of sale to such person
and (ii) such failure to give or send such Prospectus by the Closing Date to the
party or parties asserting such loss, claim, damage or liability would have
constituted the sole defense to the claim asserted by such person. The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Underwriter or to any officer, employee or controlling
person of that Underwriter.
Without limitation and in addition to its obligations under the other
paragraphs of this Section 8, the Company agrees to indemnify and hold harmless
Salomon Smith Barney Inc., its officers and employees and each person who
controls Salomon Smith Barney Inc. within the meaning of the Securities Act
against any loss, claim, damage or liability, joint or several, to which they or
any of them may become subject, insofar as such loss, claim, damage or liability
(or action in respect thereof) arises out of or is based upon Salomon Smith
Barney
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<PAGE> 28
Inc.'s acting as a "qualified independent underwriter" (within the meaning of
National Association of Securities Dealers, Inc. Conduct Rule 2720) in
connection with the offering contemplated by this Agreement, 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, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability results from the gross negligence or willful
misconduct of Salomon Smith Barney Inc.
The Company agrees to indemnify and hold harmless Salomon Smith Barney
Inc. (including its officers and employees) and each person, if any, who
controls Salomon Smith Barney Inc. within the meaning of the Securities Act
(collectively, the "SALOMON ENTITIES"), from and against any loss, claim, damage
or liability or any action in respect thereof to which any of the Salomon
Entities may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon
(i) the failure of any Participant to pay for and accept delivery of the
Directed Stock sold pursuant to the Directed Stock Program which, immediately
following the effectiveness of the Registration Statement, were subject to a
properly confirmed agreement to purchase or (ii) the Directed Stock Program,
provided that, the Company shall not be responsible under this subparagraph (ii)
for any loss, claim, damage, liability or action that is finally judicially
determined to have resulted from the gross negligence or willful misconduct of
the Salomon Entities. The Company shall reimburse the Salomon Entities promptly
upon demand for any legal or other expenses reasonably incurred by them in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that the untrue
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<PAGE> 29
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or on behalf
of that Underwriter specifically for inclusion therein, and shall reimburse the
Company and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if (i) the employment of such counsel
has been expressly authorized in writing by the Company; (ii) the Company has
not assumed the defense of and employed counsel reasonably satisfactory to the
Representatives within a reasonable time after notice of the commencement of
such action or (iii) the named parties to any such action or proceeding
(including impleaded parties) include both an indemnified party and the Company
and such indemnified party shall have been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party,
which are
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different from or additional to those available to the Company, and such
counsel's representation of such indemnified party and the Company in such
action or proceeding would give rise to a conflict of interest which would make
it improper for such counsel to represent both the indemnified party and the
Company (in which case the Company shall not have the right to assume the
defense of such action or proceeding on behalf of such indemnified party). The
Company shall not, in connection with any one such action or proceeding, or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm for
the Underwriters and all such indemnified parties (in addition to any local
counsel), which firm will be designated by the Representatives, as
representative of the Underwriters, and the Company shall reimburse all such
reasonable fees and expenses as they are billed. Notwithstanding anything
contained herein to the contrary, if indemnity may be sought pursuant to Section
8(a) hereof in respect of such claim or action, then in addition to such
separate firm for the indemnified parties, the indemnifying party shall be
liable for the fees and expenses of not more than one separate firm (in addition
to any local counsel) for the Salomon Entities for the defense of any loss,
claim, damage, liability or action arising out of the Directed Stock Program. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), 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, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and the Underwriters on the other from the offering of the Stock
or (ii) if the allocation
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provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock purchased
under this Agreement (before deducting expenses) received by the Company, on the
one hand, and the total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Stock purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the shares of the Stock under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. Benefits received by Salomon
Smith Barney Inc. in its capacity as "qualified independent underwriter" (within
the meaning of National Association of Securities Dealers, Inc. Conduct Rule
2720) shall be deemed to be equal to the compensation received by Salomon Smith
Barney for acting in such capacity. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission, nor shall Salomon Smith Barney Inc. in its
capacity as "qualified independent underwriter" be responsible for any amount in
excess of the compensation received by Salomon Smith Barney Inc. for acting in
such capacity. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The
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Underwriters' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, the legend concerning
over-allotments and the concession and reallowance figures appearing under the
caption "Underwriting" in, the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
SECTION 9. Defaulting Underwriters.
If, on any Delivery Date, any Underwriter defaults in the performance
of its obligations under this Agreement, the remaining non-defaulting
Underwriters shall be obligated to purchase the Stock which the defaulting
Underwriter agreed but failed to purchase on such Delivery Date in the
respective proportions which the number of shares of the Firm Stock set opposite
the name of each remaining non-defaulting Underwriter in Schedule 1 or Schedule
2 hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 or Schedule
2 hereto; provided, however, that the remaining non-defaulting Underwriters
shall not be obligated to purchase any of the Stock on such Delivery Date if the
total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of shares of the Stock to be purchased on such Delivery Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of shares of the Stock which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 3. If the foregoing maximums
are exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives and the Company who so agree,
shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the Stock to be purchased on
such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives and the Company do not elect to purchase the
shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to the Second
Delivery Date, the obligation of the Underwriters to purchase, and of the
Company to sell, the Option Stock) shall terminate without liability on the part
of any non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 6 and 11. As used in this Agreement, the term "UNDERWRITER" includes,
for all purposes of this Agreement unless the context
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requires otherwise, any party not listed in Schedule 1 or 2 hereto who, pursuant
to this Section 9, purchases Stock which a defaulting Underwriter agreed but
failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. Termination. The obligations of the Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(i) or 7(j), shall have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
SECTION 11. Reimbursement of Underwriters' Expenses. If the Company
shall fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company
(including, without limitation, with respect to the Transactions) is not
fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by reason
of the default of one or more Underwriters, the Company shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
SECTION 12. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to (i) Salomon Smith Barney Inc., 388 Greenwich
Street, New York, New York 10013, Attention: Registration Department (Fax:
212-816-7912), with a copy, in the case of any notice pursuant to Section 8(c)
to the Registration Department, 388 Greenwich Street, 32nd Floor, New York, NY
10013 and (ii) Lehman Brothers Inc., Three World Financial Center, New York,
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New York 10285, Attention: Syndicate Department (Fax: 212-526-6588), with a
copy, in the case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World
Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: General Counsel (Fax: (918) 573-4503);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Salomon Smith Barney Inc. and Lehman
Brothers Inc. on behalf of the Representatives.
SECTION 13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
SECTION 14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
34
<PAGE> 35
SECTION 15. Definition of the Terms "BUSINESS DAY" and "SUBSIDIARY".
For purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 18. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
35
<PAGE> 36
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
WILLIAMS COMMUNICATIONS GROUP, INC.
By /s/ G. L. BEST
-------------------------------------
Name: G. L. Best
Title: Vice President
<PAGE> 37
Accepted:
SALOMON SMITH BARNEY INC.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By SALOMON SMITH BARNEY INC.
By /s/ CHARLES K. BOBRINSKOY
---------------------------------
Authorized Representative
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SALOMON BROTHERS INTERNATIONAL LIMITED
MERRILL LYNCH INTERNATIONAL
For themselves and as Representatives
of the several Underwriters named
in Schedule 2 hereto
By LEHMAN BROTHERS INTERNATIONAL (EUROPE)
By /s/ ARLENE SALMONSON
---------------------------------
Authorized Representative
<PAGE> 38
SCHEDULE 1
<TABLE>
<CAPTION>
Number of Shares of Firm
U.S. Underwriters Stock to be Purchased
----------------- ------------------------
<S> <C>
Salomon Smith Barney Inc................................... 6,360,000
Lehman Brothers Inc........................................ 6,360,000
Merrill Lynch, Pierce, Fenner &
Smith Incorporated...................................... 6,360,000
Banc of America Securities LLC............................. 1,150,000
CIBC World Markets Inc..................................... 1,150,000
Credit Suisse First Boston Corporation..................... 1,150,000
Donaldson, Lukfin & Jenrette Securities
Corporation............................................. 1,150,000
------------------------
Total...................................................... 23,680,000
========================
</TABLE>
<PAGE> 39
SCHEDULE 2
<TABLE>
<CAPTION>
Number of Shares of
International Underwriters Firm Stock to be Purchased
- -------------------------- --------------------------
<S> <C>
Lehman Brothers International (Europe)..................... 1,574,720
Salomon Brothers International Limited..................... 1,574,720
Merrill Lynch International................................ 1,574,720
Cazenove & Co. ............................................ 59,200
Bank of America International Limited...................... 284,160
CIBC World Markets International Limited................... 284,160
Credit Suisse First Boston Corporation..................... 284,160
Donaldson, Lufkin & Jenrette International................. 284,160
--------------------------
Total...................................................... 5,920,000
==========================
</TABLE>
<PAGE> 40
SCHEDULE 3
Significant Subsidiaries
Williams Communications, Inc.
Williams Communications Solutions, LLC
2
<PAGE> 41
EXHIBIT A
LOCK-UP LETTER AGREEMENT
SALOMON SMITH BARNEY INC.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the several
Underwriters named in Schedule 1,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SALOMON BROTHERS INTERNATIONAL LIMITED
MERRILL LYNCH INTERNATIONAL
As Representatives of the several
Underwriters named in Schedule 2,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing
for the purchase by you and such other firms (the "UNDERWRITERS") of shares (the
"SHARES") of Common Stock, par value $0.01 per share (the "COMMON STOCK"), of
Williams Communications Group, Inc., a Delaware corporation (the "COMPANY"), and
that the Underwriters propose to reoffer the Shares to the public (the
"OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Salomon
Smith Barney Inc. and Lehman Brothers Inc., on behalf of the Underwriters, the
undersigned will not, directly or indirectly, (1) offer for sale, sell, pledge,
or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the
1
<PAGE> 42
future of) any shares of Common Stock (including, without limitation, shares of
Common Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock (other than the Shares) owned by the undersigned on the date of execution
of this Lock-Up Letter Agreement or on the date of the completion of the
Offering, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 180 days after
the date of the final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
2
<PAGE> 43
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
By:
---------------------------------
Name:
Title:
Dated:
---------------
3
<PAGE> 1
Exhibit 1.2
================================================================================
WILLIAMS COMMUNICATIONS GROUP, INC.
(a Delaware corporation)
10.70% Senior Redeemable Notes due 2007
10.875% Senior Redeemable Notes due 2009
PURCHASE AGREEMENT
Dated: September 30, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
PURCHASE AGREEMENT
SECTION 1. Representations and Warranties by the Company..................................2
(a) Compliance with Registration Requirements................................2
(b) Good Standing of the Company and Significant Subsidiaries................3
(c) Capitalization...........................................................4
(d) Authorization of the Notes...............................................4
(e) Authorization of the Indenture...........................................4
(f) Description of the Notes and the Indenture...............................4
(g) Authorization of Agreement...............................................4
(h) Absence of Defaults and Conflicts........................................4
(i) Registration Rights......................................................5
(j) No Material Adverse Change in Business...................................5
(k) Financial Statements.....................................................6
(l) Independent Accountants..................................................6
(m) Title to Property........................................................6
(n) Insurance................................................................6
(o) Possession of Intellectual Property......................................6
(p) Absence of Proceedings...................................................7
(q) Absence of Further Requirements..........................................7
(r) Absence of Further Required Disclosure...................................7
(s) Employee Benefits Matters................................................7
(t) Possession of Licenses and Permits.......................................7
(u) Absence of Further Transactions..........................................8
(v) Accurate Books and Records...............................................8
(w) Compliance with Agreements and Law.......................................8
(x) Environmental Laws.......................................................8
(y) Investment Company Act...................................................9
(z) Transactions.............................................................9
SECTION 2. Sale and Delivery to Underwriters; Closing.....................................9
(a) Notes....................................................................9
(b) Payment.................................................................10
(c) Denominations; Registration.............................................10
SECTION 3. Covenants of the Company......................................................10
(a) Compliance with Securities Regulations and Commission Requests..........10
(b) Filing of Amendments....................................................11
(c) Delivery of Registration Statements.....................................11
(d) Delivery of Prospectuses................................................11
(e) Continued Compliance with Securities Laws...............................11
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
(f) Blue Sky Qualifications.................................................12
(g) Rule 158................................................................12
(h) Use of Proceeds.........................................................12
(i) Restriction on Sale of Securities.......................................12
SECTION 4. Payment of Expenses...........................................................12
(a) Expenses................................................................12
(b) Termination of Agreement................................................13
SECTION 5. Conditions of Underwriters' Obligations.......................................13
(a) Effectiveness of Registration Statement.................................13
(b) Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. ...................14
(c) Opinion of William von Glahn............................................18
(d) Opinion of Counsel for Underwriters.....................................20
(e) Officers' Certificate...................................................22
(f) Accountant's Comfort Letter.............................................22
(g) Bring-down Comfort Letter...............................................22
(h) Maintenance of Rating...................................................22
(i) Additional Documents....................................................23
(j) Additional Transactions.................................................23
(k) Termination of Agreement................................................23
SECTION 6. Indemnification...............................................................23
(a) Indemnification of Underwriters.........................................23
(b) Indemnification of Company, Directors, Officers and Employees...........24
(c) Actions against Parties; Notification...................................25
SECTION 7. Contribution..................................................................26
SECTION 8. Representations, Warranties and Agreements to Survive Delivery................27
SECTION 9. Termination of Agreement......................................................28
(a) Termination; General....................................................28
(b) Liabilities.............................................................28
SECTION 10. Default by One or More of the Underwriters...................................28
SECTION 11. Notices......................................................................29
SECTION 12. Parties......................................................................29
SECTION 13. Governing Law and Time.......................................................29
SECTION 14. Effect of Headings...........................................................29
</TABLE>
ii
<PAGE> 4
WILLIAMS COMMUNICATIONS GROUP, INC.
(a Delaware corporation)
$2,000,000,000
$500,000,000 10.70% Senior Redeemable Notes due 2007
$1,500,000,000 10.875% Senior Redeemable Notes due 2009
PURCHASE AGREEMENT
September 30, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Lehman Brothers Inc.
Salomon Smith Barney Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Williams Communications Group, Inc., a Delaware corporation (the
"COMPANY"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH") and each of the other
Underwriters named in Schedule A hereto (collectively, the "UNDERWRITERS", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Merrill Lynch, Lehman Brothers Inc. and Salomon
Smith Barney Inc. are acting as representatives (in such capacity, the
"REPRESENTATIVES"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule A of $2.0 billion
aggregate principal amount of the Company's 10.70% Senior Redeemable Notes due
2007 (the "10.70% NOTES") and
<PAGE> 5
10.875% Senior Redeemable Notes due 2009 (the "10.875% NOTES," and together with
the 10.70% Notes, the "NOTES"). The Notes are to be issued pursuant to an
indenture dated as of October 5, 1999 (the "INDENTURE") between the Company and
The Bank of New York, as trustee (the "TRUSTEE").
The Company understands that the Underwriters propose to make a public
offering of the Notes as soon as the Representatives deem advisable after this
Agreement has been executed and delivered and the Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the "1939 ACT").
It is understood that as of the Closing Date (as defined below), the
Company will consummate a series of transactions pursuant to which (i) the
Company will sell and issue 29,600,000 shares of the Company's Class A Common
Stock, par value $0.01 per share (the "COMMON STOCK," and together with the
4,440,000 shares of the Company's Common Stock subject to an option granted to
certain underwriters pursuant to the Equity Underwriting Agreement (as defined
below), the "STOCK") pursuant to an underwriting agreement (the "EQUITY
UNDERWRITING AGREEMENT") of even date herewith and (ii) the Company will have
entered into a strategic alliance (the "STRATEGIC ALLIANCE") with SBC
Communications Inc. ("SBC") and in connection therewith SBC will make an
investment of at least $425 million in the Common Stock as of the Closing Date
pursuant to a Securities Purchase Agreement dated February 8, 1999, as amended
as of September 24, 1999 (the "SECURITIES PURCHASE AGREEMENT") (all such
transactions, as more fully described in the Prospectus (as defined below),
shall collectively be referred to herein as the "TRANSACTIONS"). The
Transactions shall be deemed to take place simultaneously on the Closing Date
and are contingent upon the consummation of one another.
SECTION 1. Representations and Warranties by the Company. The Company
represents, warrants and agrees that:
(a) Compliance with Registration Requirements. A registration statement
on Form S-1 with respect to the Notes has (i) been prepared by the Company in
conformity in all material respects with the requirements of the Securities Act
of 1933, as amended (the "1933 ACT"), and the rules and regulations (the "1933
ACT RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"COMMISSION") thereunder, (ii) been filed with the Commission under the 1933 Act
and (iii) become effective under the 1933 Act. Copies of such registration
statement and each of the amendments thereto have been delivered by the Company
to you. As used in this Agreement, "EFFECTIVE TIME" means the date and the time
as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "EFFECTIVE
DATE" means the date of the Effective Time; "PRELIMINARY PROSPECTUS" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the 1933 Act and any prospectus filed with the
Commission by the Company with the consent of the Representatives pursuant to
Rule 424(a) of the 1933
2
<PAGE> 6
Act Rules and Regulations; "REGISTRATION STATEMENT" means such registration
statement, as amended at the Effective Time, including all information contained
in the final prospectus, if any, filed with the Commission pursuant to Rule
424(b) of the 1933 Act Rules and Regulations and deemed to be a part of the
registration statement as of the Effective Time pursuant to Rule 430A of the
1933 Act Rules and Regulations ("RULE 430A"); and "PROSPECTUS" means the
prospectus used to confirm sales of the Notes. If the Company has filed an
abbreviated registration statement to register additional Notes pursuant to Rule
462(b) under the 1933 Act (the "RULE 462 REGISTRATION STATEMENT"), then any
reference herein to the term "REGISTRATION STATEMENT" shall be deemed to include
such Rule 462 Registration Statement. To the best of the Company's knowledge,
the Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
The Registration Statement conforms in all material respects, and the
Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all material respects to the
requirements of the 1933 Act and the 1933 Act Rules and Regulations as well as
with the 1939 Act and the rules and regulations of the Commission under the 1939
Act (the "1939 ACT REGULATIONS") and do not and will not, as of the applicable
Effective Date (as to the Registration Statement and any amendment thereto) and
as of the applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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; provided that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(b) Good Standing of the Company and Significant Subsidiaries. The
Company and each of its significant subsidiaries (as defined in Rule 1-02 of
Regulation S-X under the 1933 Act) (each, a "SIGNIFICANT SUBSIDIARY" and
collectively, "SIGNIFICANT SUBSIDIARIES"), which are listed on Schedule C
hereto, have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of incorporation,
are duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires such
qualification, except where failure to have such qualifications would not,
singly or in the aggregate, have a material adverse effect on the consolidated
financial position, results of operation, business or prospects of the Company
and its subsidiaries, taken as a whole, and have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged.
3
<PAGE> 7
(c) Capitalization. The Company has an authorized capitalization as
set forth in the Prospectus and all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each Significant
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and (except for directors' qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(d) Authorization of the Notes. The Notes have been duly authorized
and, at the Closing Time (defined below), will have been duly executed by the
Company and, when authenticated and issued in the manner provided for in the
Indenture and delivered to the Trustee against payment of the purchase price
therefor as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally or except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be in the forms contemplated by, and
entitled to the benefits of, the Indenture.
(e) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and duly qualified under the 1939 Act and, when duly
executed and delivered by the Company and the Trustee, will constitute a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(f) Description of the Notes and the Indenture. The Notes and the
Indenture will conform in all material respects to the respective statements
relating thereto contained in the Prospectus; the Indenture will be in
substantially the form filed as an exhibit to the Registration Statement and the
Notes will be substantially in the form contained in the Indenture.
(g) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(h) Absence of Defaults and Conflicts. The execution, delivery and
performance of this Agreement, the Indenture, the Notes and each of the other
documents
4
<PAGE> 8
to be entered into in connection with the Transactions by the Company and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its Significant Subsidiaries is a party or by which the Company or any of
its Significant Subsidiaries is bound or to which any of the property or assets
of the Company or any of its Significant Subsidiaries is subject, other than
such conflicts, agreements, breaches, violations or defaults which, singly or in
the aggregate, would not have a material adverse effect on the consolidated
financial position, results of operations, business or prospects of the Company
and its subsidiaries, taken as a whole, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or any of
its Significant Subsidiaries or any statute or any order, rule or regulation
known to the Company of any court or governmental agency or body having
jurisdiction over the Company or any of its Significant Subsidiaries or any of
their properties or assets; and except for the registration of the Stock and the
Notes under the 1933 Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities Exchange
Act of 1934, as amended (the "1934 ACT"), the 1933 Act, the 1939 Act, applicable
state securities laws and securities laws of foreign jurisdictions in connection
with the purchase and distribution of the Notes by the Underwriters and the
purchase and distribution of the Stock by the underwriters named in the Equity
Underwriting Agreement, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
(i) Registration Rights. Except as described in the Prospectus, there
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the 1933 Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to include
any securities of the Company in the securities registered pursuant to the
Registration Statement.
(j) No Material Adverse Change in Business. Neither the Company nor
any of its Significant Subsidiaries has sustained, since the respective dates as
of which information is given in the Prospectus, any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree that has resulted in, or is reasonably likely to result in, a
material adverse change in the consolidated financial position, results of
operations, business or prospects of the Company and its subsidiaries, taken as
a whole, otherwise than as set forth or contemplated in the Prospectus; and,
since such date, there has not been any material change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the
5
<PAGE> 9
consolidated financial position, results of operations, business or prospects of
the Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus.
(k) Financial Statements. The financial statements (including the
related notes and supporting schedules) filed as part of the Registration
Statement or included in the Prospectus present fairly, in all material
respects, the financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as may be
indicated in the notes thereto.
(l) Independent Accountants. Ernst & Young, who have certified certain
financial statements of the Company, whose report appears in the Prospectus and
who have delivered the initial letter referred to in Section 5(f) hereof, are
independent public accountants as required by the 1933 Act and the 1933 Act
Rules and Regulations; and Deloitte & Touche, whose report appears in the
Prospectus, were independent accountants as required by the 1933 Act and the
1933 Act Rules and Regulations during the periods covered by the financial
statements on which they reported.
(m) Title to Property. The Company and each of its Significant
Subsidiaries have good title to all real property and good title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects, except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not materially interfere
with the conduct of business of the Company and its subsidiaries, taken as a
whole; and all assets held under lease by the Company and its Significant
Subsidiaries are held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the conduct
of business of the Company and its subsidiaries, taken as a whole.
(n) Insurance. The Company and each of its Significant Subsidiaries
carry, or are covered by, insurance in such amounts and covering such risks as
the Company believes is adequate for the conduct of their respective businesses
and the value of their respective properties and as the Company believes is
customary for companies engaged in similar businesses in similar industries.
(o) Possession of Intellectual Property. The Company and each of its
Significant Subsidiaries own or possess, or can acquire on reasonable terms,
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the conduct of
their respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others which, singly or in the
aggregate, in the judgment of the Company, is reasonably
6
<PAGE> 10
likely to result in any material adverse change in the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole.
(p) Absence of Proceedings. Except as described in the Prospectus,
there are no legal or governmental proceedings pending to which the Company or
any of its Significant Subsidiaries is a party or of which any property or
assets of the Company or any of its Significant Subsidiaries is the subject
which, if determined adversely to the Company or any of its Significant
Subsidiaries, might have a material adverse effect on the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole; and to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(q) Absence of Further Requirements. There are no contracts or other
documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the 1933 Act or by the 1933 Act Rules
and Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement.
(r) Absence of Further Required Disclosure. No business or related
party transaction exists which is required by Item 404 of Regulation S-K to be
described in the Prospectus which is not so described.
(s) Employee Benefits Matters. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "REPORTABLE EVENT" (as
defined in ERISA) has occurred with respect to any "PENSION PLAN" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "PENSION PLAN" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "CODE"); and each
"PENSION PLAN" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(t) Possession of Licenses and Permits. The Company has filed all
material federal, state and local income and franchise tax returns required to
be filed through the date hereof and has paid all taxes due thereon, other than
those filings or payments being contested in good faith, and the Company has not
received notice that any tax deficiency has been determined adversely to the
Company or any of its Significant Subsidiaries
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<PAGE> 11
which has had or is reasonably likely to have a material adverse effect on the
consolidated financial position, results of operations, business or prospects of
the Company and its subsidiaries, taken as a whole.
(u) Absence of Further Transactions. Since the date as of which
information is given in the Prospectus through the date hereof, and except as
may otherwise be disclosed in the Prospectus or with respect to the subsequent
issuance of shares of Common Stock, if any, pursuant to employee or director
benefit plans, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business, except, in case of (ii) and (iii), for such liabilities, obligations
or transactions that have not had or are not reasonably expected to have, a
material adverse effect on the consolidated financial conditions, results of
operations, business or prospects of the Company and its subsidiaries, taken as
a whole or (iv) declared or paid any dividend on its capital stock.
(v) Accurate Books and Records. The Company (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(w) Compliance with Agreements and Law. Neither the Company nor any of
its Significant Subsidiaries (i) is in violation of its charter or by-laws, (ii)
is in default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to which any of
its properties or assets is subject or (iii) is in violation in any material
respect of any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to the
conduct of its business except, in case of (ii) and (iii), for such defaults,
violations, or failures to obtain such authorizations or permits that have not
had or are not reasonably expected to have, a material adverse effect on the
consolidated financial condition, results of operations, business or prospects
of the Company and its subsidiaries, taken as a whole.
(x) Environmental Laws. There has been no storage, disposal,
generation, manufacture, refinement, transportation, handling or treatment of
toxic wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its
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Significant Subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or previously
owned or leased by the Company or its Significant Subsidiaries in violation of
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not be reasonably
likely to have, singularly or in the aggregate with all such violations and
remedial actions, a material adverse effect on the consolidated financial
position, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole; there has been no material spill, discharge,
leak, emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic wastes,
medical wastes, solid wastes, hazardous wastes or hazardous substances due to or
caused by the Company or any of its Significant Subsidiaries or with respect to
which the Company or any of its Significant Subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a material adverse effect
on the consolidated financial position, results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole; and the terms
"HAZARDOUS WASTES", "TOXIC WASTES", "HAZARDOUS SUBSTANCES" and "MEDICAL WASTES"
shall have the meanings specified in any applicable local, state, federal and
foreign laws or regulations with respect to environmental protection.
(y) Investment Company Act. Neither the Company nor any subsidiary is,
or, as of the Closing Date after giving effect to the Transactions and the
application of the net proceeds therefrom as described in the Prospectus, will
be, an "investment company" as defined in the Investment Company Act of 1940, as
amended.
(z) Transactions. On or prior to the Closing Date, each of the
documents to be entered into in connection with the Transactions (other than
this Agreement) will have been duly authorized, executed and delivered by the
Company in substantially the form previously provided to the Underwriters and
will conform to the descriptions thereof in the Prospectus.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Notes. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Notes set
forth in Schedule A opposite the name of such
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<PAGE> 13
Underwriter, plus any additional principal amount of Notes which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Notes shall be made at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017, or at such other place
as shall be agreed upon by the Representatives and the Company, at 10:00 A.M.
(Eastern time) on the fourth full business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
as shall be agreed upon by the Representatives and the Company (such time and
date of payment and delivery being herein called "CLOSING TIME").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Notes to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the Notes
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Notes to be purchased by any Underwriter
whose funds have not been received by the Closing Time, but such payment shall
not relieve such Underwriter from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Notes shall be
in such denominations ($1,000 or integral multiples thereof) and registered in
such names as the Representatives may request in writing at least one full
business day before the Closing Time. The Notes, which may be in temporary form,
will be made available for examination and packaging by the Representatives in
the City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of Rule
430A and will notify the Representatives immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed and (ii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus, or of
the suspension of the qualification of the Notes for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary, if any,
pursuant
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<PAGE> 14
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of any such prospectus was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. If any stop order is issued, the Company will make every reasonable
effort to obtain the lifting thereof.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)) or any amendment, supplement
or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents and will obtain the consent of
the Representatives to the filing, which consent shall not be unreasonably
withheld.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, conformed copies of the Registration Statement as originally filed and
of each amendment thereto (including exhibits filed therewith), and will also
deliver to the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to the Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR"), except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Rules and Regulations and the 1939 Act and the
1939 Act Regulations so as to permit the completion of the distribution of the
Notes as contemplated in this Agreement and in the Prospectus. If at any time
when a prospectus is required by the 1933 Act to be delivered in connection with
sales of the Notes, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the Underwriters or for
the Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not
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<PAGE> 15
include any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time they were made, or if it shall
be necessary, in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Rules and Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Notes for offering and sale
under the applicable securities laws of such states and other jurisdictions as
the Representatives may reasonably designate and to maintain such qualifications
in effect for such period of time that is necessary to complete the distribution
of the Notes; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(g) Rule 158. The Company will make generally available to its
securityholders as soon as practicable an earnings statement (which need not be
audited) for the purposes of, and to provide the benefits contemplated by, the
last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Notes in the manner specified in the Prospectus under
"USE OF PROCEEDS".
(i) Restriction on Sale of Securities. During a period of 180 days
from the date of the Prospectus, the Company will not, without the prior written
consent of Merrill Lynch on behalf of the Underwriters, directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, lend or otherwise dispose of or transfer, any debt securities, or
any securities convertible into or exercisable or exchangeable for debt
securities, or file a registration statement under the 1933 Act with respect to
the foregoing.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment
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<PAGE> 16
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Notes, (iii) the preparation, issuance and delivery
of the certificates for the Notes to the Underwriters, (iv) the fees and
disbursements of the Company's counsel and accountants (v) the qualification of
the Notes under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees (not in excess in the
aggregate of $10,000) and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Memorandum and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, the Prospectus and any
amendments or supplements thereto, (vii) the costs and expenses of the Company
relating to investor presentations on any "ROAD SHOW" undertaken in connection
with the marketing of the offering of the Notes, including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered (with the approval of the
Company) in connection with the road show, (viii) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Notes, (ix) any fees payable in connection
with the rating of the Notes, and (x) the filing fees incident to the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Notes; provided that, except as provided in this Section 4,
the Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Notes which they may sell,
and the expenses of advertising the offering of the Notes made by the
Underwriters.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters. If this Agreement is terminated
pursuant to Section 10 by reason of the default of one or more of the
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof, to
the performance by the Company of its covenants and other obligations hereunder,
and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, shall have become
effective and at
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<PAGE> 17
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with. If
applicable, a prospectus containing the information required by Rule 430A shall
have been filed with the Commission in accordance with Rule 424(b), or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A.
(b) Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. At Closing
Time, Skadden, Arps, Slate, Meagher & Flom LLP shall have furnished to the
Representatives their written opinion, as counsel to the Company, addressed to
the Underwriters and dated the Closing Time, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company has an authorized capitalization as set forth in
the Prospectus under the "Actual" column under the caption
"Capitalization", and all of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid
and non-assessable and conform in all material respects to the
description thereof contained in the Prospectus; provided, however,
that in rendering the preceding opinion, counsel may rely on a review
of the Restated Certificate of Incorporation and By-Laws of the
Company, minutes of the Company's Board of Directors, an officer's
certificate regarding the outstanding capital stock and a certificate
of the transfer agent for the capital stock.
(ii) At the time the Registration Statement became effective, the
Registration Statement, and the Prospectus, as of its date, appeared on
their face to be appropriately responsive in all material respects to
the requirements of the 1933 Act and the 1933 Act Rules and
Regulations, except in each case counsel need express no opinion as to
the financial statements, schedules and other financial data included
therein or excluded therefrom or the exhibits to the Registration
Statement, including the Form T-1, and counsel need not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus
(other than as set forth in clause (iii) below).
(iii) The statements contained in the Prospectus under the
caption "Description of the Notes," insofar as they constitute
summaries of matters of law or summaries of provisions of the Notes,
fairly summarize such laws or such provisions in all material respects;
the statements contained in the Prospectus under the captions
"Regulation-General regulatory environment"; "--Federal regulation";
"--State regulation" (as to Illinois law, with the exception of the
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<PAGE> 18
sentences "We are currently authorized to provide intrastate services,
at least to some extent, in 50 states," and "In a number of states, we
have pending applications for additional authority or are awaiting
tariff approval."); and "--Local regulation" (as to Illinois law, with
the exception of the sentence "We cannot guarantee that fees will
remain at their current levels following the expiration of existing
franchises."), insofar as they purport to constitute statements of law
or legal conclusions, are correct in all material respects; and the
statements contained in the Prospectus under the caption "Important
United States Federal Tax Consequences of the Notes to Non-U.S.
Holders," insofar as they purport to constitute statements of law or
legal conclusions, have been reviewed by counsel and fairly present the
information disclosed therein in all material respects.
(iv) To the best of such counsel's knowledge based solely on
discussion with officers of the Company responsible for such matters
and review by counsel of documents furnished by them, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
1933 Act or by the 1933 Act Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement.
(v) This Agreement has been duly authorized, executed and
delivered by the Company; and each of the other documents listed on a
Schedule to counsel's opinion as a "TRANSACTION DOCUMENT" has been duly
authorized, executed and delivered by the Company.
(vi) To the best of such counsel's knowledge, the issue and sale
of the Notes by the Company pursuant to this Agreement and the
execution, delivery and compliance by the Company with all of the
provisions of this Agreement, the Indenture, the Notes and each of the
Transaction Documents and the consummation of the transactions
contemplated hereby and thereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any Applicable Contract, except to the extent such
conflict, breach, violation or default has not resulted in or would not
reasonably be expected to result in, a material adverse change in the
consolidated financial condition, results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole, nor
will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its Significant
Subsidiaries or any Applicable Law or Applicable Order, or, with
respect to this Agreement and the transactions contemplated hereby, the
1933 Act, the 1933 Act Rules and Regulations, the 1934 Act or the rules
and regulations thereunder; provided, however, that such counsel shall
express no opinion in this paragraph (vi) with regard to the anti-fraud
or anti-manipulation provisions of the 1933 Act, the 1933 Act Rules and
Regulations, the 1934 Act or the rules and regulations thereunder or
the information contained in, the accuracy, completeness or
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<PAGE> 19
correctness of, or the adequacy of the disclosure contained in, the
Prospectus or the Registration Statement or the responsiveness thereof
to the requirements of the 1933 Act and the 1933 Act Rules and
Regulations, which matters are covered elsewhere in such counsel's
opinion; and, except for the registration of the Stock and the Notes
under the 1933 Act and such consents, approvals, filings,
authorizations, registrations or qualifications as may be required
under the 1934 Act and applicable state securities laws, as to which
counsel need express no opinion, in connection with the purchase and
distribution of the Notes by the Underwriters and the purchase and
distribution of the Stock by the underwriters named in the Equity
Underwriting Agreement, no Governmental Approval, is required for the
execution, delivery and performance of this Agreement, the Indenture,
the Notes or any of the Transaction Documents by the Company and the
consummation of the transactions contemplated hereby and thereby,
except for such Governmental Approvals as have been obtained or made.
(vii) The Company is not an "investment company" as defined in
the Investment Company Act of 1940, as amended.
(viii) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution
and delivery thereof by the Trustee) constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law) and the waiver contained in Section 3.24 of the
Indenture may be deemed unenforceable.
(ix) The issuance and sale of the Notes have been duly authorized
by the Company, and the Notes when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid
for by the Underwriters in accordance with the terms of the Purchase
Agreement, will be valid and binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that (a)
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (b) the waiver
contained in Section 3.24 of the Indenture may be deemed unenforceable.
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(x) The Notes and the Indenture conform as to legal matters in
all material respects to the descriptions thereof contained in the
Prospectus.
The term "APPLICABLE CONTRACTS" means those agreements which are
specifically identified to counsel by the Company and listed on a Schedule to
counsel's opinion and "APPLICABLE LAWS" means the Delaware General Corporation
Law and those laws, rules and regulations of the State of New York and the
federal laws of the United States of America which, in counsel's experience, are
normally applicable to transactions of the type contemplated by this Agreement
but without counsel's having made any special investigation concerning any other
laws, rules or regulations; provided that the term "APPLICABLE LAWS" does not
include securities or antifraud laws of any jurisdiction or the rules and
regulations of the National Association of Securities Dealers Inc. The term
"APPLICABLE ORDERS" means those orders or decrees of governmental authorities
specifically identified to counsel by the Company and listed on a Schedule to
counsel's opinion. The term "TRANSACTION DOCUMENTS" means those agreements which
are listed on a Schedule to such counsel's opinion. The term "GOVERNMENTAL
APPROVALS" means any consent, approval, license, authorization or validation of,
or notice to, or filing, recording or registration with, any New York, Delaware
or federal executive, legislative, judicial, administrative or regulatory body
pursuant to Applicable Laws.
In rendering the opinion set forth in clause (vi) with respect to
conflicts with, defaults under, and breaches or violations of, Applicable
Contracts, counsel need not express any opinion with respect to compliance with
any covenant, restriction or provision of any Applicable Contract that requires
satisfaction of a financial ratio or test or any aspect of the financial
condition, results of operations, business or prospects of the Company or any of
its subsidiaries.
Such counsel shall also state that they have been advised that the
Registration Statement was declared effective under the 1933 Act as of the date
and time specified in such opinion, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the 1933 Act Rules and
Regulations specified in such opinion on the date specified therein and, to the
knowledge of counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened by the Commission.
The Indenture has been duly qualified under the 1939 Act.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
to the extent specifically referred therein, the laws of the State of New York
and the General Corporation Law of the State of Delaware. Such opinion shall
also be to the effect that (x) such counsel has acted as special counsel to the
Company in connection with the preparation of the Registration Statement and (y)
based on the foregoing, no facts have come to the attention of such counsel
which lead them to believe that the Registration
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<PAGE> 21
Statement (except for the financial statements and financial schedules and other
financial data included therein and the Trustee's Statement of Eligibility on
Form T-1, as to which such counsel need express no belief) as of the Effective
Date, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus (except as stated
above), as of its date and as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel is not passing upon and is not assuming any
responsibility for the accuracy, completeness, or fairness of the statements
contained in the Registration Statement or the Prospectus and has not made any
independent check or verification thereof (other than as set forth in clause
(iii) above).
(c) Opinion of William von Glahn. At Closing Time, William von Glahn,
Senior Vice President, Law of the Company, shall have furnished to the
Representatives his written opinion, addressed to the Underwriters and dated the
Closing Time, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) The Company and each of its Significant Subsidiaries have
been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, except to the extent
such failure to be qualified or in good standing would not have a
material adverse effect on the consolidated financial position, results
of operations, business or prospects of the Company and its
subsidiaries, taken as a whole, and have all corporate power and
authority necessary to own or hold their respective properties and
conduct the businesses in which they are engaged as described in or
contemplated by the Registration Statement.
(ii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its Significant
Subsidiaries is a party or of which any property or assets of the
Company or any of its Significant Subsidiaries is the subject which, if
determined adversely to the Company or any of its Significant
Subsidiaries, could reasonably be expected to have a material adverse
effect on the consolidated financial position, results of operations,
business or prospects of the Company and its subsidiaries, taken as a
whole; and, to the best of such counsel's knowledge, no such
proceedings are threatened or pending by governmental authorities or
threatened by others.
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(iii) Except as described in the Prospectus, to the best of such
counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the 1933 Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement.
(iv) The Company is in compliance in all material respects with
all presently applicable provisions of ERISA; no "reportable event" (as
defined in ERISA) has occurred with respect to any "PENSION PLAN" (as
defined in ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal
from, any "PENSION PLAN" or (ii) Sections 412 or 4971 of the Code; and
each "PENSION PLAN" for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(v) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the Company
or any of its Significant Subsidiaries (or, to the knowledge of such
counsel, any of their predecessors in interest) at, upon or from any of
the property now or previously owned or leased (but not including
property on which the Company had or has easements or similar rights)
by the Company or its Significant Subsidiaries in violation of any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except
for any violation or remedial action which would not have, or could not
be reasonably likely to have, singularly or in the aggregate with all
such violations and remedial actions, a material adverse effect on the
consolidated financial position, results of operations, business or
prospects of the Company and its subsidiaries, taken as a whole; there
has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to
or caused by the Company or any of its Significant Subsidiaries or with
respect to which the Company or any of its Significant Subsidiaries
have knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not
be reasonably likely to have, singularly or in the aggregate with all
such spills, discharges, leaks, emissions, injections, escapes,
dumpings and
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<PAGE> 23
releases, a material adverse effect on the consolidated financial
position, results of operations, business or prospects of the Company
and its subsidiaries, taken as a whole.
(vi) The statements contained in the Prospectus under the
captions "Relationships and Related Party Transactions," "Relationship
Between the Company and Williams" and "Description of Other
Indebtedness and Other Financing Arrangements," insofar as they
constitute summaries of legal matters and the documents listed on a
Schedule to such counsel's opinion, fairly summarize such legal matters
and documents in all material respects.
In rendering such opinion, such counsel may state that his opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the State of Oklahoma and the General
Corporation Law of the State of Delaware.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received from Davis Polk & Wardwell, counsel for the
Underwriters (and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters) such opinion or opinions, dated the Closing Time, to the
effect that:
(i) This Agreement has been duly authorized, executed and
delivered by the Company.
(ii) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution
and delivery thereof by the Trustee) constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law).
(iii) The Notes are in the forms contemplated by the Indenture,
have been duly authorized by the Company and, assuming that the Notes
have been duly authenticated by the Trustee in the manner described in
its certificate delivered to you today (which fact such counsel need
not determine by an inspection of the Notes), the Notes have been duly
executed, issued and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof
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<PAGE> 24
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law), and will be entitled to the
benefits of the Indenture.
(iv) The Indenture has been duly qualified under the 1939 Act.
(v) The Notes and the Indenture conform as to legal matters in
all material respects to the descriptions thereof contained in the
Prospectus.
(vi) The statements contained in the Prospectus under the
captions "Description of the Notes" and "Underwriting," insofar as such
statements constitute summaries of legal matters, documents,
proceedings, federal statutes, rules and regulations, fairly summarize
in all material respects such legal matters, documents, proceedings,
federal statutes, rules and regulations.
(vii) The Registration Statement was declared effective under the
1933 Act as of the date and time specified in such opinion.
(viii) Nothing has come to such counsel's attention that causes
such counsel to believe that the Registration Statement and the
Prospectus and any further amendments or supplements thereto made by
the Company prior to such Delivery Date (except for the financial
statements and financial schedules and other financial data included
therein and the Trustee's Statement of Eligibility on Form T-1, as to
which such counsel need express no belief) do not comply as to form in
all material respects with the requirements of the 1933 Act and the
1933 Act Rules and Regulations.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware. Such opinion shall also be to the effect that (x) such counsel has
acted as counsel to the Underwriters in connection with the preparation of the
Registration Statement and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead them to believe that the Registration
Statement (except for the financial statements and financial schedules and other
financial data included therein and the Trustee's Statement of Eligibility on
Form T-1, as to which such counsel need express no belief) as of the Effective
Date, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus (except as stated
above) contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or
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<PAGE> 25
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The foregoing opinion and statement
may be qualified by a statement to the effect that such counsel does not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as set
forth in clause (vi) above).
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the Chairman of the Board, its President, a Vice
President or the chief financial officer of the Company, dated the Closing Time,
to the effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of Closing Time, (iii)
the Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(f) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young a letter
dated such date, in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "COMFORT LETTERS" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(g) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Ernst & Young a letter, dated the Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (f) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(h) Maintenance of Rating. At Closing Time, the Notes shall be rated
at least B2 by Moody's Investor's Service Inc. and at least BB- by Standard &
Poor's Ratings Group, a division of McGraw-Hill, Inc., and the Company shall
have delivered to the Representatives a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Representatives,
confirming that the Notes have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
the Notes or any of the Company's other debt securities by any "NATIONALLY
RECOGNIZED STATISTICAL RATING AGENCY", as that term is defined by the
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<PAGE> 26
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance or
review its rating of the Notes or any of the Company's other debt securities.
(i) Additional Documents. At Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all corporate proceedings taken by
the Company in connection with the issuance and sale of the Notes as herein
contemplated shall be satisfactory in form and substance to the Representatives
and counsel for the Underwriters.
(j) Additional Transactions. At Closing Time, the Representatives
shall have received evidence satisfactory to them that each of the Transactions
shall have occurred or will occur simultaneously with the offering of the Notes
on the Closing Date, as described in the Prospectus without modification, change
or waiver, except for such modifications, changes or waivers as have been
specifically identified to the Representatives and which in the judgment of the
Representatives do not make it impracticable or inadvisable to proceed with the
offering and delivery of the Notes on the Closing Date on the terms and in the
manner contemplated in the Prospectus.
(k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 6 and 7 shall survive any such termination and remain in
full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information required by Rule 430A or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact
included in
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<PAGE> 27
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
and
(ii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the information required by Rule
430A or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and, provided further, that the Company will not be liable
to any Underwriter with respect to any Preliminary Prospectus to the extent the
Company shall sustain the burden of proving that any such loss, liability,
claim, damage or expense resulted from the fact that such Underwriter, in
contravention of a requirement of applicable law, sold Notes to a person to whom
such Underwriter failed to send or give, at or prior to the Closing Time, a copy
of the Prospectus, as then amended or supplemented, if: (i) the Company has
previously furnished copies thereof (sufficiently in advance of the Closing Time
to allow for distribution by the Closing Time) to the Underwriter and the loss,
liability, claim, damage or expense of such Underwriter resulted from an untrue
statement or omission of a material fact contained in or omitted from the
Preliminary Prospectus which was corrected in the Prospectus as, if applicable,
amended or supplemented prior to the Closing Time and such Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person and (ii) such failure to give or send such Prospectus by the
Closing Time to the party or parties asserting such loss, liability, claim,
damage or expense would have constituted the sole defense to the claim asserted
by such person. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Underwriter or to any
controlling person of that Underwriter.
(b) Indemnification of Company, Directors, Officers and Employees.
Each Underwriter severally agrees to indemnify and hold harmless the Company,
each of its directors, its officers and employees and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense, joint and several, described in the
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indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the information required by Rule 430A or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto). The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person of the
Company.
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party may participate at its own expense in the defense of any such
action and, to the extent that it wishes, jointly with any other similarly
notified indemnifying party, assume the defense thereof with counsel reasonably
satisfactory to the indemnifying party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than the
reasonable costs of investigation; provided, however, that the Representatives
shall have the right to employ counsel to represent jointly the Representatives
and those other Underwriters and their controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Underwriters against the Company under this Section 6 if: (i) the
employment of such counsel has been expressly authorized in writing by the
Company, (ii) the Company has not assumed the defense of and employed counsel
reasonably satisfactory to the Representatives within a reasonable time after
notice of the commencement of such action or (iii) the named parties to any such
action or proceeding (including impleaded parties) include both an indemnified
party and the Company and such indemnified party shall have been advised in
writing by counsel that there may be one or more legal defenses available to
such indemnified party, which are different from or additional to those
available to the Company, and such counsel's representation of such indemnified
party and the Company in such action or proceeding would give rise to a conflict
of interest which would make it improper for such counsel to represent both the
indemnified party and the Company (in which case the Company shall not have the
right to assume the defense of such action or proceeding on behalf of such
indemnified party). In no event shall the indemnifying parties be liable for
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reasonable fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, which consent shall not be unreasonably withheld, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party; and no indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with the
consent of the indemnifying party or if there is a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Notes
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Notes
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Notes pursuant to
this Agreement (before deducting expenses) received by the Company and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, bear to the aggregate initial public offering price
of the Notes as set forth on such cover.
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The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding commenced by any governmental agency or body or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director, officer and employee of the Company, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The Underwriters' respective obligations to contribute pursuant to this Section
7 are several in proportion to the principal amount of Notes set forth opposite
their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Notes to the Underwriters.
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<PAGE> 31
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Notes or to enforce contracts for
the sale of the Notes, or (iii) if trading in any securities of the Company has
been suspended or materially limited by the Commission, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Notes which it or
they are obligated to purchase under this Agreement (the "DEFAULTED NOTES"),
then:
(a) if the number of Defaulted Notes does not exceed 10% of
the aggregate principal amount of the Notes to be purchased hereunder,
each of the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Notes exceeds 10% of the
aggregate principal amount of the Notes to be purchased hereunder, this
Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
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<PAGE> 32
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements. As used herein, the term
"UNDERWRITER" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of High Yield Capital
Markets, Attn: John Hagerty; and notices to the Company shall be directed to it
at the address of the Company set forth in the Registration Statement,
Attention: General Counsel (Fax: (918) 573-4503).
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers, employees and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters and the Company and
their respective successors, and said controlling persons and officers,
employees and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Notes from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law and Time. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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<PAGE> 33
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
WILLIAMS COMMUNICATIONS
GROUP, INC.
By /s/ G.L. BEST
----------------------------------------
Title: Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
LEHMAN BROTHERS INC.
SALOMON SMITH BARNEY INC.
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ THOMAS S. HORN
------------------------------------
Authorized Signatory
<PAGE> 34
SCHEDULE A
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Name of Underwriter 10.70% Notes 10.875% Notes
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ..................... $ 149,375,000 $ 448,125,000
Lehman Brothers Inc. ...................... 119,065,000 357,188,000
Solomon Smith Barney ...................... 119,065,000 357,188,000
Banc of America Securities LLC ............ 24,375,000 73,125,000
Chase Securities Inc. ..................... 24,375,000 73,125,000
BNY Capital Markets, Inc. ................. 11,250,000 33,750,000
Nesbitt Burns Securities Inc. ............. 11,250,000 33,750,000
Wasserstein Perella Securities, Inc. ...... 11,250,000 33,750,000
ABN AMRO Incorporated ..................... 4,285,000 12,857,000
BancBoston Robertson Stephens Inc. ........ 4,285,000 12,857,000
CIBC World Markets Inc. ................... 4,285,000 12,857,000
Credit Lyonnais Securities (USA) Inc. ..... 4,285,000 12,857,000
Credit Suisse First Boston Corporation .... 4,285,000 12,857,000
Deutsche Bank Securities Inc. ............. 4,285,000 12,857,000
Scotia Capital Markets (USA) Inc. ......... 4,285,000 12,857,000
Total ..................................... $ 500,000,000 $1,500,000,000
============== ==============
</TABLE>
Sch A-1
<PAGE> 35
SCHEDULE B
WILLIAMS COMMUNICATIONS GROUP, INC.
$500,000,000 OF 10.70% SENIOR REDEEMABLE NOTES DUE 2007
1. The initial public offering price of the 10.70% Notes shall be 100%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the 10.70%
Notes shall be 97.50% of the principal amount thereof.
3. The interest rate on the 10.70% Notes shall be 10.70% per annum.
$1,500,000,000 OF 10.875% SENIOR REDEEMABLE NOTES DUE 2009
1. The initial public offering price of the 10.875% Notes shall be
99.249% of the principal amount thereof, plus accrued interest, if any, from the
date of issuance.
2. The purchase price to be paid by the Underwriters for the 10.875%
Notes shall be 96.749% of the principal amount thereof.
3. The interest rate on the 10.875% Notes shall be 10.875% per annum.
Sch B-1
<PAGE> 36
SCHEDULE C
Significant Subsidiaries
Williams Communications, Inc.
Williams Communications Solutions, LLC
Sch C-1
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
WILLIAMS COMMUNICATIONS GROUP, INC.
The name of the corporation (which is hereinafter referred to as the
"Corporation") is "Williams Communications Group, Inc."
The original Certificate of Incorporation (the "Certificate of
Incorporation") was filed with the Secretary of State of the State of Delaware
on December 1, 1994, under the name "WilTel Technology Ventures, Inc." Such
Certificate of Incorporation was amended on September 20, 1995, and February 11,
1997.
This Restated Certificate of Incorporation, which restates, integrates and
amends the Certificate of Incorporation, has been duly adopted in accordance
with Sections 103, 242 and 245 of the General Corporation Law of the State of
Delaware. The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
ARTICLE I
The name of this corporation (hereinafter called the "Corporation") is:
WILLIAMS COMMUNICATIONS GROUP, INC.
ARTICLE II
The purpose or purposes of this Corporation shall be to engage in any
lawful acts or activities for which corporations may be organized under the
General Corporation Law of the State of Delaware (the "Delaware Code").
ARTICLE III
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
<PAGE> 2
ARTICLE IV
CAPITAL STOCK
SECTION 1. Authorized Stock.
The maximum number of shares of capital stock which this Corporation shall
have authority to issue is 2,000,000,000 consisting of 1,000,000,000 shares of
class A common stock, $.01 par value per share (the "Class A Common Stock"),
500,000,000 shares of class B common stock, $.01 par value per share (the "Class
B Common Stock"), and 500,000,000 shares of preferred stock, $.01 par value per
share (the "Preferred Stock"). The Class A Common Stock and the Class B Common
Stock are hereinafter referred to collectively as the "Common Stock." The
powers, preferences and rights and the qualifications, limitations and
restrictions in respect of the shares of each class are set forth in the
following Sections.
SECTION 2. Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby expressly authorized, by resolution or
resolutions, to provide for the issuance of up to 500,000,000 shares of
Preferred Stock in one or more series and, by filing a certificate pursuant to
the Delaware Code (hereinafter referred to as a "Preferred Stock Designation"),
to establish from time to time the number of shares constituting each such
series and the designation of such series, the voting powers (if any) of the
shares of such series, and the relative rights, powers, privileges, preferences
and limitations of the shares of such series. The authority of the Board of
Directors with respect to each series shall include, but not be limited to,
determination of the following:
(a) the designation of the series, which may be made by distinguishing
number, letter or title;
(b) the number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the Preferred Stock
Designation) increase or decrease, but not below the number of shares thereof
then outstanding) in the manner permitted by law;
(c) the rate of any dividends (or method of determining the dividends)
payable to the holders of the shares of such series, any conditions upon which
such dividends shall be paid and the date or dates or the method for determining
the date or dates upon which such dividends shall be payable;
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<PAGE> 3
(d) whether dividends, if any, shall be cumulative or noncumulative,
and, in the case of shares of any series having cumulative dividend rights, the
date or dates or method of determining the date or dates from which dividends on
the shares of such series shall cumulate;
(e) if the shares of such series may be redeemed by the Corporation,
the price or prices (or method of determining such price or prices) at which,
the form of payment of such price or prices (which may be cash, property or
rights, including securities of the Corporation or of another corporation or
other entity) for which, the period or periods within which and the other terms
and conditions upon which the shares of such series may be redeemed, in whole or
in part, at the option of the Corporation or at the option of the holder or
holders thereof or upon the happening of a specified event or events, if any,
including the obligation, if any, of the Corporation to purchase or redeem
shares of such series pursuant to a sinking fund or otherwise;
(f) the amount payable out of the assets of the Corporation to the
holders of shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation;
(g) provisions, if any, for the conversion or exchange of the shares of
such series, at any time or times, at the option of the holder or holders
thereof or at the option of the Corporation or upon the happening of a specified
event or events, into shares of any other class or classes or any other series
of the same class of capital stock of the Corporation or into any other security
of the Corporation, or into the stock or other securities of any other
corporation or other entity, and the price or prices or rate or rates of
conversion or exchange and any adjustments applicable thereto, and all other
terms and conditions upon which such conversion or exchange may be made;
(h) restrictions on the issuance of shares of the same series or of any
other class or series of capital stock of the Corporation, if any; and
(i) the voting rights and powers, if any, of the holders of shares of
the series.
Shares of Preferred Stock, regardless of series, that are converted into
other securities or other consideration shall be retired and canceled and the
Corporation shall take all such actions as are necessary to cause such shares to
have the status of authorized but unissued shares of Preferred Stock, without
designation as to series.
3
<PAGE> 4
SECTION 3. Common Stock.
A. Voting Rights.
Subject to applicable law and the rights of any outstanding series of
Preferred Stock to vote as a separate class or series, the shares of Class A
Common Stock and Class B Common Stock shall vote together as a single class and
shall have the following voting rights: (i) each share of Class A Common Stock
shall entitle the holder thereof to one (1) vote upon all matters upon which
stockholders shall have the right to vote; and (ii) each share of Class B Common
Stock shall entitle the holder thereof to ten (10) votes upon all matters upon
which stockholders shall have the right to vote, subject to Section 3.E.8. of
this Article IV. The authorized number of shares of Class A Common Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding or reserved for issuance upon conversion of the Class B Common Stock
or any other class or series of outstanding Stock) by the affirmative vote of
the holders of Common Stock entitled to cast a majority of the total votes
entitled to be cast by the holders of the Common Stock, voting as a single
class, without a separate class vote of the holders of the Class A Common Stock.
The Corporation may, as a condition to counting the votes cast by any holder of
shares of Class B Common Stock, require proof as set forth in Section 3.E.8 of
this Article IV that the shares of Class B Common Stock held by such holder have
not been converted into shares of Class A Common Stock. Except as otherwise
provided by law or by another provision of this Restated Certificate of
Incorporation or by a Preferred Stock Designation, the Common Stock shall have
the exclusive right to vote for the election of directors and on all other
matters or proposals presented to the stockholders and all matters to be voted
on by stockholders must be approved by a majority of the outstanding shares
entitled to vote; provided, however, that the holders of shares of Common Stock,
as such, shall not be entitled to vote on any amendment of this Restated
Certificate of Incorporation (including any amendment of any provision of a
Preferred Stock Designation) that solely relates to the powers, privileges,
preferences or rights pertaining to one or more outstanding series of Preferred
Stock, or the number of shares of any such series, and does not affect the
number of authorized shares of Preferred Stock or the powers, privileges and
rights pertaining to the Common Stock, if the holders of any of such series of
Preferred Stock are entitled, separately or together with the holders of any
other series of Preferred Stock, to vote thereon pursuant to this Restated
Certificate of Incorporation (including any Preferred Stock Designation) or
pursuant to the Delaware Code, unless a vote of holders of shares of Common
Stock is otherwise
4
<PAGE> 5
required by any provision of the Preferred Stock Designation for any such series
or any other provision of this Restated Certificate of Incorporation fixing the
powers, privileges, and rights of any such series or the qualifications,
limitations or restrictions thereon or is otherwise required by law. Holders of
Preferred Stock of any series shall not be entitled to receive notice of any
meeting of stockholders at which they are not entitled to vote, except as may be
explicitly provided by any Preferred Stock Designation. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock, without a vote
of the holders of the Preferred Stock, or any series thereof, unless a vote of
any such holders is required pursuant to another provision of this Restated
Certificate of Incorporation (including any Preferred Stock Designation). Except
as otherwise provided by law or in this Restated Certificate of Incorporation,
and subject to any voting rights granted to holders of any outstanding Preferred
Stock, amendments to this Restated Certificate of Incorporation must be approved
by a majority of the votes entitled to be cast by all shares of Class A Common
Stock and Class B Common Stock, voting together as a single class, provided,
however, that any amendment to this Restated Certificate of Incorporation that
would alter or change the powers, preferences or special rights of the Class A
Common Stock so as to affect them adversely also must be approved by a majority
of the votes entitled to be cast by the holders of the Class A Common Stock,
voting as a separate class. Any amendment to this Restated Certificate of
Incorporation to increase the authorized shares of any class requires the
approval only of a majority of the votes entitled to be cast by all shares of
Class A Common Stock and Class B Common Stock, voting together as a single
class, subject to the rights set forth in any series of Preferred Stock. Holders
of shares of Common Stock are not entitled to cumulate their votes in the
election of directors.
B. Dividends and Distributions.
Subject to the preferential and other dividend rights of any outstanding
series of Preferred Stock, holders of Class A Common Stock and Class B Common
Stock shall be entitled to such dividends and other distributions in cash, stock
or property of the Corporation as may be declared thereon by the Board of
Directors from time to time out of assets or funds of the Corporation legally
available therefor. No dividend or other distribution may be declared or paid on
any share of Class A Common Stock unless a like dividend or other distribution
is simultaneously declared or paid, as the case may be, on each share of Class B
Common Stock, nor shall any dividend or other distribution be declared or paid
on any share of Class B Common Stock unless a like dividend or other
distribution is simultaneously declared or paid, as the case
5
<PAGE> 6
may be, on each share of Class A Common Stock, in each case without preference
or priority of any kind; provided, however, that all dividends and distributions
on the Class A Common Stock and Class B Common Stock payable in shares of Common
Stock of the Corporation shall be made in shares of Class A Common Stock and
Class B Common Stock, respectively. In no event will shares of either class of
Common Stock be reclassified, split, divided or combined unless the outstanding
shares of the other class of Common Stock shall be proportionately reclassified,
split, divided or combined.
In the event of a transaction as a result of which the shares of Class A
Common Stock are converted into or exchanged for one or more other securities,
cash or other property (a "Class A Conversion Event"), then from and after such
Class A Conversion Event, a holder of Class B Common Stock shall be entitled to
receive, upon the conversion of such Class B Common Stock pursuant to Section
3.E. of this Article IV, the amount of such securities, cash and other property
that such holder would have received if the conversion of such Class B Common
Stock had occurred immediately prior to the record date (or if there is no
record date, the effective date) of the Class A Conversion Event and if the
securities, cash or other property that the Class A Common Stock may be
converted into or exchanged for in a Class A Conversion Event is dependent upon
the holder of the Class A Common Stock making an election, the holder of the
Class A Common Stock had failed to make an election. This paragraph shall be
applicable in the same manner to all successive conversions or exchanges of
securities issued pursuant to any Class A Conversion Event. No adjustments in
respect of dividends shall be made upon the conversion of any share of Class B
Common Stock; provided, however, that if a share shall be converted after the
record date for the payment of a dividend or other distribution on shares of
Class B Common Stock but before such payment, then the record holder of such
share at the close of business on such record date shall be entitled to receive
the dividend or other distribution payable on such share of Class B Common Stock
on the payment date notwithstanding the conversion thereof.
C. Options, Rights or Warrants.
Subject to Section 3.B. of this Article IV, the Corporation shall not, and
shall not be entitled to, issue additional shares of Class B Common Stock, or
issue options, rights or warrants to subscribe for or purchase additional shares
of Class B Common Stock, except that the Corporation may (i) make a pro rata
offer to all holders of Common Stock of rights to subscribe for additional
shares of the class of Common Stock held by them and (ii) issue additional
shares of Class B Common Stock under the circumstances permitted by the
Separation Agreement (the "Separation
6
<PAGE> 7
Agreement"), dated as of , 1999, between the Corporation and The Williams
Companies, Inc. ("Williams"). The Corporation may make offerings of options,
rights or warrants to subscribe for or purchase shares of any class or classes
of capital stock (other than Class B Common Stock) to all holders of Class A
Common Stock or Class B Common Stock if an identical offering is made
simultaneously to all the holders of the other class of Common Stock. All
offerings of options, rights or warrants shall offer the respective holders of
Class A Common Stock and Class B Common Stock the right to subscribe or purchase
at the same consideration per share.
D. Merger or Consolidation.
In the event of a merger or consolidation of the Corporation with or into
another entity (whether or not the Corporation is the surviving entity), the
holders of each share of Class A Common Stock and Class B Common Stock shall be
entitled to receive the same per share consideration as the per share
consideration, if any, received by the holders of each share of the other class
of Common Stock; provided that, if such consideration shall consist in any part
of voting securities (or of options, rights or warrants to purchase, or of
securities convertible into or exchangeable for, voting securities), then the
Corporation may provide in the applicable merger or such other agreement for the
holders of shares of Class B Common Stock to receive, on a per share basis,
voting securities with ten (10) times the number of votes per share as those
voting securities to be received by the holders of shares of Class A Common
Stock (or options, rights or warrants to purchase, or securities convertible
into or exchangeable for, voting securities with ten (10) times the number of
votes per share as those voting securities issuable upon exercise of the
options, rights or warrants to be received by the holders of the shares of Class
A Common Stock, or into which the convertible or exchangeable securities to be
received by the holders of the shares of Class A Common Stock may be converted
or exchanged).
E. Conversion of Class B Common Stock.
1. Voluntary Conversion.
Prior to the date on which shares of Class B Common Stock are
transferred to stockholders of Williams in a Tax-Free Spin-Off (as
defined in paragraph (E) (3)(a) below), each share of Class B Common
Stock shall be convertible, at the option of its record holder, into
one validly issued, fully paid and non-assessable share of Class A
Common Stock at any time. Following a Tax-Free Spin-Off, shares
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<PAGE> 8
of Class B Common Stock shall no longer be convertible into shares of
Class A Common Stock.
2. Voluntary Conversion Procedures.
At the time of a voluntary conversion, the record holder of shares
of Class B Common Stock shall deliver to the principal office of the
Corporation or any transfer agent for shares of the Class A Common
Stock (i) the certificate or certificates representing the shares of
Class B Common Stock to be converted, duly endorsed in blank or
accompanied by proper instruments of transfer, and (ii) written notice
to the Corporation stating that the record holder elects to convert
such share or shares and stating the name or names and denominations in
which the certificate or certificates representing the shares of Class
A Common Stock issuable upon the conversion are to be issued and
including instructions for the delivery thereof. Conversion shall be
deemed to have been effected at the time when delivery is made to the
principal office of the Corporation or the office of any transfer agent
for shares of Class A Common Stock of such written notice and the
certificate or certificates representing the shares of Class B Common
Stock to be converted, and as of such time, each Person (as hereinafter
defined) named in such written notice as the Person to whom a
certificate representing shares of Class A Common Stock is to be issued
shall be deemed to be the holder of record of the number of shares of
Class A Common Stock to be evidenced by that certificate. Upon such
delivery, the Corporation or its transfer agent shall promptly issue
and deliver a certificate or certificates representing the number of
shares of Class A Common Stock to which such record holder is entitled
by reason of such conversion, and shall cause such shares of Class A
Common Stock to be registered in the name of the record holder.
3. Automatic Conversion.
(a) Subject to Section 3.E.3.(b) of this Article IV, prior to a
Tax-Free Spin-Off, in the event of any Transfer (as hereinafter
defined) of any share of Class B Common Stock to any Person, other than
to the Williams Group (as defined in paragraph (E)(9) below) such share
of Class B Common Stock shall automatically, without any further
action, convert into one share of Class A Common Stock.
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<PAGE> 9
Notwithstanding anything to the contrary set forth in this Restated
Certificate of Incorporation, shares of Class B Common Stock shall not
convert into shares of Class A Common Stock (i) in any transfer
effected in connection with a distribution of Class B Common Stock to
stockholders or security holders of Williams in a transaction
(including any distribution in exchange for shares of capital stock or
securities of Williams) intended to qualify as a tax-free distribution
under Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any successor provision (a "Tax-Free Spin-Off") or (ii) in
any transfer after a Tax-Free Spin-Off. For purposes of this paragraph
(E), a Tax-Free Spin-Off shall be deemed to have occurred at the time
shares are first transferred to stockholders or security holders of
Williams.
(b) Notwithstanding anything to the contrary set forth in this
Article IV, Section 3, a holder of shares of Class B Common Stock may
pledge such holder's shares of Class B Common Stock to a financial
institution pursuant to a bona fide pledge of such shares of Class B
Common Stock as collateral security for any indebtedness or other
obligation of any Person (the "Pledged Stock") due to the pledgee or
its nominee; provided, however, that (i) such shares shall not be voted
by or registered in the name of the pledgee and shall remain subject to
the provisions of this Article IV, Section 3.E. and (ii) upon any
foreclosure, realization or other similar action by the pledgee prior
to a Tax-Free Spin-Off, such Pledged Stock shall automatically convert
into shares of Class A Common Stock on a share-for-share basis.
(c) The foregoing automatic conversion events described in this
Article IV, Section 3.E.3 shall be referred to hereinafter as an "Event
of Automatic Conversion." The determination of whether an Event of
Automatic Conversion shall have occurred will be made by the Board of
Directors or a duly authorized committee thereof in accordance with
Article IV, Section 3.E.8 below.
4. Automatic Conversion Procedure.
Any conversion pursuant to an Event of Automatic Conversion shall be
deemed to have been effected at the time the
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<PAGE> 10
Event of Automatic Conversion occurred (the "Conversion Time"). At the
Conversion Time, the certificate or certificates that represented
immediately prior thereto the shares of Class B Common Stock that were
so converted (the "Converted Class B Common Stock") shall,
automatically and without further action, represent the same number of
shares of Class A Common Stock. Holders of Converted Class B Common
Stock shall deliver their certificates, duly endorsed in blank or
accompanied by proper instruments of transfer, to the principal office
of the Corporation or the office of any transfer agent for shares of
the Class A Common Stock, together with a written notice setting out
the name or names (with addresses) and denominations in which the
certificate or certificates representing such shares of Class A Common
Stock are to be issued and including instructions for delivery thereof.
Upon such delivery, the Corporation or its transfer agent shall
promptly issue and deliver at such stated address to such holder of
shares of Class A Common Stock a certificate or certificates
representing the number of shares of Class A Common Stock to which such
holder is entitled by reason of such conversion, and shall cause such
shares of Class A Common Stock to be registered in the name of such
holder. The Person entitled to receive the shares of Class A Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Class A Common Stock at and as
of the Conversion Time, and the rights of such Person as a holder of
shares of Class B Common Stock that have been converted shall cease and
terminate at and as of the Conversion Time, in each case without regard
to any failure by such holder to deliver the certificates or the notice
required by this Section.
5. Unconverted Shares.
In the event of the conversion of less than all the shares of Class
B Common Stock evidenced by a certificate surrendered to the
Corporation in accordance with the procedures of this Section 3.E., the
Corporation shall execute and deliver to, or upon the written order of,
the holder of such unconverted shares, without charge to such holder, a
new certificate evidencing the number of shares of Class B Common Stock
not converted.
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<PAGE> 11
6. Retired Shares.
Shares of Class B Common Stock that are converted into shares of
Class A Common Stock as provided herein shall be retired and canceled
and the Corporation shall take all such actions as are necessary to
cause such shares to have the status of authorized but unissued shares
of Class B Common Stock.
7. Reservation.
The Corporation shall at all times prior to a Tax-Free Spin-Off
reserve and keep available, out of its authorized and unissued shares
of Class A Common Stock, for the purposes of effecting conversions,
such number of duly authorized shares of Class A Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding shares of Class B Common Stock. All the shares of Class A
Common Stock so issuable shall, when so issued, be duly and validly
issued, fully paid and non-assessable and free from liens and charges
with respect to such issuance.
8. Determination of Voting Rights and Event of Automatic Conversion.
The Board of Directors of the Corporation or a duly authorized
committee thereof shall have the power to determine, in good faith
after reasonable inquiry, whether an Event of Automatic Conversion has
occurred with respect to any share of Class B Common Stock. A
determination by the Board of Directors of the Corporation or such
committee that an Event of Automatic Conversion has occurred shall be
conclusive. As a condition to counting the votes cast by any holder of
shares of Class B Common Stock at any annual or special meeting of
stockholders, in connection with any written consent of stockholders,
as a condition to registration of transfer of shares of Class B Common
Stock, or for any other purpose, the Board of Directors or a duly
authorized committee thereof, in its discretion, may require the holder
of such shares to furnish such affidavits or other proof as the Board
of Directors or such committee deems necessary or advisable to
determine whether an Event of Automatic Conversion shall have occurred.
If the Board of Directors or such committee shall determine that a
holder has substantially failed to comply promptly with any request by
the Board of Directors or such committee for such proof, the shares
held by such holder shall be
11
<PAGE> 12
entitled to one (1) vote per share until such time as the Board of
Directors or such committee shall determine that such holder has
complied with such request. The Board of Directors or a duly authorized
committee thereof may exercise the authority granted by this Article
IV, Section 3.E.8 through duly authorized officers or agents of the
Corporation.
9. Definitions.
For purposes of this Article IV, Section E:
(a) Beneficial Owner.
A Person shall be deemed the "Beneficial Owner" of, and to
"Beneficially Own" and to have "Beneficial Ownership" of, any
share (i) which such Person has the power to vote or dispose,
or to direct the voting or disposition of, directly or
indirectly, through any agreement, arrangement or
understanding (written or oral), or (ii) which such Person has
the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (written or oral), or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise.
(b) Nominee.
The term "Nominee" shall mean a Person that is acting as a
bona fide nominee for the registration of record ownership of
securities Beneficially Owned by another Person.
(c) Subsidiary.
The term "Subsidiary" shall mean, as to any person or entity,
a corporation, partnership, joint venture, association or
other entity in which such person or entity beneficially owns
(directly or indirectly) 50% or more of the outstanding voting
stock, voting power, partnership
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<PAGE> 13
interests or similar voting interests, or 50% or more of the
value of the equity of such entity.
(d) Person.
The term "Person" means any natural person, corporation,
association, partnership, limited liability company,
organization, business, government or political subdivision
thereof or governmental agency.
(e) Transfer.
The term "Transfer" shall mean any sale, transfer (including a
transfer made in whole or in part without consideration as a
gift), exchange, assignment, pledge, encumbrance, alienation
or any other disposition or hypothecation of record ownership
or of Beneficial Ownership of any share, whether by operation
of law or otherwise; provided, however, that (i) a pledge of
any share made in accordance with the provisions of Article
IV, Section 3.E.3.(b). and (ii) a grant of a revocable proxy,
written consent or other authorization with respect to any
share to a Person designated by the Board of Directors or
management of the Corporation who is soliciting proxies on
behalf of the Corporation shall not be considered a
"Transfer"; and provided, further, that in the case of any
transferee of record ownership that is a Nominee, such
Transfer of record ownership shall be deemed to be made to the
Person or Persons for whom such Nominee is acting.
(f) Williams Group.
The term "Williams Group" shall mean Williams, its direct and
indirect subsidiaries, any person or entity in which Williams
or any successor beneficially owns, directly or indirectly, at
least 50% of the equity or the voting securities, any
successor of any of the foregoing and stockholders of Williams
who receive the Corporation's Class B Common Stock in a
transaction
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<PAGE> 14
intended to qualify as a tax-free distribution under Section
355 of the Code, or any corresponding provision of any
successor statute in a Tax-Free Spin-Off, but shall not
include the Corporation and its subsidiaries.
10. Stock Legend.
The Corporation shall include a legend on the certificates
representing shares of Class B Common Stock stating that such shares
are subject to automatic conversion in certain circumstances as set
forth in this Article IV, Section 3.E.
11. Taxes.
The issuance of a certificate representing shares of Class A Common
Stock issued upon conversion of shares of Class B Common Stock shall be
made without charge to the holder of such shares for any stamp or other
similar tax in respect of such issuance. However, if any such
certificate is to be issued in a name other than that of the record
holder of the shares of Class B Common Stock converted, the Person or
Persons requesting the issuance thereof shall pay to the Corporation
the amount of any tax which may be payable in respect of any Transfer
involved in such issuance or shall establish to the satisfaction of the
Corporation that such tax has been paid or is not required to be paid.
F. Liquidation.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, after distribution in full of the preferential
and/or other amounts to be distributed to the holders of shares of any
outstanding series of Preferred Stock, the holders of shares of Class A Stock
and Class B Common Stock shall be entitled to receive all of the remaining
assets of the Corporation available for distribution to its stockholders,
ratably in proportion to the number of shares of Common Stock held by them. In
any such distribution shares of Class A Common Stock and Class B Common Stock
shall be treated equally on a per share basis.
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ARTICLE V
Purchase of Shares by Corporation
The Corporation may purchase any shares of outstanding capital stock of the
Corporation or the right to purchase any such shares of capital stock from any
holder thereof on terms and conditions established by the Board of Directors or
a duly authorized committee thereof.
ARTICLE VI
Board of Directors
SECTION 1. Number and Terms.
Except as otherwise fixed by or pursuant to the provisions of this Restated
Certificate of Incorporation relating to the rights of the holders of any class
or series of Preferred Stock, the number of directors of the Corporation shall
be determined by resolution adopted by a majority of the entire Board of
Directors, but the number shall not be less than three; provided, however, that
(i) no reduction in the number of directors shall end the term of office of any
incumbent director prior to the date such director's term of office would
otherwise end, and (ii) the By-laws of the Corporation (the "By-laws") may
provide that the vote of a greater number of the directors may be required for
action of the Board of Directors changing the size of the Board of Directors.
The directors, other than those who may be elected by the holders of any class
or series of Preferred Stock, shall be classified by the Board of Directors with
respect to the time for which they severally hold office, into three classes, as
nearly equal in number as possible, one class to be originally elected for a
term expiring at the annual meeting of stockholders to be held in 2000, another
class to be originally elected for a term expiring at the annual meeting of
stockholders to be held in 2001, and another class to be originally elected for
a term expiring at the annual meeting of stockholders to be held in 2002. Each
director of the Corporation shall hold office until his or her successor is duly
elected and qualified, such classification to be effective upon the date shares
of Class A Common Stock are first publicly held. At each succeeding annual
meeting of stockholders, directors elected to succeed those directors whose
terms then expire shall be elected for a term of office to expire at the third
annual meeting of stockholders following such director's election and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent director. Unless and
except to the extent that the By-laws shall so require, the election of
directors need not be by written ballot.
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SECTION 2. Vacancies.
Except as otherwise provided for or fixed by or pursuant to the provisions
of this Restated Certificate of Incorporation relating to the rights of the
holders of any series of Preferred Stock, any vacancy on the Board of Directors
of the Corporation resulting from death, resignation, removal or other cause and
any newly created directorship resulting from any increase in the authorized
number of directors between meetings of stockholders shall be filled only by the
affirmative vote of (i) at least 66 and 2/3% of the remaining directors then in
office if prior to the Trigger Date, or (ii) a majority of all the directors
then in office, even though less than a quorum if on or after the Trigger Date,
but in any event not by the stockholders. Any director so chosen shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred or the new directorship was created and until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal from office in accordance with this Restated Certificate of
Incorporation or any applicable law or pursuant to an order of a court. If there
are no directors in office, then an election of directors may be held in the
manner provided by applicable law.
SECTION 3. Notice.
Advance notice of nominations for the election of directors and business to
be transacted at any stockholders' meeting shall be given in the manner and to
the extent provided in the By-laws.
SECTION 4. Removal.
Except as otherwise provided for or fixed by or pursuant to the provisions
of this Restated Certificate of Incorporation relating to the rights of the
holders of any series of Preferred Stock, (i) prior to the Trigger Date, any
director may be removed from office with or without cause but only by the
affirmative vote of the holders of a majority of the combined voting power of
the then-outstanding shares of stock of the Corporation entitled to vote for the
election of directors, voting together as a single class, and (ii) on and after
the Trigger Date, any director may be removed from office only for cause by the
affirmative vote of the holders of at least a majority of the combined voting
power of the then-outstanding shares of stock of the Corporation entitled to
vote for the election of directors, voting together as a single class.
SECTION 5. Amendment of this Article.
Notwithstanding anything to the contrary elsewhere contained in this
Restated Certificate of Incorporation, the affirmative vote of the holders of at
least 66 and 2/3%
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of the combined voting power of the then-outstanding shares of stock of the
Corporation entitled to vote for the election of directors, voting together as a
single class, shall be required to alter, amend or repeal, or to adopt any
provision inconsistent with, this Article VI.
ARTICLE VII
Stockholder Action; No Cumulative Voting
SECTION 1. Action by Consent in Lieu of a Meeting.
Effective upon and commencing as of the day following the day on which
Williams, and any company that is directly or indirectly controlled by Williams
and of which at least a majority of the equity interests therein are directly or
indirectly beneficially owned by Williams shall first cease to be the owner, in
the aggregate, of at least a majority of the then-outstanding shares of Common
Stock (the "Trigger Date"), and except as otherwise provided pursuant to the
provisions of this Restated Certificate of Incorporation (including any
Preferred Stock Designation) fixing the powers, privileges or rights of any
class or series of stock other than the Common Stock in respect of action by
written consent of the holders of such class or series of stock, any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such holders and may not
be effected by any consent in writing by such holders. Prior to the Trigger
Date, the By-laws may provide that any action required to be taken at any
meeting of stockholders may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of shares of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares of stock entitled to vote were
present and voted, provided that prompt notice of the taking of the corporation
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
SECTION 2. Meetings.
Effective upon and commencing as of the Trigger Date, except as otherwise
required by law and subject to the rights of the holders of any class or series
of Preferred Stock, special meeting of stockholders of the Corporation of any
class or
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series for any purpose or purposes may be called only by the Board of Directors
pursuant to a resolution stating the purpose or purposes thereof approved by a
majority of the entire Board of Directors and, effective as of the Trigger Date,
any power of stockholders to call a special meeting is specifically denied. No
business other than that stated in the notice shall be transacted at any special
meeting.
Prior to the Trigger Date, subject to the rights of the holders of any
outstanding series of Preferred Stock, special meetings of stockholders of the
Corporation may be called only by the Secretary of the Corporation at the
request of Williams or its affiliates.
Notwithstanding the foregoing, whenever the holders of any one or more
outstanding series of Preferred Stock shall have the right, voting separately by
class or series, as applicable, to elect directors at an annual or special
meeting of stockholders, the calling of special meetings of the holders of such
class or series shall be governed by the terms of the applicable resolution or
resolutions of the Board of Directors establishing such series of Preferred
Stock pursuant to Article IV of this Restated Certificate of Incorporation.
SECTION 3. Stockholder Nomination of Director Candidates and other Stockholder
Proposals.
Advance notice of stockholder nominations for the election of directors and
of the proposal by stockholders of any other action to be taken by the
stockholders shall be given in such manner as shall be provided in the By-laws
(as amended and in effect from time to time).
SECTION 4. Amendment of this Article.
Notwithstanding anything to the contrary contained in this Restated
Certificate of Incorporation, the affirmative vote of the holders of at least
66 and 2/3% of the combined voting power of the then-outstanding shares of stock
of the Corporation entitled to vote for the election of directors, voting
together as a single class, shall be required to alter, amend or repeal, or to
adopt any provision inconsistent with, this Article.
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ARTICLE VIII
By-laws
The Board of Directors shall have the power to adopt, alter, amend or
repeal the By-laws. The stockholders of the Corporation may adopt, amend or
repeal the By-laws but only by the affirmative vote of holders of at least a
majority of the combined voting power of the then-outstanding shares of capital
stock of all classes and series of the Corporation entitled to vote generally on
matters requiring the approval of stockholders, voting together as a single
class.
ARTICLE IX
Amendments
The Corporation reserves the right at any time from time to time to amend,
alter, change or repeal any provision contained in this Restated Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Restated Certificate of Incorporation in its
present form or as hereafter amended are granted subject to the right reserved
in this Article IX.
ARTICLE X
Indemnification; Limitation of Liability.
SECTION 1. Indemnification.
A. Each person who was or is made a party or is threatened to be made a party to
or is otherwise involved in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director of the Corporation or any
of its direct or indirect subsidiaries or is or was serving at the request of
the Corporation as a director of any other corporation or of a partnership,
limited liability company, joint venture, trust, or other enterprise, including
service with respect to an employee benefit plan (hereinafter an "indemnitee"),
whether the basis of such proceeding is alleged action in an official capacity
as a director or in any other capacity while serving as a director, shall be
indemnified and held harmless by the Corporation to the fullest
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extent authorized by the Delaware Code, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability, and loss (including
attorneys' fees, judgments, fines, excise or other taxes assessed with respect
to an employee benefit plan, penalties, and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith, and
such indemnification shall continue as to an indemnitee who has ceased to be a
director and shall inure to the benefit of the indemnitee's heirs, executors,
and administrators; provided, however, that, except as provided in Paragraph B
of this Section 1 with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Paragraph A of this Section 1 shall
include the right to be paid by the Corporation the expenses incurred in
defending any proceeding for which such right to indemnification is applicable
in advance of its final disposition (hereinafter an "advancement of expenses");
provided, however, that, if the Delaware Code requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a director (and not
in any other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section 1 or otherwise.
C. The rights to indemnification and to the advancement of expenses conferred in
Paragraphs A and B of this Section 1 shall be contract rights. If a claim under
Paragraph A or B of this Section 1 is not paid in full by the Corporation within
60 days after a written claim has been received by the Corporation, except in
the case of a claim for an advancement of expenses, in which case the applicable
period shall be 20 days, the indemnitee may at anytime thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If successful
in whole or in part in any such suit, or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit
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brought by an indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware Code, and (ii) any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover such expenses upon a
final adjudication that the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware Code. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware Code, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Section 1 or
otherwise, shall be on the Corporation.
D. The rights to indemnification and to the advancement of Expenses conferred in
this Section 1 shall not be exclusive of any right which any person may have or
hereafter acquire under any statute, this certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors, or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect itself and
any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust, or other enterprise against any
expense, liability, or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability, or loss under the
Delaware Code.
F. The Corporation's obligation, if any, to indemnify any person who was or is
serving as a director of any direct or indirect subsidiary of the Corporation
or, at the request of the Corporation, of any other corporation or of a
partnership, joint venture, trust, or other enterprise shall be reduced by any
amount such person may collect as indemnification from such other corporation,
partnership, joint venture, trust or other enterprise.
G. Any repeal or modification of the foregoing provisions of this Section 1
shall
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not adversely affect any right or protection hereunder of any person in respect
of any act or omission occurring prior to the time of such repeal or
modification.
H. The Corporation may, to the extent authorized from time to time by the Board
of Directors, grant indemnification rights and rights to the advancement of
expenses to any officer, employee or agent of the Corporation to the fullest
extent of the provision of this Article with respect to the indemnification and
advancement of expenses to directors.
SECTION 2. Limited Liability.
No director of the Corporation shall be liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision does not eliminate the liability of the
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title B of the Delaware Code, or (iv) for any transaction from
which the director derived an improper personal benefit. For purposes of the
prior sentence, the term "damages" shall, to the extent permitted by law,
include without limitation, any judgment, fine amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without limitation,
counsel fees and disbursements). Each person who serves as a director of the
Corporation while this Section 2 is in effect shall be deemed to be doing so in
reliance on the provisions of this Section 2, and neither the amendment or
repeal of this Section 2, nor the adoption of any provision of this Restated
Certificate of Incorporation inconsistent with this Section 2, shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for, arising out of, based upon, or in connection with any acts or
omissions of such director occurring prior to such amendment, repeal, or
adoption of an inconsistent provision. The provisions of this Section 2 are
cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitation or eliminations arise under or are
created by any law, rule, regulation, by-law, agreement, vote of stockholders or
disinterested directors, or otherwise.
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ARTICLE XI
Certain Transactions With Stockholders and Corporation Opportunities.
SECTION 1. Certain Acknowledgments; Certain Fiduciary Duties
In anticipation that (i) the Corporation will cease to be a wholly owned
subsidiary of Williams, but that Williams will remain a stockholder of the
Corporation and have continued contractual, corporate, and business relations
with the Corporation, and in anticipation that the Corporation and Williams may
enter into contracts or otherwise transact business with each other and that the
Corporation may derive benefits therefrom, (ii) that directors, officers and/or
employees of Williams or of Affiliated Companies (as defined below in this
Article XI) of Williams may serve as directors and/or officers of the
Corporation, (iii) that Williams and Affiliated Companies thereof engage and are
expected to continue to engage in the same, similar or related lines of business
as those in which the Corporation, directly or indirectly, may engage and/or
other business activities that overlap with or compete with those in which the
Corporation, directly or indirectly, may engage, subject to the Separation
Agreement, (iv) the Corporation may from time to time enter into contractual,
corporate or business relations with one or more of its directors, or one or
more corporations, partnerships, associations or other organizations in which
one or more of its directors have a financial interest (collectively, "Related
Entities"), the provisions of this Article XI Section 2. are set forth to
regulate and define certain contractual relations of the Corporation as they may
involve Williams, Related Entities, and their respective officers and directors,
and the powers, rights, duties and liabilities of the Corporation and its
officers, directors and stockholders in connection therewith. The provisions of
this Article XI, Section 2. are in addition to, and not in limitation of, the
provisions of the Delaware Code and the other provisions of this Restated
Certificate of Incorporation. Any contract or business relation that does not
comply with the procedures set forth in this Article XI., Section 2. shall not
by reason thereof be deemed void or voidable or result in any breach of
fiduciary duty or duty of loyalty or failure to act in good faith or in the best
interests of the Corporation or derivation of any improper personal benefit, but
shall be governed by the provisions of this Restated Certificate of
Incorporation, the By-laws, the Delaware Code, and other applicable law.
SECTION 2. Certain Agreements and Transactions Permitted
No contract, agreement, arrangement or transaction (or any amendment,
modification or termination thereof) between the Corporation and Williams or
between the Corporation and one or more of the directors or officers of the
Corporation, Williams, or any Affiliated Company or between the Corporation and
any Affiliated Company shall be void or voidable solely for the reason that
Williams, any Affiliated Company, or any one or more of the officers or
directors of the
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Corporation, Williams, or any Affiliated Company are parties thereto, or solely
because any such directors or officers are present at or participate in the
meeting of the Board of Directors or committee thereof which authorizes the
contract, agreement, arrangement, or transaction (or the amendment, modification
or termination thereof), or solely because his or their votes are counted for
such purpose. Subject to Section 4 of this Article, no such agreement (or the
amendment, modification or termination thereof), or the performance thereof by
the Corporation or Williams, or any Affiliated Company thereof, (a) shall be
contrary to (i) any fiduciary duty that Williams or any Affiliated Company
thereof may owe to the Corporation or any Affiliated Company thereof or to any
stockholder or other owner of an equity interest in the Corporation or any
Affiliated Company thereof by reason of Williams or any Affiliated Company
thereof being a controlling stockholder of the Corporation or participating in
the control of the Corporation or of any Affiliated Company thereof; or (ii) any
fiduciary duty of any director or officer of the Corporation or of any
Affiliated Company thereof who is also a director, officer or employee of
Williams or any Affiliated company thereof to the Corporation or such Affiliated
Company, or to any stockholder thereof; and Williams, any Affiliated Company,
and such directors and officers (i) shall be deemed to have acted in good faith
and in a manner such persons reasonably believe to be in and not opposed to the
best interests of the Corporation and (ii) shall be deemed not to have breached
their duties of loyalty to the Corporation and its stockholders and not to have
derived an improper personal benefit therefrom, if:
(i) such agreement shall have been entered into before
the Corporation ceased to be a wholly owned
subsidiary of Williams and continued in effect in
respect of any such transaction or opportunity after
such time, or
(ii) the material facts as to the contract, agreement,
arrangement, transaction, amendment, modification or
termination are disclosed or are known to the Board
of Directors or the committee thereof which
authorizes the contract, agreement, arrangement or
transaction (or the amendment, modification or
termination thereof), and the Board of Directors or
such committee in good faith authorizes the contract,
agreement, arrangement or transaction (or the
amendment, modification or termination
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thereof) is approved by (a) the affirmative vote of a
majority of the disinterested directors, even though
the disinterested directors be less than a quorum;
(b) such committee of the Board of Directors
constituted solely of members who are not Interested
Persons in respect of such agreement by the
affirmative vote of a majority of the members of such
committee or (c) one or more officers or employees of
the Corporation (including officers or employees of
the Corporation acting as directors, officers,
trustees, partners or members of, or in any similar
capacity on behalf of, any Affiliated Company of the
Corporation) who in each case is not an Interested
Person in respect of such agreement and to whom the
authority to approve such agreement has been
delegated either by the Board of Directors by the
same affirmative vote required by subclause (a) of
this subparagraph for approval of such agreement by
the Board of Directors or by a committee of the Board
of Directors constituted as provided by and acting by
the same affirmative vote as required by subclause
(b) of this subparagraph for approval of such
agreement by such committee or, in the case of an
employee, to whom such authority has been delegated
by an officer to whom authority to approve such
agreement has been so delegated,
(iii) the material facts as to the contract, agreement,
arrangement or transaction (or the amendment,
modification or termination thereof) are disclosed or
are known to the holders of voting stock entitled to
vote thereon, and the contract, agreement,
arrangement, or transaction (or the amendment,
modification or termination thereof) is specifically
approved in good faith by vote of the holders of a
majority of the then-outstanding voting stock not
owned by
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Williams or a Affiliated Company, as the case may be,
or
(iv) such contract, agreement, arrangement or transaction
(or the amendment, modification or termination
thereof) is fair as to the Corporation as of the time
it is authorized, approved or ratified by the Board
of Directors, a committee thereof or the stockholders
of the Corporation, or
(v) in the case of any such transaction that was not
entered into in the performance of an agreement that
satisfied the requirements of clause (i), (ii), (iii)
or (iv) of this sentence, such transaction shall have
been approved or ratified by (a) the Board of
Directors of the Corporation by the affirmative vote
of a majority of the members (even though less than a
quorum) who are not Interested Persons in respect of
such transaction or (b) by a committee of the Board
of Directors of the Corporation constituted solely of
members who are not Interested Persons in respect of
such transaction by the affirmative vote of a
majority of the members of such committee or (c) by
one or more officers or employees of the Corporation
(including officers or employees of the Corporation
acting as directors, officers, trustees, partners or
members of, or in any similar capacity on behalf of,
any Affiliated Company of the Corporation) who in
each case is not an Interested Person in respect of
such transaction and to whom the authority to approve
such transaction has been delegated either by the
Board of Directors by the same affirmative vote
required by subclause (a) of this subparagraph for
approval of such transaction of the Board of
Directors or a committee of the Board of Directors
constituted as provided by and acting
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by the same affirmative vote as required by subclause
(b) of this subparagraph for approval of such
transaction by such committee or, in the case of an
employee, to whom such authority has been delegated
by an officer to whom authority to approve such
transaction has been so delegate;, provided, however,
that, before such approval or ratification, the
material facts of the relationship between the
Corporation or such Affiliated Company thereof, on
the one hand, and Williams or such Affiliated Company
thereof, on the other hand, and the material facts as
to such transaction were disclosed to or were known
by the members of the Board of directors or of such
committee or the officer or officers or employee or
employees who acted on approval or ratification of
such transaction, as the case may be; or
(vi) in the case of any such transaction that was not
entered into in the performance of an agreement that
satisfied the requirements of clause (i), (ii), (iii)
or (iv) of this sentence, such transaction was fair
to the Corporation as of the time it was entered into
by the Corporation; or
(vii) in the case of any such transaction that was not
entered into in the performance of an agreement that
satisfied the requirements of clause (i), (ii), (iii)
or (iv) of this sentence, such transaction was
approved or ratified by the affirmative vote of the
holders of a majority of the shares of capital stock
of the Corporation entitled to vote thereon and who
do not vote thereon, exclusive of Williams and any
Affiliated Company thereof and any Interested Person
in respect of such transaction.
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Subject to Section 4 of this Article XI, neither Williams nor any
Affiliated Company thereof, as a stockholder of the Corporation or participant
in control of the Corporation, shall have or be under any fiduciary duty to
refrain from entering into any agreement or participating in any transaction
that meets the requirements of any of clauses (i), (ii), (iii), (iv), (v), (vi)
or (vii) of the immediately preceding sentence and no director, officer or
employees of the Corporation who is also a director, officer or employee of
Williams or any Affiliated Company thereof shall have or be under any fiduciary
duty to the Corporation to refrain from acting on behalf of the Corporation or
any Affiliated Company thereof in respect of any such agreement or transaction
or performing any such agreement in accordance with its terms. Directors of the
Corporation who are also directors or officers of Williams or any Affiliated
Company may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract,
agreement, arrangement, or transaction (or the amendment, modification or
termination thereof). Voting stock owned by Williams and any Affiliated
Companies thereof may be counted in determining the presence of a quorum at a
meeting of stockholders which authorizes the contract, agreement, arrangement or
transaction. Any person purchasing or otherwise acquiring any shares of capital
stock of the Corporation, or any interest therein, shall be deemed to have
notice of and to have consented to the provisions of this Article. The failure
of any agreement or transaction between the Corporation or an Affiliated Company
thereof, on the one hand, and Williams or an Affiliated Company thereof, on the
other hand, to satisfy the requirements of this Section shall not, by itself,
cause such agreement or transaction to constitute any breach of any fiduciary
duty to the Corporation or to any Affiliated Company thereof, or, any to
stockholder or other owner of an equity interest therein, by any controlling
stockholder of the Corporation or such Affiliated Company thereof or by any
director or officer of the Corporation.
For purposes of this Article XI, Section 2., any contract, agreement,
arrangement, or transaction (or amendment, modification, or termination thereof)
with any corporation, partnership, joint venture, association, or other entity
in which the Corporation owns (directly or indirectly) 50% or more of the
outstanding voting stock, voting power, partnership interests, or similar
ownership interests, or with any officer or director thereof, shall be deemed to
be a contract, agreement, arrangement or transaction with the Corporation.
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SECTION 3. Certain Definitions.
For purposes of this Article, the following definitions shall apply:
"Affiliated Company" shall mean in respect of Williams, any company which
is controlled by Williams controls Williams or is under common control with
Williams (other than the Corporation and any company that is controlled by the
Corporation) and in respect of the Corporation shall mean any company controlled
by the Corporation.
"Interested Person" in respect of an agreement or transaction referred to
in Section 2 of this Article XI shall mean any director, officer or employees of
Williams or an Affiliated Company thereof and any person who has a financial
interest that is material to such person in Williams or such Affiliated Company
or otherwise has a personal financial interest that is material to such person
in such agreement or transaction; provided, however, that no such financial
interest shall be considered material by reason of a person' ownership of
securities of Williams or an Affiliated Company thereof, if such ownership of
securities has been determined in good faith not to be reasonably likely to
influence such individual's decision on behalf of the Corporation or an
Affiliated Company thereof in respect of the agreement or transaction either in
the specific instance by, or pursuant to, a policy adopted by, the Board of
Directors of the Corporation by the affirmative vote of a majority of the
members (even though less than a quorum) who are not directors, officers or
employees of Williams or any Affiliated Company thereof or a committee of the
Board of Directors of the Corporation constituted solely of members who are not
directors, officers or employees of Williams or any Affiliated Company thereof
by the affirmative vote of a majority of such committee.
SECTION 4. Termination.
The provisions of this Article XI shall have no further force or effect at
such time as Williams and any company controlling, controlled by or under common
control with Williams shall first cease to be the owner, in the aggregate, of
stock representing 25% or more of the votes entitled to be cast by the holders
of all the then-outstanding shares of stock entitled to vote; provided, however,
that such termination shall not terminate the effect of such provisions with
respect to (i) any agreement between the Corporation or an Affiliated Company
thereof and Williams or an Affiliated Company thereof that was entered into
before such time or any transaction entered into in the performance of such
agreement, whether entered into before or after such time, or (ii) any
transaction entered into between the Corporation or an Affiliated Company
thereof and Williams or an Affiliated Company thereof or the allocation of any
opportunity between them before such time.
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SECTION 5. Amendment of this Article.
Notwithstanding anything to the contrary elsewhere contained in this
Restated Certificate of Incorporation, the affirmative vote of the holders of at
least 66 and 2/3% of the combined voting power of the then-outstanding shares of
stock of the Corporation entitled to vote for the election of directors, voting
together as a single class, shall be required to alter, amend or repeal, or to
adopt any provision inconsistent with, this Article XI.
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IN WITNESS WHEREOF, Williams Communications Group, Inc. has caused this
Restated Certificate of Incorporation to be signed by its Secretary this 24th
day of September, 1999.
Williams Communications Group, Inc.
/s/ SHAWNA L. GEHRES
------------------------------------
Name: Shawna L. Gehres
Title: Secretary
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<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
WILLIAMS COMMUNICATIONS GROUP, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
<PAGE> 2
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors.
Section 2. Annual Meetings. The Annual Meetings of stockholders for the
election of directors shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of stockholders.
Section 3. Special Meetings. Unless otherwise required by law
or the Restated Certificate of Incorporation of the Corporation, as it may be
amended or restated from time to time (the "Restated Certificate of
Incorporation"), and subject to the rights of the holders of any class or series
of stock having a preference over the common stock as to dividends or
distributions upon liquidation, Special Meetings of stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be one,
or (ii) the President, (iii) any Vice President, if there be one, (iv) the
Secretary or (v) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of (i) the Board of Directors,
(ii) a committee of the Board of Directors that has been duly designated by the
Board of Directors and
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whose powers and authority include the power to call such meetings, or (iii)
anytime prior to the day following the day on which The Williams Companies, Inc.
("Williams"), and any company that is directly or indirectly controlled by
Williams and of which at least a majority of the equity interests therein are
directly or indirectly beneficially owned by Williams, shall first cease to be
the owner, in the aggregate, of at least a majority of the then-outstanding
shares of common stock (the "Trigger Date"), by Williams or its affiliates.
Following the Trigger Date, Special Meetings cannot be called by any
stockholder. Such request shall state the purpose or purposes of the proposed
meeting. At a Special Meeting of stockholders, only such business shall be
conducted as shall be specified in the notice of meeting (or any supplement
thereto).
Section 4. Notice. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
Special Meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law, the written notice of any meeting shall be given not
less than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
Section 5. Adjournments. Any meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice
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need not be given of any such adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 6. Quorum. Unless otherwise required by law or the Restated
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
in the manner provided in Section 5, until a quorum shall be present or
represented.
Section 7. Nature of Business at Meetings of Stockholders.
(a) Nomination of Directors. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors of
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the Corporation, except as may be otherwise provided in the Corporation's
Restated Certificate of Incorporation with respect to the right of holders of
preferred stock of the Corporation to nominate and elect a specified number of
directors in certain circumstances. Nominations of persons for election to the
Board of Directors may be made at any Annual Meeting of stockholders, or at any
Special Meeting of stockholders called for the purpose of electing directors,
(a) by or at the direction of the Board of Directors (or any duly authorized
committee thereof) or (b) by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 7 and on the record date for the determination of stockholders
entitled to vote at such meeting and (ii) who complies with the notice
procedures set forth in this Section 7.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
(a) in the case of an Annual Meeting, not less than ninety (90) days nor more
than one hundred and twenty (120) days prior to the anniversary date of the
immediately preceding Annual Meeting of stockholders; provided, however, that in
the event that the Annual Meeting is called for a date that is not within thirty
(30) days before or
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after such anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the Annual Meeting was
mailed or such public disclosure of the date of the Annual Meeting was made,
whichever first occurs; and (b) in the case of a Special Meeting of stockholders
called for the purpose of electing directors, not less than ninety (90) days or,
if later, not later than the close of business on the tenth (10th) day following
the day on which notice of the date of the Special Meeting was mailed or public
disclosure of the date of the Special Meeting was made, whichever first occurs,
and not more than one hundred and twenty (120) days prior to the scheduled date
of the Special Meeting.
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b)
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as to the stockholder giving the notice (i) the name and record address of such
stockholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by such
stockholder, (iv) a representation that such stockholder intends to appear in
person or by proxy at the meeting to nominate the persons named in its notice
and (v) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to being named as a nominee and to serve as a director if
elected.
Notwithstanding the foregoing, any holder of common stock of the
Corporation, who together with its affiliates owns capital stock entitled to
exercise a majority of the voting power in an election of directors, may
nominate one or more individuals for election as directors by giving notice to
the Corporation not later than five days before the scheduled date for the
election of directors.
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No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 7. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective, and such defective nomination
shall be disregarded.
(b) No business may be transacted at an Annual Meeting of stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the Annual Meeting by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (c) otherwise properly brought before
the Annual Meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 7 and on the record date for the determination of stockholders
entitled to vote at such Annual Meeting and (ii) who complies with the notice
procedures set forth in this Section 7.
In addition to any other applicable requirements, for any other
business to be properly brought before an Annual Meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation.
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To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than ninety (90) days nor more than one hundred twenty (120) days prior
to the anniversary date of the immediately preceding Annual Meeting of
stockholders; provided, however, that in the event that the Annual Meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the Annual Meeting was mailed or
such public disclosure of the date of the Annual Meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before the
Annual Meeting (i) a brief description of the business desired to be brought
before the Annual Meeting and the reasons for conducting such business at the
Annual Meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of capital stock of the Corporation that
are owned beneficially or of record by such stockholder, (iv) a description of
all arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such
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<PAGE> 10
stockholder intends to appear in person or by proxy at the Annual Meeting to
bring such business before the meeting.
No business shall be conducted at the Annual Meeting of stockholders
except business brought before the Annual Meeting in accordance with the
procedures set forth in this Section 7; provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 7 shall be deemed to preclude discussion by
any stockholder of any such business. If the Chairman of an Annual Meeting
determines that business was not properly brought before the Annual Meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting, and such
business shall not be transacted.
Section 8. Voting. Unless otherwise required by law, the Restated
Certificate of Incorporation or these By-laws, any question brought before any
meeting of stockholders, other than the election of directors, shall be decided
by the vote of the holders of a majority of the total number of votes of the
capital stock represented and entitled to vote thereat, voting as a single
class. Unless otherwise provided in the Restated Certificate of Incorporation,
and subject to Section 5 of Article V hereof, each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat
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held by such stockholder. Such votes may be cast in person or by proxy, but no
proxy shall be voted on or after three years from its date, unless such proxy
provides for a longer period. The Board of Directors, in its discretion, or the
officer of the Corporation presiding at a meeting of stockholders, in such
officer's discretion, may require that any votes cast at such meeting shall be
cast by written ballot.
Section 9. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided in the Restated Certificate of Incorporation, any action
required or permitted to be taken at any Special Meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
days of the earliest
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dated consent delivered in the manner required by this Section 9 to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
the state of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and who, if the action
had been taken at a meeting, would have been entitled to notice of the meeting
if the record date for such meeting had been the date that written consents
signed by a sufficient number of holders to take the action were delivered to
the Corporation as provided above in this Section 9.
Section 10. Record Date for Action by Written Consent. In order that
the corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The
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Board of Directors shall promptly, but in all events within ten (10) days after
the date on which such a request is received, adopt a resolution fixing the
record date. If no record date has been fixed by the Board of Directors within
ten (10) days of the date on which such a request is received, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of stockholders meetings are recorded,
to the attention of the Secretary of the Corporation. Delivery shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the Board of
Directors adopts the resolution taking such prior action.
Section 11. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of
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the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof and
may be inspected by any stockholder of the Corporation who is present.
Section 12. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 11 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 13. Conduct of Meetings. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the
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judgment of such chairman, are appropriate for the proper conduct of the
meeting. Such rules, regulations or procedures, whether adopted by the Board of
Directors or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) the determination of when the polls shall open
and close for any given matter to be voted on at the meeting; (iii) rules and
procedures for maintaining order at the meeting and the safety of those present;
(iv) limitations on attendance at or participation in the meeting to
stockholders of record of the Corporation, their duly authorized and constituted
proxies or such other persons as the chairman of the meeting shall determine;
(v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors
The exact number of Directors on the Board of Directors shall be fixed
initially by resolution of a majority of the entire Board of Directors in
accordance with the Restated Certificate of Incorporation, but the number shall
not be less than three; provided, however, that (i) no reduction in the number
of directors shall end the term of office of any incumbent director prior to the
date such director's term
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of office would otherwise end; and (ii) before the Trigger Date, and except as
otherwise provided pursuant to the provisions of the Restated Certificate of
Incorporation fixing the powers, privileges or rights of any class or series of
stock other than the common stock, action by the Board of Directors fixing the
number of directors shall require the affirmative vote of 80% of the entire
Board of Directors.
The directors, other than those who may be elected by the holders of
any class or series of preferred stock, shall be classified by the Board of
Directors with respect to the time for which they severally hold office into
three classes as nearly equal in number as possible, one class to be originally
elected for a term expiring at the Annual Meeting of stockholders to be held in
2000, another class to be originally elected for a term expiring at the Annual
Meeting of stockholders to be held in 2001, and another class to be originally
elected for a term expiring at the Annual Meeting of stockholders to be held in
2002. Each director of the Corporation shall hold office until his or her
successor is duly elected and qualified, such classification to be effective
upon the date shares of Class A Common Stock, par value $0.01 per share, are
first publicly held. At each succeeding Annual Meeting of stockholders,
directors elected to succeed those directors whose terms then expire shall be
elected for a term of office to expire at the third annual meeting of
stockholders following such director's election and until such director's
successor shall have been elected and qualified or until such director's earlier
death, resignation or
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removal. Except as provided in Section 2 of this Article III, directors shall be
elected by a plurality of the votes cast at the Annual Meetings of stockholders.
Any director may resign at any time upon written notice to the Corporation.
Directors need not be stockholders.
Section 2. Vacancies. Except as otherwise provided for or fixed by or
pursuant to the provisions of the Restated Certificate of Incorporation relating
to the rights of the holders of any series of Preferred Stock, prior to the
Trigger Date, any vacancy on the Board of Directors of the Corporation resulting
from death, resignation, removal or other cause and any newly created
directorship resulting from any increase in the authorized number of directors
between meetings of stockholders shall be filled only by the affirmative vote of
80% of all the directors then in office, but in any event not by the
stockholders. Following the Trigger Date, vacancies may be filled only by the
affirmative vote of a majority of the remaining directors. Any director so
chosen shall hold office for the remainder of the full term of the class of
directors in which the vacancy occurred or the new directorship was created and
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal from office in accordance with the Restated
Certificate of Incorporation or any applicable law or pursuant to an order of a
court. If there are no directors in office, then an election of directors may be
held in the manner provided by applicable law.
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Section 3. Duties and Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Restated Certificate of
Incorporation or by these By-laws required to be exercised or done by the
stockholders.
Section 4. Removal of directors from the Board of Directors shall be in
accordance with the Restated Certificate of Incorporation.
Section 5. Meetings. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman, if
there be one, the President, or by any director. Notice thereof stating the
place, date and hour of the meeting shall be given to each director either by
mail not less than forty-eight (48) hours before the date of the meeting, by
telephone or telegram on twenty-four (24) hours' notice, or on such shorter
notice as the person or persons calling such meeting may deem necessary or
appropriate in the circumstances.
Section 6. Quorum. Except as otherwise required by law or the Restated
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction
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of business, and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting of the time and place of the
adjourned meeting, until a quorum shall be present.
Section 7. Actions by Written Consent. Unless otherwise provided in the
Restated Certificate of Incorporation, or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 8. Meetings by Means of Conference Telephone. Unless otherwise
provided in the Restated Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 8 shall constitute presence in person at such meeting.
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Section 9. Committees. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to the
extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be affixed to all papers that
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required.
Section 10. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any
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director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, also may choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law or
the Restated Certificate of Incorporation. The officers of the Corporation need
not be stockholders of the Corporation nor, except in the case of the Chairman
of the Board of Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors, at its first meeting held
after each Annual Meeting of stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the
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Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier death,
resignation or removal. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors, and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the
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Chief Executive Officer of the Corporation, unless the Board of Directors
designates the President as the Chief Executive Officer, and, except where by
law the signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other powers as may from
time to time be assigned by these By-laws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at
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all meetings of the stockholders and the Board of Directors. If there be no
Chairman of the Board of Directors, or if the Board of Directors shall otherwise
designate, the President shall be the Chief Executive Officer of the
Corporation. The President shall also perform such other duties and may exercise
such other powers as may from time to time be assigned to such officer by these
By-laws or by the Board of Directors.
Section 6. Vice Presidents. At the request of the President or in the
President's absence or in the event of the President's inability or refusal to
act (and if there be no Chairman of the Board of Directors), the Vice President,
or the Vice Presidents if there is more than one (in the order designated by the
Board of Directors), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
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Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board of Directors or the President, under
whose supervision the Secretary shall be. If the Secretary shall be unable or
shall refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation, and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest to the affixing by such officer's signature.
The Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
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Section 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of the Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the
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Secretary's disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties
of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Assistant
Treasurer and for the restoration to the Corporation, in case of the Assistant
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging to
the Corporation.
Section 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors
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may delegate to any other officer of the Corporation the power to choose such
other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed.
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When authorizing such issue of a new certificate, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or the owner's legal
representative, to advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed or the
issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-laws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by such person's attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued. No transfer of stock shall be valid as against the
Corporation for any purpose until it shall have been entered in the stock
records of the Corporation by an entry showing from and to whom transferred.
Section 5. Record Date.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the
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Board of Directors, and which record date shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting. If no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; providing, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten (10) days after the
date upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this
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State, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 6. Record Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of
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shares to receive dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise required by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Restated Certificate of Incorporation or these By-laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by law,
the Restated Certificate of Incorporation or these By-laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. Attendance of
a person at a
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meeting, present in person or represented by proxy, shall constitute a waiver of
notice of such meeting, except where the person attends the meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the requirements of the DGCL and the provisions of the
Restated Certificate of Incorporation, if any, may be declared by the Board of
Directors at any regular or special meeting of the Board of Directors (or any
action by written consent in lieu thereof in accordance with Section 7 of
Article III hereof), and may be paid in cash, in property, or in shares of the
Corporation's capital stock. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.
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Section 2. Disbursements. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
than Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party 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 the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust, employee
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benefit plan or other enterprise, against 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 person
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, or except as otherwise
provided in the Restated Certificate of Incorporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which 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 reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in
the Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer,
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employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person 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; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than
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a quorum, or (ii) by a committee of such directors designated by a majority vote
of such directors, even though less than a quorum, or (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion or (iv) by the stockholders. Such determination shall be made,
with respect to former directors and officers, by any person or persons having
the authority to act on the matter on behalf of the Corporation. To the extent,
however, that a present or former director or officer of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have 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, or, with respect to any criminal action
or proceeding, to have had no reasonable cause to believe such person's conduct
was unlawful, if such person's action is based on the records or books of
account of the Corporation or another enterprise, or on information supplied to
such person by the officers of the Corporation or another enterprise in the
course of their duties, or on the advice of legal counsel for the Corporation or
another enterprise or on information or records
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given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Section 1 or 2 of this Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer
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seeking indemnification has not met any applicable standard of conduct. Notice
of any application for indemnification pursuant to this Section 5 shall be given
to the Corporation promptly upon the filing of such application. If successful,
in whole or in part, the director or officer seeking indemnification shall also
be entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a director
or officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under the Restated Certificate of Incorporation, any By-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of the persons specified in
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Sections 1 and 2 of this Article VIII shall be made to the fullest extent
permitted by law. The provisions of this Article VIII shall not be deemed to
preclude the indemnification of any person who is not specified in Section 1 or
2 of this Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director
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or officer of such constituent corporation serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued. For purposes of this Article VIII, references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director or officer with respect to an employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer
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and shall inure to the benefit of the heirs, executors and administrators of
such a person.
Section 11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
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ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-laws may be altered, amended or
repealed, in whole or in part, or new By-laws may be adopted by the stockholders
or by the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office; provided, however, that any proposed
alteration or repeal of, or the adoption of any By-law inconsistent with, any of
Section 3, 7 or 9 of Article II, Section 1 or 2 of Article III, or this Article
IX of these By-laws by the stockholders shall require the affirmative vote of at
least 80% of the voting power of all capital stock then outstanding, voting
together as a single class; and provided further, that, in the case of any such
stockholder action at a Special Meeting of stockholders, notice of the proposed
alteration, repeal or adoption of the new by-law or By-laws must be contained in
the notice of such Special Meeting.
Section 2. Entire Board of Directors. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
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* * *
Adopted as of: September 24, 1999
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Last Amended as of: N/A
----------------------
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
WILLIAMS COMMUNICATIONS GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, the undersigned officers of Williams Communications Group, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the said Corporation,
the said Board of Directors on September 30, 1999, adopted the following
resolution creating a series of 10,000,000 shares of Preferred Stock designated
as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Amended
and Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 10,000,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series
<PAGE> 2
A Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of February, May, August and November in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to, 100 times the aggregate
per share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Class A Common Stock, par value $0.01 per share or Class B Common Stock,
par value $0.01 per share, of the Corporation (the "Common Stock"), since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. In the
event the Corporation shall at any time after September 30, 1999 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
2
<PAGE> 3
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such
3
<PAGE> 4
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
(6) quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock (including
holders of the Series A Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect two (2) directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of
this Section 3(C) or at any annual meeting of stockholders, and thereafter
at annual meetings of stockholders, provided that neither such voting right
nor the right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of directors
shall be exercised unless the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise
4
<PAGE> 5
by the holders of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right,
voting as a class, to elect directors to fill such vacancies, if any, in
the Board of Directors as may then exist up to two (2) directors or, if
such right is exercised at an annual meeting, to elect two (2) directors.
If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of directors as shall be
necessary to permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right to elect
directors in any default period and during the continuance of such period,
the number of directors shall not be increased or decreased except by vote
of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the
Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of
Preferred Stock, which meeting shall thereupon be called by the President,
a Vice-President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this Paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and not
later than 60 days after such order or request or in
5
<PAGE> 6
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding. Notwithstanding the
provisions of this Paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) directors
voting as a class, after the exercise of which right (x) the directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in Paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining directors theretofore
elected by the holders of the class of stock which elected the director
whose office shall have become vacant. References in this Paragraph (C) to
directors elected by the holders of a particular class of stock shall
include directors elected by such directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect directors
shall cease, (y) the term of any directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of directors
shall be such number as may be provided for in the amended and restated
certificate of incorporation or by-laws irrespective of any increase made
pursuant to the provisions of Paragraph (C)(ii) of this Section
6
<PAGE> 7
3 (such number being subject, however, to change thereafter in any manner
provided by law or in the amended and restated certificate of incorporation
or by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be filled
by a majority of the remaining directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
7
<PAGE> 8
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Junior Participating Preferred Stock, [or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred
Stock,] except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
8
<PAGE> 9
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received an amount equal to $100 per share of Series A Participating
Preferred Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately
adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series A Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred Stock and
Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
9
<PAGE> 10
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
10
<PAGE> 11
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. At any time when any shares of Series A Junior
Participating Preferred Stock are outstanding, neither the Amended and Restated
Certificate of Incorporation of the Corporation nor this Certificate of
Designation shall be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of [a majority] or more of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as a
class.
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 30th day
of September, 1999.
/s/ S. MILLER WILLIAMS
----------------------------------------
Senior Vice President
Attest:
/s/ SHAWNA L. GEHRES
- -------------------------------
Secretary
11
<PAGE> 1
EXHIBIT 4.2
===============================================================================
WILLIAMS COMMUNICATIONS GROUP, INC.
AND
The Bank of New York, Trustee
Indenture
Dated as of October 6, 1999
----------
$2,000,000,000
10.70% Senior Redeemable Notes Due 2007
10.875% Senior Redeemable Notes Due 2009
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Terms Defined...........................................................12
SECTION 1.02. Other Definitions...............................................................47
ARTICLE 2
ISSUE, EXECUTION, FORM AND REGISTRATION OF NOTES
SECTION 2.01. Authentication and Delivery of Notes............................................48
SECTION 2.02. Execution of Notes..............................................................48
SECTION 2.03. Certificate of Authentication...................................................48
SECTION 2.04. Form, Denomination and Date of Notes; Payments of Interest......................48
SECTION 2.05. Global Note Legends.............................................................49
SECTION 2.06. Registration, Transfer and Exchange.............................................50
SECTION 2.07. Book-Entry Provisions for Global Notes..........................................51
SECTION 2.08. Mutilated, Defaced, Destroyed, Lost and Stolen Notes............................52
SECTION 2.09. Cancellation of Notes...........................................................53
SECTION 2.10. Temporary Notes.................................................................54
SECTION 2.11. CUSIP Numbers...................................................................54
ARTICLE 3
COVENANTS OF THE COMPANY AND THE TRUSTEE
SECTION 3.01. Payment of Principal and Interest...............................................54
SECTION 3.02. Offices for Payments, etc.......................................................55
SECTION 3.03. Appointment to Fill a Vacancy in Office of Trustee..............................55
SECTION 3.04. Paying Agents...................................................................55
SECTION 3.05. Certificates to Trustee.........................................................56
SECTION 3.06. Noteholders' Lists..............................................................57
SECTION 3.07. Reports by the Trustee..........................................................57
SECTION 3.08. Limitation on Consolidated Debt.................................................57
SECTION 3.09. Limitation on Debt of Restricted Subsidiaries...................................64
SECTION 3.10. Limitation on Issuances of Guarantees by, and Debt
Securities of, Domestic Restricted Subsidiaries.......................................67
SECTION 3.11. Limitation on Restricted Payments...............................................67
SECTION 3.12. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.....................................................72
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SECTION 3.13. Limitation on Liens.............................................................75
SECTION 3.14. Limitation on Sale and Leaseback Transactions...................................77
SECTION 3.15. Limitation on Asset Dispositions.................................................78
SECTION 3.16. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries...............................................................79
SECTION 3.17. Limitation on Transactions with Affiliates......................................80
SECTION 3.18. Repurchase of Notes Upon Change of Control Triggering
Event.................................................................................83
SECTION 3.19. Reports.........................................................................84
SECTION 3.20. Limitation on Designations of Unrestricted Subsidiaries.........................85
SECTION 3.21. Existence.......................................................................87
SECTION 3.22. Payment of Taxes and Other Claims...............................................87
SECTION 3.23. Maintenance of Properties and Insurance.........................................88
SECTION 3.24. Waiver of Stay, Extension or Usury Laws.........................................88
ARTICLE 4
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
SECTION 4.01. Events of Default...............................................................89
SECTION 4.02. Acceleration....................................................................90
SECTION 4.03. Other Remedies..................................................................91
SECTION 4.04. Waiver of Past Defaults.........................................................91
SECTION 4.05. Control by Majority.............................................................92
SECTION 4.06. Limitation on Suits.............................................................92
SECTION 4.07. Rights of Holders to Receive Payment............................................92
SECTION 4.08. Collection Suit by Trustee......................................................92
SECTION 4.09. Trustee May File Proofs of Claim................................................93
SECTION 4.10. Priorities......................................................................93
SECTION 4.11. Undertaking for Costs...........................................................94
ARTICLE 5
CONCERNING THE TRUSTEE
SECTION 5.01. Duties and Responsibilities of the Trustee; During
Default; Prior to Default.............................................................94
SECTION 5.02. Certain Rights of the Trustee...................................................96
SECTION 5.03. Trustee Not Responsible for Recitals, Disposition of Notes
or Application of Proceeds Thereof....................................................97
SECTION 5.04. Trustee and Agents May Hold Notes; Collections, etc.............................97
SECTION 5.05. Moneys Held by Trustee..........................................................97
SECTION 5.06. Notice of Default...............................................................97
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SECTION 5.07. Compensation and Indemnification of Trustee and Its
Prior Claim...........................................................................98
SECTION 5.08. Right of Trustee to Rely on Officers' Certificate, etc..........................99
SECTION 5.09. Persons Eligible for Appointment as Trustee.....................................99
SECTION 5.10. Resignation and Removal; Appointment of Successor
Trustee...............................................................................99
SECTION 5.11. Acceptance of Appointment by Successor Trustee.................................101
SECTION 5.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee..................................................................101
SECTION 5.13. Preferential Collection of Claims..............................................102
ARTICLE 6
CONCERNING THE HOLDERS
SECTION 6.01. Evidence of Action Taken by Holders............................................102
SECTION 6.02. Proof of Execution of Instruments and of Holding of
Notes; Record Date...................................................................103
SECTION 6.03. Notes Owned by Company Deemed Not Outstanding..................................103
SECTION 6.04. Right of Revocation of Action Taken............................................104
ARTICLE 7
SUPPLEMENTAL INDENTURES
SECTION 7.01. Supplemental Indentures Without Consent of Holders.............................104
SECTION 7.02. Supplemental Indentures With Consent of Holders................................105
SECTION 7.03. Effect of Supplemental Indenture...............................................107
SECTION 7.04. Documents to Be Given to Trustee; Compliance with TIA..........................108
SECTION 7.05. Notation on Notes in Respect of Supplemental Indentures........................108
ARTICLE 8
CONSOLIDATION, MERGER OR SALE OF ASSETS
SECTION 8.01. Consolidation, Merger or Sale of Assets........................................108
SECTION 8.02. Successor Corporation Substituted..............................................109
SECTION 8.03. Opinion of Counsel to Trustee..................................................110
ARTICLE 9
REDEMPTION OF NOTES
SECTION 9.01. Right of Optional Redemption; Prices...........................................110
SECTION 9.02. Notice of Redemption; Partial Redemptions......................................111
SECTION 9.03. Payment of Notes Called for Redemption.........................................112
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SECTION 9.04. Exclusion of Certain Notes from Eligibility for Selection
for Redemption.......................................................................113
ARTICLE 10
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.01. Company's Option to Effect Defeasance or Covenant Defeasance..................113
SECTION 10.02. Legal Defeasance and Discharge................................................114
SECTION 10.03. Covenant Defeasance...........................................................114
SECTION 10.04. Conditions to Legal or Covenant Defeasance....................................115
SECTION 10.05. Deposited Money and Government Securities to Be Held
in Trust; Other Miscellaneous Provisions.............................................116
SECTION 10.06. Repayment to Company..........................................................117
SECTION 10.07. Reinstatement.................................................................117
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.01. Incorporators, Stockholders, Officers, Directors,
Employees and Controlling Persons of Company Exempt from
Individual Liability.................................................................118
SECTION 11.02. Provisions of Indenture for the Sole Benefit of Parties
and Holders..........................................................................118
SECTION 11.03. Successors and Assigns of Company Bound by Indenture..........................118
SECTION 11.04. Notices and Demands on Company, Trustee and Holders...........................118
SECTION 11.05. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein...................................................119
SECTION 11.06. Payments Due on Saturdays, Sundays and Holidays...............................120
SECTION 11.07. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939................................................................121
SECTION 11.08. New York Law to Govern........................................................121
SECTION 11.09. Counterparts..................................................................121
SECTION 11.10. Effect of Headings............................................................121
</TABLE>
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<PAGE> 6
INDENTURE, dated as of October 6, 1999 between Williams Communications
Group, Inc., a Delaware corporation (the "COMPANY"), and The Bank of New York, a
New York banking corporation (the "TRUSTEE"),
W I T N E S S E T H :
WHEREAS, the Company has duly authorized the issuance of $500,000,000
aggregate principal amount of its 10.70% Senior Redeemable Notes Due 2007 (the
"10.70% NOTES") and $1,500,000,000 aggregate principal amount of its 10.875%
Senior Redeemable Notes Due 2009 (the "10.875% NOTES", and together with the
10.70% Notes, the "NOTES") and, to provide, among other things, for the
authentication, delivery and administration thereof, the Company has duly
authorized the execution and delivery of this Indenture; and
WHEREAS, the Notes and the Trustee's certificate of authentication
shall be in substantially the following form:
[FORM OF FACE OF NOTE]
No. $
[CUSIP]
Williams Communications Group, Inc.
[ ]% Senior Redeemable Note Due 200_
Williams Communications Group, Inc., a Delaware corporation (the
"COMPANY"), for value received hereby promises to pay to [ ] or registered
assigns the principal sum of [ ] Dollars at the Company's office or agency
for said purpose in The City of New York, on October 1, 200_, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest,
semi-annually on April 1 and October 1 (each an "INTEREST PAYMENT DATE") of each
year, commencing with April 1, 2000, on said principal sum in like coin or
currency at the rate per annum set forth above at said office or agency from the
most recent Interest Payment Date to which interest on the Notes has been paid
or duly provided for, unless the date hereof is a date to which interest on the
Notes has been paid or duly provided for, in which case from the date of this
Note, or, if no interest on the Notes has been paid or duly provided for, from
October 6, 1999. Notwithstanding the foregoing, if the date hereof is after
March 15 or September 15 (each a "REGULAR RECORD DATE"), as the case may be, and
before the immediately following Interest Payment Date, this Note shall bear
<PAGE> 7
interest from such Interest Payment Date; provided, that if the Company shall
default in the payment of interest due on such Interest Payment Date then this
Note shall bear interest from the next preceding Interest Payment Date to which
interest on the Notes has been paid or duly provided for. The interest so
payable on any Interest Payment Date will, except as otherwise provided in the
Indenture referred to on the reverse hereof, be paid to the person in whose name
this Note is registered at the close of business on the Regular Record Date
preceding such Interest Payment Date whether or not such day is a business day;
provided that interest may be paid, at the option of the Company, by mailing a
check therefor payable to the registered Holder entitled thereto at such
Holder's last address as it appears on the Note register or by wire transfer, in
immediately available funds, to such bank or other entity in the continental
United States as shall be designated in writing by such Holder prior to the
relevant Regular Record Date and shall have appropriate facilities for such
purpose, or in accordance with the standard operating procedures of the
Depositary (as defined in the Indenture).
Interest, other than interest on overdue amounts, on the Notes will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Note shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
WILLIAMS COMMUNICATIONS GROUP, INC.
By:
------------------------------------
Name:
Title:
2
<PAGE> 8
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
-----------------------------
This is one of the Notes described in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------
Authorized Signatory
3
<PAGE> 9
[FORM OF REVERSE OF NOTE]
Williams Communications Group, Inc.
[ ]% Senior Redeemable Note Due 200_
This Note is one of a duly authorized issue of debt securities of the
Company, limited to the aggregate principal amount of $[ ], issued or to be
issued pursuant to an indenture dated as of October 6, 1999 (the "INDENTURE"),
duly executed and delivered by the Company to The Bank of New York, as Trustee
(herein called the "TRUSTEE"). Reference is hereby made to the Indenture and all
indentures supplemental thereto for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders (the words "HOLDERS" or "HOLDER" meaning the registered
holders or registered holder) of the Notes.
This Note will bear interest until final maturity at a rate per annum
shown above. The Company will pay interest on overdue principal of, premium, if
any, and to the extent lawful, interest on overdue installments of interest, at
a [ ]% rate per annum based on a 360-day year consisting of twelve 30-day
months.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all the Notes may be declared due
and payable, in the manner and with the effect, and subject to the conditions,
provided in the Indenture. The Indenture provides that in certain events such
declaration and its consequences may be waived by the Holders of a majority in
aggregate principal amount of the Notes then outstanding and that, prior to any
such declaration, such Holders may waive any past default under the Indenture
and its consequences except a default in the payment of principal of, premium,
if any, or interest on any of the Notes or in respect of a covenant or provision
of the Indenture that cannot be modified or amended without the consent of the
holder of each outstanding Note affected. Any such consent or waiver by the
Holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Note and any Note which may be issued in exchange or substitution
herefor, whether or not any notation thereof is made upon this Note or such
other Notes.
The Indenture permits the Company and the Trustee, with the consent of
the Holders of not less than a majority in principal amount of the Notes at the
time outstanding, evidenced as in the Indenture provided, to 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
4
<PAGE> 10
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 reduce the principal amount thereof or
the interest thereon that would be due and payable upon the Stated 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 Stated
Maturity thereof; (2) reduce the percentage in principal amount of the
outstanding 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 Notes to any other Debt; (4)
except as otherwise required by the Indenture, release any security interest
that may have been granted in favor of the Holders of the Notes; (5) reduce the
premium payable upon the redemption of any Note nor change the time at which any
Note may be redeemed, as described in the Indenture; (6) reduce the premium
payable upon a Change of Control Triggering Event; (7) make any change in any
Domestic Restricted Subsidiary Guarantee that would adversely affect the Holders
of the Notes; or (8) modify any provision of this paragraph (except to increase
any percentage set forth herein).
Notwithstanding the foregoing, without the consent of any Holder of
Notes, the Company and the Trustee may, at any time and from time to time,
without notice to or consent of any Holders of Notes, enter into one or more
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 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 Notes in
addition to or in place of certificated Notes; (5) to evidence and provide for
the acceptance of appointment under the Indenture of a successor trustee; (6) to
secure the Notes; (7) to comply with the Trust Indenture Act of 1939; (8) to add
additional Guarantees with respect to the Notes or to release Guarantors from
Domestic Restricted Subsidiary Guarantees as provided by the terms of the
Indenture; or (9) 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 provision 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.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
5
<PAGE> 11
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the place, times, and rate, and in the currency, herein
prescribed.
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and any multiple of $1,000.
At the office or agency of the Company referred to on the face hereof
and in the manner and subject to the limitations provided in the Indenture,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.
Upon due presentment for registration of transfer of this Note at the
above-mentioned office or agency of the Company, a new Note or Notes of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture. No service charge shall be made
for any such transfer, but the Company may require payment of a sum sufficient
to cover any tax or other similar governmental charge that may be imposed in
connection therewith.
[Prior to October 1, 2007, the Company may redeem all or part of the
Notes at any time upon not less than 30 nor more than 60 days' notice at the
Make-Whole Price (as defined in the Indenture), plus accrued and unpaid interest
on the Notes, if any, to the redemption date.
In addition, at any time or from time to time prior to October 1, 2002,
the Company may redeem up to 35% of the original aggregate principal amount of
the Notes at a redemption price equal to 110.70% of the principal amount of the
Notes so redeemed, plus accrued and unpaid interest thereon (if any) to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), with
the net cash proceeds of one or more private placements to Persons other than
Affiliates of the Company or public offerings of common stock of the Company, in
each case resulting in gross proceeds to the Company of at least $100 million in
the aggregate; provided that
o at least 65% of the original aggregate principal amount of the
Notes would remain outstanding immediately after giving effect
to such redemption;
o any such redemption shall be made within 90 days of such
private placement or public offering upon not less than 30 nor
more than 60 days' prior notice; and
6
<PAGE> 12
o any such redemption may not occur in connection with or after
the occurrence of a Change of Control.
Subject to payment by the Company of a sum sufficient to pay the amount
due on redemption, interest on this Note (or portion hereof if this Note is
redeemed in part) shall cease to accrue upon the date duly fixed for redemption
of this Note (or portion hereof if this Note is redeemed in part).](1)
[Prior to October 1, 2004, the Company may redeem all or part of the
Notes at any time upon not less than 30 nor more than 60 days' notice at the
Make-Whole Price (as defined in the Indenture), plus accrued and unpaid interest
on the Notes, if any, to the redemption date. The Notes may be redeemed at the
option of the Company as a whole, or from time to time in part, on any date on
or after October 1, 2004, upon mailing a notice of such redemption not less than
30 nor more than 60 days prior to the date fixed for redemption to the Holders
of Notes to be redeemed, all as provided in the Indenture, at the following
redemption prices (expressed in percentages of principal amount) together in
each case with accrued and unpaid interest to the date fixed for redemption
(subject to the right of Holders of record on the relevant Regular Record Date
to receive interest on an Interest Payment Date that is on or prior to the
redemption date):
If redeemed during the twelve-month period beginning October 1,
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2004............................................... 105.438%
2005............................................... 103.625%
2006............................................... 101.813%
2007 and thereafter................................ 100.000%
</TABLE>
In addition, at any time or from time to time prior to October 1, 2002,
the Company may redeem up to 35% of the original aggregate principal amount of
the Notes at a redemption price equal to 110.875% of the principal amount of the
Notes so redeemed, plus accrued and unpaid interest thereon (if any) to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), with
the net cash proceeds of one or more private placements to Persons other than
Affiliates of the Company or public offerings of common stock of the Company, in
each case resulting in gross proceeds to the Company of at least $100 million in
the aggregate; provided that
- ------------------------------
(1) To be inserted in 10.70% Notes.
7
<PAGE> 13
o at least 65% of the original aggregate principal amount of the
Notes would remain outstanding immediately after giving effect
to such redemption;
o any such redemption shall be made within 90 days of such
private placement or public offering upon not less than 30 nor
more than 60 days' prior notice; and
o any such redemption may not occur in connection with or after
the occurrence of a Change of Control.
Subject to payment by the Company of a sum sufficient to pay the amount
due on redemption, interest on this Note (or portion hereof if this Note is
redeemed in part) shall cease to accrue upon the date duly fixed for redemption
of this Note (or portion hereof if this Note is redeemed in part).](2)
Upon the occurrence of a Change of Control Triggering Event (as defined
in the Indenture), any Holder of Notes will have the right to cause the Company
to purchase the Notes of such Holder, in whole or in part in integral multiples
of aggregate principal amount of $1,000, at a purchase price in cash equal to
101% of the principal amount of the Notes on the purchase date plus accrued and
unpaid interest, if any, to such purchase date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date), as provided in, and subject to, the terms of the
Indenture.
The Company, the Trustee, and any authorized agent of the Company or
the Trustee, may deem and treat the registered Holder hereof as the absolute
owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium,
if any, or the interest on this Note, for any claim based thereon, or otherwise
in respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture, or in any of the Notes or because of
- -----------------------------
(2) To be inserted in 10.875% Notes.
8
<PAGE> 14
the creation of any Debt (as defined in the Indenture) represented thereby,
against any incorporator, shareholder, officer, director, employee or
controlling person of the Company or of any successor Person thereof, either
directly or through the Company or any successor Person, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
The Indenture is hereby incorporated by the reference and to the extent
of any variance between the provisions hereof and the Indenture, the Indenture
shall control.
This Note shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of said State, except as may otherwise be required by mandatory provisions of
law.
9
<PAGE> 15
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- -------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- -------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________ attorney to transfer said Note on the books of
the Company with full power of substitution in the premises.
Date:
--------------- ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:
--------------------
10
<PAGE> 16
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 3.15 or Section 3.18 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 3.15 or Section 3.18 of the Indenture, state the amount (in
principal amount): $_______________.
Date:
------------------
Your Signature:
---------------------------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee:
--------------------------------------
11
<PAGE> 17
AND WHEREAS, all things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid, binding and legal obligations of the Company, and to
constitute these presents a valid indenture and agreement according to its
terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Notes by the
Holders thereof, the Company and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective Holders from time to time of
the Notes as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture which are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939 (except as herein otherwise expressly provided or
unless the context otherwise clearly requires), shall have the meanings assigned
to such terms in said Trust Indenture Act and in said Securities Act as in force
at the date of this Indenture. All accounting terms used herein and not
expressly defined shall have the meanings given to them in accordance with GAAP
(whether or not such is indicated herein). The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision. The terms
defined in this Article include the plural as well as the singular.
"ACCRETED VALUE" of any Debt issued at a price less than the principal
amount at stated maturity, means, as of any date of determination, an amount
equal to the sum of (a) the issue price of such Debt as determined in accordance
with Section 1273 of the Code or any successor provisions plus (b) the aggregate
of the portions of the original issue discount (the excess of the amounts
considered as part of the "stated redemption price" of such Debt within the
meaning of Section 1273(a)(2) of the Code or any successor provisions, whether
denominated as principal or interest, over the issue price of such Debt) that
shall
12
<PAGE> 18
until that time have accrued pursuant to Section 1272 of the Code (without
regard to Section 1272(a)(7) of the Code) from the date of issue of such Debt to
the date of determination, minus all amounts until that time paid in respect of
such Debt, which amounts are considered as part of the "stated redemption price"
of such Debt within the meaning of Section 1273(a)(2) of the Code or any
successor provisions (whether such amounts paid were denominated principal or
interest).
"ACQUIRED DEBT" means, with respect to any specified Person,
o 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
o Debt secured by a Lien encumbering any Property
acquired by such specified Person,
which Debt was not incurred in connection with, or in anticipation of,
such merger, consolidation or acquisition or such Person becoming a
Subsidiary of such specified Person.
"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. For purposes of the
covenants described in Section 3.15 and Section 3.17 and the definition of
"Telecommunications Assets" only, "Affiliate" shall also mean any beneficial
owner of shares representing more than 10% or more of the total voting power of
the Voting Stock on a fully diluted basis of the Company or of rights or
warrants to purchase such Voting Stock, whether or not currently exercisable,
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"ASSET DISPOSITION" means any transfer, conveyance, sale, lease,
issuance or other disposition by the Company or any Restricted Subsidiary in one
or more related transactions (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:
13
<PAGE> 19
(1) shares of Capital Stock or other ownership interests of a
Restricted Subsidiary (other than as permitted by clause (5), (6), (7)
or (9) of the covenant described in Section 3.16 and other than any
transaction in which the Company or such Restricted Subsidiary receives
therefor one or more properties with a Fair Market Value equal to the
Fair Market Value of the Capital Stock issued, sold or disposed of by
the Company or the Restricted Subsidiary);
(2) real property;
(3) all or substantially all of the assets of the Company or
any Restricted Subsidiary representing a division or line of business;
or
(4) other Property of the Company or any Restricted Subsidiary
outside of the ordinary course of business, excluding
o any transfer, conveyance, sale, lease or the
disposition of Property by the Company or any
Restricted Subsidiary for which the Company or any
Restricted Subsidiary receives capacity, and
o any transfer, conveyance, sale, lease or other
disposition of equipment that in the good faith
judgment of the Company is obsolete, damaged, worn
out or no longer used by or useful to the Company;
provided, in each case, that the aggregate consideration for such transfer,
conveyance, sale, lease or other disposition is equal to $5 million or more in
any 12-month period.
The following shall not be Asset Dispositions:
(1) Permitted Telecommunications Asset Dispositions that
comply with clause (1) of the first paragraph in Section 3.15;
(2) when used with respect to the Company, any Asset
Disposition permitted pursuant to Article Eight which constitutes a
disposition of all or substantially all of the assets of the Company
and the Restricted Subsidiaries taken as a whole;
(3) Receivables sales constituting Debt under Qualified
Receivable Facilities permitted to be Incurred pursuant to Section
3.08;
14
<PAGE> 20
(4) sales, leases, conveyances, transfers or other
dispositions to the Company or to a Restricted Subsidiary or to any
other person if, after giving effect to such sale, lease, conveyance,
transfer or other disposition, such other Person becomes a Restricted
Subsidiary; and
(5) any disposition that results in a Permitted Investment
(other than pursuant to clause (f) or (i) of the definition of
"Permitted Investment") or a Restricted Payment permitted by Section
3.11.
"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 owed under such lease is to be determined, the total
net amount of rent required to be paid by such Person under such lease during
the remaining term of such lease, including any period for which such lease has
been extended, as determined in accordance with GAAP, discounted from the last
date of such remaining 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 GAAP. 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 a 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 of such Capital Lease Obligation.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors (or similar governing body) of such person or any committee of the
Board of Directors (or similar governing body) of such Person authorized, with
respect to any particular matter, to exercise the power of the Board of
Directors (or similar governing body) of such Person.
"BOARD RESOLUTION" means a copy of a resolution, certified by the
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 any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized by law to close.
15
<PAGE> 21
"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) 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 GAAP (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
GAAP.
"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 and any rights (other than debt securities convertible
or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such Person.
"CASH EQUIVALENTS" means:
(1) Government Securities maturing, or subject to tender at
the option of the holder thereof, within two years after the date of
acquisition thereof;
(2) time deposits and certificates of deposit of any
commercial bank organized in the United States having capital and
surplus in excess of $500 million or a commercial bank organized under
the law of any other country that is a member of the Organization for
Economic Cooperation and Development having total assets in excess of
$500 million, or its foreign currency equivalent at the time, with a
maturity date not more than one year from the date of acquisition;
(3) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (1)
above entered into with
o any bank meeting the qualifications specified in
clause (2) above, or
o any primary government securities dealer reporting to
the Market Reports Division of the Federal Reserve
Bank of New York;
16
<PAGE> 22
(4) direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing, or subject to tender at the
option of the holder of such obligation, within one year after the date
of acquisition thereof; provided that, at the time of acquisition, the
long-term debt of such state, political subdivision or public
instrumentality has a rating of A, or higher, from S&P or A-2 or higher
from Moody's or, if at any time neither S&P nor Moody's shaft be rating
such obligations, then an equivalent rating from such other nationally
recognized rating service;
(5) commercial paper issued by the parent corporation of any
commercial bank organized in the United States having capital and
surplus in excess of $500 million or a commercial bank organized under
the laws of any other country that is a member of the Organization for
Economic Cooperation and Development having total assets in excess of
$500 million or its foreign currency equivalent at the time, and money
market instruments and commercial paper issued by others having one of
the three highest ratings obtainable from either S&P or Moody's, or, if
at any time neither S&P nor Moody's shall be rating such obligations,
then from such other nationally recognized rating service and in each
case maturing within one year after the date of acquisition;
(6) overnight bank deposits and bankers' acceptances at any
commercial bank organized in the United States having capital and
surplus in excess of $500 million or a commercial bank organized under
the laws of any other country that is a member of the Organization for
Economic Cooperation and Development having total assets in excess of
$500 million or its foreign currency equivalent at the time;
(7) deposits available for withdrawal on demand with a
commercial bank organized in the United States having capital and
surplus in excess of $500 million or a commercial bank organized under
the laws of any other country that is a member of the Organization for
Economic Cooperation and Development having total assets in excess of
$500 million or its foreign currency equivalent at the time; and
(8) investments in money market funds substantially all of
whose assets comprise securities of the types described in clauses (1)
through (7).
"CERTIFICATED SECURITIES" means securities issued in the form of
permanent certificated securities in registered form in substantially the form
hereinabove recited.
17
<PAGE> 23
"CHANGE OF CONTROL" has the meaning set forth in Section 3.18.
"CHANGE OF CONTROL TRIGGERING EVENT" has the meaning set forth in
Section 3.18.
"COMMISSION" means the Securities and Exchange Commission.
"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" means as of the date of determination the
ratio of (1) the aggregate amount of Debt of the Company and its Restricted
Subsidiaries on a consolidated basis as at the date of determination to (2) the
sum of:
(a) the Company's capital in excess of par value on the date
of this Indenture determined on a consolidated basis in accordance with
GAAP;
(b) the aggregate Net Proceeds to the Company from the
issuance or sale of any Capital Stock, including Preferred Stock, of
the Company other than Disqualified Stock subsequent to the date of
this Indenture; and
(c) the aggregate Net Proceeds from the issuance or sale of
Debt of the Company or any Restricted Subsidiary subsequent to the date
of this Indenture convertible or exchangeable into Capital Stock of the
Company other than Disqualified Stock, in each case upon conversion or
exchange thereof into Capital Stock of the Company subsequent to the
date of this Indenture;
provided, however, that, for purposes of calculation of the Consolidated Capital
Ratio, the Net Proceeds from the issuance or sale of Capital Stock or Debt
described in clause (b) or (c) above shall not be included to the extent
o such proceeds have been utilized to make a Permitted
Investment under clause (i) of the definition thereof
or a Restricted Payment, or
o such Capital Stock or Debt shall have been issued or
sold to the Company, a Subsidiary of the Company or a
Plan.
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"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, to the extent reducing Consolidated Net
Income for such period;
(1) Consolidated Interest Expense of the Company and its
Restricted Subsidiaries for such period; plus
(2) Consolidated Income Tax Expense of the Company and its
Restricted Subsidiaries for such period; plus
(3) consolidated depreciation and amortization expense and any
other non-cash items (other than any such non-cash item to the extent
that it represents an accrual of or reserve for cash expenditures in
any future period) for such period; plus
(4) any penalty paid in such period in connection with
redeeming or retiring any Debt prior to its stated maturity; plus
(5) any change in Deferred Revenue during such period;
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 restrictions.
"CONSOLIDATED INCOME TAX EXPENSE" for any period means the aggregate
amounts of the provisions for income taxes of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED INTEREST EXPENSE" for any period means 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 GAAP, including without limitation or duplication (or, to the extent not so
included, with the addition of (but in no event adding any amount that would be
eliminated in consolidation in accordance with GAAP)):
(1) the amortization of Debt discounts and issuance costs,
including commitment fees;
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<PAGE> 25
(2) any payments or fees with respect to letters of credit,
bankers' acceptances or similar facilities;
(3) net costs with respect to interest rate swap or similar
agreements or foreign currency hedge, exchange or similar agreements,
including fees;
(4) Preferred Stock Dividends other than dividends paid in
shares of Preferred Stock that is not Disqualified Stock declared and
paid or payable;
(5) accrued Disqualified Stock Dividends, whether or not
declared or paid;
(6) interest on Debt guaranteed by the Company and its
Restricted Subsidiaries;
(7) the portion of any Capital Lease Obligation or Sale and
Leaseback Transaction paid during such period that is allocable to
interest expense in accordance with GAAP; and
(8) the cash contributions to any Plan to the extent such
contributions are used by such Plan to pay interest or fees to any
Person, other than the Company or a Restricted Subsidiary, in
connection with Debt Incurred by such Plan.
"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 GAAP; provided that there shall be
excluded from such net income (or loss):
(a) for purposes of Section 3.11 only, 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 (except, for purposes of
Section 3.11 only, to the extent such dividends or distributions have
been subtracted from the calculation of the amount of Investments to
support the actual making of Investments);
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<PAGE> 26
(c) gains or losses realized upon the sale or other
disposition of any Property of the Company or its Restricted
Subsidiaries that is not sold or disposed of in the ordinary course of
business (it being understood that Permitted Telecommunications Asset
Dispositions shall be considered to be in the ordinary course of
business);
(d) all extraordinary gains and extraordinary losses,
determined in accordance with GAAP;
(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 of (1) options
to purchase Capital Stock of the Company or such Restricted Subsidiary
or (2) other compensatory rights; and
(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, but such excess shall be excluded only to the extent
that such minority interest in net income (or loss) is not otherwise
excluded in determining consolidated net income in accordance with
GAAP; provided further that 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; provided further, that at the time
any restriction referred to in the immediately preceding proviso ceases
to be effective, all of such net income previously excluded from
Consolidated Net Income by reason of such proviso shall be included
cumulatively in Consolidated Net Income in the accounting period during
which such restriction ceases to be effective.
"CONSOLIDATED NET WORTH" of any Person means the stockholders' equity
of such Person, determined on a consolidated basis in accordance with GAAP, less
(to the extent not otherwise accounted for as a liability) amounts attributable
to Disqualified Stock of such Person.
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"CONSOLIDATED TANGIBLE ASSETS" of any Person means the total amount of
assets (less applicable reserves and other properly deductible items) which
under GAAP would be included on a consolidated balance sheet of such Person and
its Subsidiaries after deducting from such total amount of assets all goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles, which in each case under GAAP would be included on such
consolidated balance sheet.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 101 Barclay Street, Floor 21 West, New York, New
York 10286.
"CREDIT FACILITIES" means one or more credit agreements, including
without limitation, the Permanent Credit Facility, loan agreements, fiscal
agency agreements (other than fiscal agency agreements relating to Debt
Securities) or similar facilities, secured or unsecured, providing for working
capital advances, revolving credit loans, term loans and/or letters of credit,
including any Qualified Receivable Facility, 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 with such
credit facilities, 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:
(1) every obligation of such Person for money borrowed;
(2) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of Property;
(3) every reimbursement obligation of such Person with respect
to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person or for which such Person is otherwise
obligated to make payment;
(4) every obligation of such Person issued or assumed as the
deferred purchase price of Property or services, including securities
repurchase agreements;
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<PAGE> 28
(5) every Capital Lease Obligation of such Person;
(6) all obligations to redeem or repurchase Disqualified Stock
issued by such Person and all Attributable Value in respect of Sale and
Leaseback Transactions entered into by such Person;
(7) the liquidation preference of any Preferred Stock, other
than Disqualified Stock, which is covered by the preceding clause (6),
issued by any Restricted Subsidiary of such Person;
(8) every obligation under Interest Rate or Currency
Protection Agreements of such Person; and
(9) every obligation of the type referred to in clauses (1)
through (8) 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 thereof, shall be, except as otherwise set forth here, the
Accreted Value at maturity such Debt at such time or (b) in the case of any
Receivables sale constituting Debt, the amount of the unrecovered purchase price
paid (that is, the amount paid for Receivables that has not been actually
recovered from the collection of such Receivables) by the purchaser (other than
the Company or a Wholly Owned Restricted Subsidiary of the Company) thereof.
The amount of Debt represented by an obligation under an Interest Rate
or Currency Protection Agreement shall be equal to
(x) zero if such obligation has been Incurred pursuant to
clause (10) of paragraph (b) of Section 3.08, or
(y) the notional amount of such obligation if not Incurred
pursuant to such clause.
Despite the above,"Debt" does not include trade accounts payable or
accrued liabilities arising in the ordinary course of business.
"DEBT SECURITIES" means any debt securities, including any Guarantee of
such securities, issued by the Company or any Domestic Restricted Subsidiary in
connection with an underwritten public offering or an underwritten private
placement for resale in accordance with Rule 144A and/or Regulation S, in each
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<PAGE> 29
case, not rated or rated below Baa3 by Moody's or BBB- by S&P, or an equivalent
below investment grade rating by any successor Rating Agency.
"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.
"DEFERRED REVENUE" means amounts appearing as a liability on the
financial statements of the Company prepared in accordance with generally
accepted accounting principles as deferred revenue, provided that, in the case
of any increase in deferred revenue, only to the extent of cash received in
connection therewith.
"DEPOSITARY" means The Depository Trust Company, its nominees, and
their respective successors.
"DISQUALIFIED STOCK" of any Person means any Capital Stock of such
Person which, by its terms, or by the terms of any security into which it is
convertible or for which it is exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the final Stated Maturity of the Notes; provided, however,
that any Preferred Stock which would not constitute Disqualified Stock but for
provisions of such Preferred Stock giving holders thereof the right to require
the Company to repurchase or redeem such Preferred Stock upon the occurrence of
a change of control or asset disposition occurring prior to the final Stated
Maturity of the Notes shall not constitute Disqualified Stock if the change of
control or asset disposition provisions applicable to such Preferred Stock are
no more favorable to the holders of such Preferred Stock than the provisions
applicable to the Notes contained in Section 3.15 and Section 3.18 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 Notes as are required to be repurchased pursuant to Section
3.15 and Section 3.18; and provided further, that such Preferred Stock will not
be deemed Disqualified Stock if it is redeemable by exchange for or through the
issuance of Capital Stock (other than Disqualified Stock).
"DISQUALIFIED STOCK DIVIDENDS" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Restricted Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income tax rate (expressed as a decimal number between 1 and
0) applicable to the Company for the period during which such dividends were
paid.
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<PAGE> 30
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of
the Company
o that was formed under the laws of the United States of America
or any state, district or territory thereof or the District of
Columbia, or
o 50% or more of the assets of which are located in the United
States or any territory thereof.
"DOMESTIC RESTRICTED SUBSIDIARY GUARANTEE" means a supplemental
indenture to the Indenture in form satisfactory to the Trustee, providing for an
unconditional Guarantee by a Domestic Restricted Subsidiary of payment in full
of the principal of, premium, if any, and interest on the Notes. Any such
Domestic Restricted Subsidiary Guarantee shall not be subordinate to any Debt of
the Domestic Restricted Subsidiary providing the Domestic Restricted Subsidiary
Guarantee.
"ELIGIBLE RECEIVABLES" means, at any time, Receivables of the Company
and its Restricted Subsidiaries, as evidenced on the most recent quarterly
consolidated balance sheet of the Company as at a date at least 45 days prior to
such time, arising in the ordinary course of business of the Company or any
Restricted Subsidiary.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 4.01 which shall have continued for the period of time, if any, therein
designated.
"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).
"EXISTING INTERNATIONAL JOINT VENTURES" means ATL, PowerTel,
MetroCom and Algar.
"FAIR MARKET VALUE" means, with respect to any 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, and except in the case of Permitted Telecommunications Asset
Dispositions in the ordinary course of business, 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.
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<PAGE> 31
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the date of the Indenture, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
fully and unconditionally guaranteed or insured by, the United States of America
or any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option (unless, for purposes of
the definition of "Cash Equivalents" only, the obligations are redeemable or
callable at a price less than the purchase price paid by the Company or the
applicable Restricted Subsidiary, together with all accrued and unpaid interest,
if any, on such Government Securities).
"GUARANTEE" by any Person means any obligation, direct or indirect,
contingent or otherwise, of such Person guaranteeing, or having the economic
effect of guaranteeing, any Debt of any other Person in any manner, whether
directly or indirectly.
"GUARANTOR" means a Domestic Restricted Subsidiary of the Company that
has executed a Domestic Restricted Subsidiary Guarantee.
"HOLDERS", "HOLDER OF NOTES", "NOTEHOLDER" or other similar terms means
a person in whose name a Note is registered.
"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 the recording, as required pursuant to GAAP 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
o a change in GAAP 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
o neither the accrual of interest nor the amortization or
accretion of original issue discount shall be deemed an
Incurrence of Debt.
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Debt otherwise incurred by a Person before it becomes a Subsidiary of
the Company shall be deemed to have been Incurred at the time at which it
becomes a Restricted Subsidiary.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented.
"INTEREST PAYMENT DATE" means each semiannual interest payment date on
April 1 and October 1 of each year, commencing April 1, 2000.
"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.
"INVESTED CAPITAL" means the sum of:
(a) $625 million;
(b) the aggregate Net Proceeds received by the Company from
the issuance or sale of any Capital Stock, including Preferred Stock,
of the Company, but excluding Disqualified Stock, subsequent to the
date of the Indenture and from the Over-allotment Option; and
(c) the aggregate Net Proceeds from the issuance or sale of
Debt of the Company or any Restricted Subsidiary subsequent to the date
of the Indenture convertible or exchangeable into Capital Stock of the
Company other than Disqualified Stock, in each case upon conversion or
exchange thereof into Capital Stock of the Company subsequent to the
date of the Indenture;
provided, however, that the Net Proceeds from the issuance or sale of Capital
Stock or Debt described in clause (b) or (c) shall be excluded from any
computation of Invested Capital to the extent (1) utilized to make a Restricted
Payment or (2) such Capital Stock or Debt shall have been issued or sold to the
Company, a Subsidiary of the Company or a Plan.
"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, purchase, redemption, retirement or
acquisition of
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<PAGE> 33
Capital Stock, bonds, notes, debentures or other securities or evidence of Debt
issued by, or Incurrence of, or payment on, a Guarantee of any obligation of,
any other Person; provided that Investments shall exclude
o commercially reasonable extensions of trade credit,
o trade receivables arising in the ordinary course of business;
provided, that such receivables would be recorded as assets of
such Person in accordance with GAAP,
o Investments received in connection with the bankruptcy or
reorganization of suppliers and customers or in good faith
bona fide settlement of delinquent ordinary course of business
trade receivables of customers,
o endorsements for collection or deposit in the ordinary course
of business by such Person of bank drafts and similar
negotiable instruments of such other Person received as
payment for ordinary course of business trade receivables, and
o any Investment that is less than $100,000.
The amount, as of any date of determination, of any Investment shall be
the original cost of such Investment, plus the cost of all additions, as of such
date, thereto and minus the amount, as of such date, of any portion of such
Investment repaid to such Person in cash as a repayment of principal or a return
of capital, as the case may be (except to the extent such repaid amount has been
included in Consolidated Net Income to support the actual making of Restricted
Payments), but without any other adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
In determining the amount of any Investment involving a transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such transfer.
"JOINT VENTURE" means a Person in which the Company or a Restricted
Subsidiary holds, directly or indirectly, not more than 50% of the shares of
Voting Stock.
"LIEN" means, with respect to any Property, any mortgage or deed of
trust, pledge, hypothecation, assignment, 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
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<PAGE> 34
(including any Capital Lease Obligation, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing and any Sale and Leaseback Transaction). For purposes of this
definition the sale, lease, conveyance or other transfer by the Company or any
of its Subsidiaries 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.
"MAKE-WHOLE AMOUNT" means:
o with respect to any 10.70% Note, an amount equal to the
excess, if any, of
(1) the present value of the remaining principal, premium and
interest payments that would be payable with respect to such 10.70%
Note if such 10.70% Note were redeemed on October 1, 2007, computed
using a discount rate equal to the Treasury Rate plus 50 basis points;
over
(2) the outstanding principal amount of such 10.70% Note.
o with respect to any 10.875% Note, an amount equal to the
excess, if any, of
(1) the present value of the remaining principal, premium and
interest payments that would be payable with respect to such 10.875%
Note if such 10.875% Note were redeemed on October 1, 2004, computed
using a discount rate equal to the Treasury Rate plus 50 basis points;
over
(2) the outstanding principal amount of such 10.875% Note.
"MAKE-WHOLE AVERAGE LIFE" means, with respect to any date of redemption
of Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to
o October 1, 2007 with respect to the 10.70% Notes; and
o October 1, 2009 with respect to the 10.875% Notes.
"MAKE-WHOLE PRICE" means
o with respect to any 10.70% Note, the sum of the principal
amount of such 10.70% Note and the Make-Whole Amount; and
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<PAGE> 35
o with respect to any 10.875% Note, the greater of (1) the sum
of the principal amount of such 10.875% Note and the
Make-Whole Amount with respect to such 10.875% Note and (2)
the redemption price of such 10.875% Note on October 1, 2004.
"MOODY'S" means Moody's Investors Service, Inc. or, if Moody's
Investors Service, Inc. shall cease rating debt securities having a maturity at
original issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, however,
that if there is no successor Person, then "Moody's" shall mean any other
national recognized rating agency, other than S&P, that rates debt securities
having a maturity at original issuance of at least one year and that shall have
been designated by the Company.
"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 Property) therefrom by
such Person, net of:
(1) all legal, title and recording taxes, expenses and
commissions and other fees and expenses (including appraisals,
brokerage commissions and investment banking fees) Incurred and all
federal, state, provincial, foreign and local taxes required to be
accrued as a liability as a consequence of such Asset Disposition;
(2) all payments made by such Person or its Subsidiaries on
any Debt which is secured by such Property in accordance with the terms
of any Lien upon or with respect to such Property 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;
(3) all distributions and other payments required to be made
to minority interest holders in Subsidiaries or Joint Ventures of such
Person as a result of such Asset Disposition; and
(4) appropriate amounts to be provided by such Person or any
Subsidiary of such Person, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such
Property and retained by such Person or any Subsidiary of such Person,
as the case may be, after such Asset Disposition, including liabilities
under any
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<PAGE> 36
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 Notes, treated as a new Asset Disposition at the time
of such reduction with Net Available Proceeds equal to the amount of
such reduction; provided further, however, that, if any consideration
for a transaction, which would otherwise constitute Net Available
Proceeds, is required to be held in escrow pending determination of
whether a purchase price adjustment will be made, at such time as such
portion of the consideration is released to such Person or its
Restricted Subsidiary from escrow, such portion shall be treated for
all purposes of the Indenture and the Notes as a new Asset Disposition
at the time of, but not before, such release from escrow with Net
Available Proceeds equal to the amount of such portion of consideration
released from escrow.
"NET PROCEEDS" means the aggregate net proceeds (including the Fair
Market Value of non-cash proceeds constituting Capital Stock in or of a person
engaged in a Telecommunications Business or assets of a type generally used in a
Telecommunications Business) received by a Person from the sale of Capital Stock
or Debt after payment of out-of-pocket expenses, commissions and discounts
incurred and net of taxes paid or payable in connection with the sale of such
Capital Stock or Debt.
"NOTE" or "NOTES" means any note or notes, as the case may be,
authenticated and delivered under this Indenture.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Debt.
"OFFER TO PURCHASE" means a written offer sent by the Company by
first-class mail, postage prepaid, to each Holder of 10.70% Notes or 10.875%
Notes, as the case may be, at its address appearing in the Note Register on the
date of the offer offering to purchase up to the principal amount of such 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 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")
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<PAGE> 37
for purchase of such 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
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) any information required
by applicable law to be included therein).
The offer shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Offer to Purchase. The offer
shall also state (to the extent not inconsistent with then applicable laws,
rules or regulations):
(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 10.70%
or 10.875% Notes, as the case may be, 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 of the Indenture requiring the Offer to Purchase) (the
"PURCHASE AMOUNT");
(d) the purchase price to be paid by the Company for $1,000
aggregate principal amount of such 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
applicable 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 such Notes are to be surrendered
for tender pursuant to the Offer to Purchase;
(g) that any such Notes not tendered or tendered but not
purchased by the Company will continue to accrue interest;
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<PAGE> 38
(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 Notes tendered if the Company (or the paying agent)
receives, not later than the close of business on the expiration date,
a 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 (1) if 10.70% Notes or 10.875% Notes in an aggregate
principal amount less than or equal to the Purchase Amount with respect
to such Notes are duly tendered and not withdrawn pursuant to the Offer
to Purchase, the Company shall purchase all such Notes and (2) if
10.70% Notes or 10.875% Notes in an aggregate principal amount in
excess of the Purchase Amount with respect to such Notes are tendered
and not withdrawn pursuant to the Offer to Purchase, the Company shall
purchase Notes having an aggregate principal amount equal to the
Purchase Amount on a pro rata basis with respect to each of the 10.70%
Notes and 10.875% Notes, as applicable, (with such adjustments as may
be deemed appropriate so that only 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 Note or Notes, 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 Note so tendered.
Any Offer to Purchase shall be governed by and effected in accordance
with the offer for such Offer to Purchase.
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<PAGE> 39
"OFFICER" means, with respect to the Company, (1) the Chairman of the
Board of Directors, the President, any Vice President, the Chief Financial
Officer, and (2) the Treasurer or any Assistant Treasurer, or the Secretary or
any Assistant Secretary.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board of Directors or the President or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after the
title "Vice President") and delivered to the Trustee. Each such certificate
shall comply with Section 314 of the Trust Indenture Act of 1939 and include the
statements provided for in Section 11.05.
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Company or who may be other
counsel satisfactory to the Trustee. Each such opinion shall comply with Section
314 of the Trust Indenture Act of 1939 and include the statements provided for
in Section 11.05, and such others as may reasonably be requested by the Trustee,
if and to the extent required hereby.
"OUTSTANDING", when used with reference to Notes, subject to the
provisions of Article Twelve, means, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment or redemption
of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the
Company) or shall have been set aside, segregated and held in trust by
the Company (if the Company shall act as its own paying agent),
provided that if such Notes are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and
(c) Notes in substitution for which other Notes shall have
been authenticated and delivered, or which shall have been paid,
pursuant to the terms of Section 2.08 (unless proof satisfactory to the
Trustee and the Company is presented that any of such Notes is held by
a person in whose hands such Note is a legal, valid and binding
obligation of the Company).
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<PAGE> 40
"OVER-ALLOTMENT OPTION" means the over-allotment option granted to the
underwriters of the equity offering consummated on October 6, 1999.
"PERMANENT CREDIT FACILITY" means the senior credit facility entered
into by and among Williams Communications, Inc., WCG, as Guarantor, Bank of
America, N.A. (NationsBank, N.A. d/b/a Bank of America, N.A.), as Administrative
Agent, The Chase Manhattan Bank, as Syndication Agent, Bank of Montreal and The
Bank of New York, as Co-Documentation Agents, and the Lenders from time to time
party thereto, including any related notes, Guarantees, collateral documents,
instruments, agreements and Incremental Facilities (as defined therein) executed
at any time in connection therewith, on terms substantially similar to those
disclosed in the final prospectus relating to the Notes dated September 30,
1999, and in each case as may be amended, supplemented, modified, restated or
replaced from time to time (including amendments, supplements, modifications,
restatements, replacements or Incremental Facilities which increase the
principal amount of Debt permitted thereunder; provided that any such increase
will not increase the amount of Debt which may be incurred at the time of such
increase pursuant to clause (2) of paragraph (b) in Section 3.08).
"PERMITTED HOLDERS" means
o The Williams Companies, Inc. and any of its Subsidiaries,
o any corporation the outstanding voting power of the Capital
Stock of which is beneficially owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of the voting power of the
Capital Stock of the Company,
o any underwriter during the period engaged in a firm commitment
underwriting on behalf of the Company with respect to the
shares of Capital Stock being underwritten, or
o the Company or any Subsidiary of the Company.
"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 not for purposes of
speculation and which, in the case of an interest rate agreement, shall have a
notional amount no greater than the principal amount at maturity due with
respect to the Debt being hedged thereby.
35
<PAGE> 41
"PERMITTED INVESTMENTS" means:
(a) Cash Equivalents;
(b) investments in prepaid expenses;
(c) negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar
deposits;
(d) loans, advances or extensions of credit to employees,
officers and directors of the Company or any Restricted Subsidiary made
in the ordinary course of business and consistent with past practice or
in connection with employee benefits agreements or arrangements
approved by the Board of Directors of the Company;
(e) obligations under Permitted Interest Rate or Currency
Protection Agreements;
(f) Investments received as consideration for, or customary
indemnities given in connection with, Asset Dispositions pursuant to
and in compliance with Section 3.15 and for Permitted Telecommunication
Asset Dispositions;
(g) Investments in the Company or any Restricted Subsidiary,
or in any Person as a result of which such Person becomes a Restricted
Subsidiary;
(h) Investments made prior to the date of the Indenture;
(i) Investments made after the date of the Indenture in
Persons engaged in the Telecommunications Business in an aggregate
amount as of the date of determination not to exceed Invested Capital
as of the date of determination;
(j) Investments deemed to have been made as a result of the
acquisition of a Person that at the time of such acquisition held
instruments constituting Investments that were not acquired in
contemplation of the acquisition of such Person;
(k) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers or in good faith bona fide
settlement of delinquent ordinary course of business trade receivables
of customers;
36
<PAGE> 42
(l) Investments where all or a portion of the consideration
provided is Capital Stock of the Company, other than Disqualified
Stock, but the same shall constitute a Permitted Investment only to the
extent of such consideration provided in the form of such Capital
Stock;
(m) Investments in Existing International Joint Ventures;
provided that the aggregate amount of such Investments made after the
date of the Indenture does not exceed $100 million as of the date of
determination; and
(n) additional Investments in an aggregate amount not to
exceed $200 million.
"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
GAAP shall have been made for such Liens;
(b) other Liens incidental to the conduct of the Company's and
its Restricted Subsidiaries' businesses or the ownership of its
Property 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 when taken as a whole, or materially impair the
use thereof in the operation of its business;
(c) Liens, pledges and deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of statutory obligations;
(d) 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,
the obtaining of advances or credit or the payment of the deferred
purchase price of Property and which do not in the aggregate materially
impair the use of Property in the operation of the business of the
Company and the Restricted Subsidiaries taken as a whole;
37
<PAGE> 43
(e) 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;
(f) any interest or title of a lessor in the Property subject
to any lease other than a Capital Lease;
(g) Liens with respect to assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company to secure Debt
owing to the Company;
(h) Liens arising out of judgments or awards against the
Company or any Restricted Subsidiary of the Company 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 GAAP;
(i) Liens arising by operation of law in connection with
judgments, only to the extent, for an amount and for a period not
resulting in an Event of Default with respect thereto;
(j) Liens securing Permitted Interest Rate or Currency
Protection Agreement; and
(k) Liens in favor of the Trustee arising under the Indenture.
"PERMITTED TELECOMMUNICATIONS ASSET DISPOSITION" means the transfer,
conveyance, sale, lease or other disposition of an interest in or capacity on
optical fiber and/or conduit and any related equipment used in a Segment of the
Company's communications network, whether or not in the ordinary course of
business; provided that after giving effect to such disposition, the Company
would retain at least
(1) with respect to any Segment constructed by, for or on
behalf of the Company or any of its subsidiaries or affiliates,
o 24 optical fibers per route mile on such
Segment as deployed at the time of such
disposition; or
38
<PAGE> 44
o 12 optical fibers and one empty conduit per
route mile on such Segment as deployed at
such time; and
(2) with respect to any Segment purchased or leased from third
parties, the lesser of
o 50% of the optical fibers per route mile
originally purchased on such Segment;
o 24 optical fibers per route mile on such
Segment as deployed at the time of such
disposition; or
o 12 optical fibers and one empty conduit per
route mile on such Segment as deployed at
the time of such disposition.
"PERSON" means any individual, corporation, company, partnership, joint
venture, limited liability company, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"PLAN" means any employee benefit plan, retirement plan, deferred
compensation plan, restricted stock plan, health, life, disability or other
insurance plan or program, employee stock purchase plan, employee stock
ownership plan, pension plan, stock option plan or similar plan or arrangement
of the Company or any Restricted Subsidiary of the Company, or any successor
plan thereof, and "Plans" shall have a correlative meaning.
"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.
"PREFERRED STOCK DIVIDENDS" means all dividends with respect to
Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Wholly Owned Restricted Subsidiary. The amount of any such dividend
shall be equal to the quotient of such dividend divided by the difference
between one and the maximum statutory federal income rate (expressed as a
decimal number between 1 and 0 and determined in accordance with GAAP)
applicable to the issuer of such Preferred Stock for the period during which
such dividends were paid.
39
<PAGE> 45
"PRINCIPAL" wherever used with reference to the Notes or any Note or
any portion thereof, shall be deemed to include "and premium, if any".
"PROPERTY" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including Capital Stock in, and other securities of, any
other Person. For purposes of any calculation required pursuant to the
Indenture, the value of any Property shall be its Fair Market Value.
"PROPORTIONATE INTEREST" in any issuance of Capital Stock of a
Restricted Subsidiary means a ratio (1) the numerator of which is the aggregate
amount of Capital Stock of such Restricted Subsidiary beneficially owned by the
Company and the Restricted Subsidiaries and (2) the denominator of which is the
aggregate amount of Capital Stock of such Restricted Subsidiary beneficially
owned by all Persons, excluding, in the case of this clause (2), any Investment
made in connection with such issuance.
"PURCHASE MONEY DEBT" means Debt (including Acquired Debt and Capital
Lease Obligations, mortgage financings and purchase money obligations) incurred
for the purpose of financing all or any part of the cost of construction,
installation, acquisition, lease, development or improvement by the Company or
any Restricted Subsidiary of any Telecommunications Assets of the Company or any
Restricted Subsidiary and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as the
same may be amended, supplemented, modified or restated from time to time.
"QUALIFIED RECEIVABLE FACILITY" means Debt of the Company or any
Subsidiary Incurred from time to time pursuant to either
o credit facilities secured by Receivables, or
o Receivables purchase facilities
in each case, including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified or restated from time to time.
"RATING AGENCIES" means Moody's and S&P.
"RATING DATE" means the earlier of the date of public notice of the
occurrence of a Change of Control or of the intention of the Company to effect a
Change of Control.
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<PAGE> 46
"RATING DECLINE" shall be deemed to have occurred if, no later than 90
days after the Rating Date (which period shall be extended so long as the rating
of the Notes is under publicly announced consideration for possible downgrade by
any of the Rating Agencies), either of the Rating Agencies assigns or reaffirms
a rating to the Notes that is lower than the applicable rating of the notes on
the date of the Indenture or the equivalent thereof. If, prior to the Rating
Date, either of the ratings assigned to the Notes by the Rating Agencies is
lower than the applicable rating of the notes on the date of the Indenture, then
a Rating Decline will be deemed to have occurred if such rating is not changed
by the 90th day following the Rating Date. A downgrade within rating categories,
as well as between rating categories, will be considered a Rating Decline.
"RECEIVABLES" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money and
proceeds and products thereof in each case generated in the ordinary course of
business.
"REGULAR RECORD DATE" for the Interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the March 15 or
September 15 (whether or not a Business Day) as the case may be, next preceding
such Interest Payment Date.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
vice president (whether or not designated by numbers or words added before or
after the title "vice president"), any assistant vice president, any assistant
secretary, any assistant treasurer, or any other officer or assistant officer of
the Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"RESTRICTED SUBSIDIARY" means
o a Subsidiary of the Company or of a Restricted Subsidiary that
has not been designated or classified as an Unrestricted
Subsidiary pursuant to and in compliance with Section 3.20,
and
o an Unrestricted Subsidiary that is redesignated as a
Restricted Subsidiary pursuant to such covenant.
"RETURNED INVESTMENTS" means, with respect to all Investments made in
Unrestricted Subsidiaries, the aggregate amount of all payments made in respect
of such Investments, other than interest, dividends or other distributions not
in the
41
<PAGE> 47
nature of a return or repurchase of capital or a repayment of principal, that
have been paid or returned, without restriction, to the Company or any
Restricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services or, if Standard & Poor's
Ratings Services shall cease rating debt securities having a maturity at
original issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, however,
that if there is no successor Person, then "S&P" shall mean any other national
recognized rating agency, other than Moody's, that rates debt securities having
a maturity at original issuance of at least one year and that shall have been
designated by the Company.
"SALE AND LEASEBACK TRANSACTION" of any Person means any direct or
indirect arrangement pursuant to which any Property is sold or transferred by
such Person or a Restricted Subsidiary of such person and is thereafter leased
back from the purchaser or transferee thereof by such Person or one of its
Restricted Subsidiaries. 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.
"SEGMENT" means
o with respect to the Company's intercity network, the
through-portion of such network between two local networks,
and
o with respect to a local network of the Company, the entire
through-portion of such network, excluding the spurs which
branch off the through-portion.
"STATED MATURITY" when used with respect to a Note or any installment
of interest on such note, 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, including pursuant to any mandatory redemption provision, but
excluding any provision providing for the repurchase of such Note at the option
of the Holder on such note upon the happening of any contingency beyond the
control of the Company unless such contingency has occurred.
"SUBORDINATED DEBT" means Debt of the Company (a) that is not secured
by any Lien on or with respect to any Property now owned or acquired after the
date of the Indenture and (b) as to which the payment of principal of, and
premium, if any, and interest and other payment obligations in respect of such
42
<PAGE> 48
Debt shall be subordinate to the prior payment in full in cash of the Notes to
at least the following extent:
(1) no payments of principal of, or premium, if any, or
interest on or otherwise due, including by acceleration or for
additional amounts, in respect of, or repurchases, redemptions or other
retirements of, such Debt may be permitted for so long as any default,
after giving effect to any applicable grace periods, in the payment of
principal, or premium, if any, or interest on the Notes exists,
including as a result of acceleration;
(2) if any other Default exists with respect to either series
of Notes, upon notice by Holders of 25% or more in aggregate principal
amount of the applicable series of 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 such Debt may be made for a period of 179
days from the date of such notice; provided that not more than one such
payment blockage notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to the applicable
series of Notes during such period;
(3) if payment of such Debt is accelerated when any Notes are
outstanding, no payments of such Debt may be made until three Business
Days after the Trustee receives notice of such acceleration and,
thereafter, such payments may only be made to the extent the terms of
such Debt permit payment at that time; and
(4) such Debt may not
(x) provide for payments of principal of such Debt at
the stated maturity of such Debt or by way of a sinking fund
applicable to such Debt or by way of any mandatory redemption,
defeasance, retirement or repurchase of such Debt 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 Notes, or
(y) 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 of such Debt prior to the
final Stated Maturity of the Notes,
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<PAGE> 49
other than, in the case of clause (x) or (y), any such payment, redemption or
other retirement, including pursuant to an offer to purchase made by the
Company, which is conditioned upon
o a change of control of the Company pursuant to provisions
substantially similar to those described in Section 3.18 (and
which shall provide that such Debt will not be repurchased
pursuant to such provisions prior to the Company's repurchase
of the Notes required to be repurchased by the Company
pursuant to the provisions described in Section 3.18, or
o a sale or other disposition of assets pursuant to provisions
substantially similar to those described in Section 3.15 (and
which shall provide that such Debt will not be repurchased
pursuant to such provisions prior to the Company's repurchase
of the Notes required to be repurchased by the Company
pursuant to the provision described in Section 3.15.
"SUBSIDIARY" of any Person means:
o 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 of such Person; or
o 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 of such Person,
directly or indirectly, has at least a majority ownership and
power to direct the policies, management and affairs thereof.
"TELECOMMUNICATIONS ASSETS" means:
(a) any Property, other than cash, cash equivalents and
securities, to be owned or used by the Company or any Restricted
Subsidiary and used in the Telecommunications Business;
(b) for purposes of the covenants described in Section 3.08
and Section 3.13 only, Capital Stock of any Person; or
(c) for all other purposes of the Indenture, Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the
acquisition
44
<PAGE> 50
of such Capital Stock by the Company or another Restricted Subsidiary
from any Person other than an Affiliate of the Company;
provided, however, that, in the case of clause (b) or (c), such Person is
primarily engaged in the Telecommunications Business.
"TELECOMMUNICATIONS BUSINESS" means the business of:
(1) transmitting, or providing services relating to the
transmission of, voice, video, data through owned or leased
transmission facilities or the right to use such facilities;
(2) constructing, creating, developing, operating, managing or
marketing communications networks, related network transmission
equipment, software and other devices for use in a communications
business;
(3) computer outsourcing, data center management, computer
systems integration, reengineering of computer software for any
purpose, including, without limitation, for the purposes of porting
computer software from one operating environment or computer platform
to another or to address issues commonly referred to as "YEAR 2000
ISSUES";
(4) constructing, managing or operating fiber optic
telecommunications networks and leasing capacity on those networks to
third parties;
(5) the sale, resale, installation or maintenance of
communications systems and equipment; or
(6) evaluating, participating or pursuing any other activity
or opportunity that is primarily related to those identified in (1),
(2), (3), (4) or (5) 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.
"TREASURY RATE" means, at any date of determination, the yield to
maturity as of such date (as complied by and published in the most recent
Federal Reserve Statistical Release H.15 (519), which has become publicly
available at least two business days prior to the date of the redemption notice
for which such computation is being made, or if such Statistical Release is no
longer published, as reported in any publicly available source or similar market
data) of United
45
<PAGE> 51
States Treasury securities with a constant maturity most nearly equal to the
Make-Whole Average Life; provided however, that if the Make-Whole Average Life
is not equal to the constant maturity of the United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields
are given, except that if the Make-Whole Average Life is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"TRUST INDENTURE ACT OF 1939" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was originally
executed, and "TIA", when used in respect of an indenture supplemental hereto,
means such Act as in force at the time such indenture supplemental hereto
becomes effective.
"TRUSTEE" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Five, shall also
include any successor trustee.
"UNRESTRICTED SUBSIDIARY" means
o any Subsidiary of an Unrestricted Subsidiary, and
o any Subsidiary of the Company designated as such pursuant to
and in compliance with Section 3.20 and not thereafter
redesignated as a Restricted Subsidiary as permitted pursuant
to such section.
"U.S. GOVERNMENT OBLIGATIONS" means securities issued or directly and
fully guaranteed or insured by the United States of America or any agent or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof).
"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.
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<PAGE> 52
"WILLIAMS INTERCOMPANY ARRANGEMENTS" means the Williams Note and any
other documents, instruments, agreements and arrangements between the Company
and any Restricted Subsidiaries, between any Restricted Subsidiaries or between
the Company or any Restricted Subsidiary, on the one hand, and The Williams
Companies, Inc. or any of its Subsidiaries, on the other hand, in effect on the
date of the Indenture, as such documents, instruments, agreements and
arrangements may be amended, modified or supplemented, but only to the extent
any such amendments, modifications or supplements are approved by a majority of
the members of the Board of Directors of the Company who are disinterested with
respect to such amendment, modification or supplement.
"WILLIAMS NOTE" means the promissory note of Williams Communications,
Inc., a subsidiary of the Company, dated as of September 8, 1999, to The
Williams Companies, Inc. in the principal amount as of such date equal to $1.0
billion.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
- ---- -------
<S> <C>
"Acceleration Notice"......................................... 4.02
"Affiliate Transaction"....................................... 3.17
"Agent Members"............................................... 2.07
"beneficial owner"............................................ 3.18
"cash transaction"............................................ 5.13
"Covenant Defeasance"......................................... 10.03
"Designation"................................................. 3.20
"Designation Amount........................................... 3.20
"Global Note"................................................. 2.04
"incorporated provision"...................................... 11.07
"Incurrence Date"............................................. 3.08
"Legal Defeasance"............................................ 10.02
"Note Register"............................................... 2.06
"parent corporation".......................................... 3.18
"refinancing"................................................. 3.08
"Registrar"................................................... 2.06
"Required Filing Dates"....................................... 3.19
"Revocation".................................................. 3.20
"self-liquidating paper....................................... 5.13
</TABLE>
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ARTICLE 2
ISSUE, EXECUTION, FORM AND REGISTRATION OF NOTES
SECTION 2.01. Authentication and Delivery of Notes. Upon the execution
and delivery of this Indenture, or from time to time thereafter, Notes in an
aggregate principal amount not in excess of the amount specified in the form of
Note hereinabove recited (except as otherwise provided in Section 2.08) may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said Notes
to or upon the written order of the Company, signed by its Chairman of the Board
of Directors, or any Vice Chairman of the Board of Directors, or its President
or any Vice President (whether or not designated by a number or numbers or a
word or words added before or after the title "Vice President") without any
further action by the Company.
SECTION 2.02. Execution of Notes. The Notes shall be signed on behalf
of the Company by its Chairman of the Board of Directors or its President or any
Vice President (whether or not designated by a number or numbers or a word or
words added before or after the title "Vice President"). Such signature may be
the manual or facsimile signatures of the present or any future such officers.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Note so signed shall be
authenticated and delivered by the Trustee or disposed of by the Company, such
Note nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Note had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution and delivery of this
Indenture any such person was not such officer.
SECTION 2.03. Certificate of Authentication. Only such Notes as shall
bear thereon a certificate of authentication substantially in the form
hereinabove recited, executed by the Trustee by manual signature of one of its
authorized signatories, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon any
Note executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Indenture.
SECTION 2.04. Form, Denomination and Date of Notes; Payments of
Interest. The Notes and the Trustee's certificates of authentication shall be
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<PAGE> 54
substantially in the form recited above. The Notes shall be issuable in
denominations provided for in the form of Note recited above. The Notes shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers of the Company executing the same may determine
with the approval of the Trustee.
Any of the Notes may be issued with appropriate insertions, omissions,
substitutions and variations, and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto, including those required by Section 2.05, or with
the rules of any securities market in which the Notes are admitted to trading,
or to conform to general usage.
Each Note shall be dated the date of its authentication, shall bear
interest from the applicable date and shall be payable on the dates specified on
the face of the form of Note recited above.
The Notes shall be issued initially in the form of one or more global
Notes (a "GLOBAL NOTE") deposited with the Trustee as custodian for the
Depositary.
The person in whose name any Note is registered at the close of
business on any Regular Record Date with respect to any Interest Payment Date
shall be entitled to receive the interest, if any, payable on such Interest
Payment Date notwithstanding any transfer or exchange of such Note subsequent to
the Regular Record Date and prior to such Interest Payment Date, except if and
to the extent the Company shall default in the payment of the interest due on
such Interest Payment Date, in which case such defaulted interest, plus (to the
extent lawful) any interest payable on the defaulted interest, shall be paid to
the persons in whose names outstanding Notes are registered at the close of
business on a subsequent record date (which shall be not less than five Business
Days prior to the date of such payment) established by notice given by mail by
or on behalf of the Company to the Holders of Notes not less than 15 days
preceding such subsequent record date.
SECTION 2.05. Global Note Legends. Each Global Note shall bear the
following legends on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, 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 TO SUCH OTHER
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<PAGE> 55
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE.
SECTION 2.06. Registration, Transfer and Exchange. The Notes are
issuable only in registered form. The Company will keep at each office or agency
to be maintained for the purpose as provided in Section 3.02 (the "REGISTRAR") a
register or registers (the "NOTE REGISTER(S)") in which, subject to such
reasonable regulations as it may prescribe, it will register, and will register
the transfer of, Notes as in this Article provided. Such Note Register shall be
in written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times such
Note Register or Note Registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Note at each
such office or agency, the Company shall execute and the Trustee shall
authenticate in accordance with the procedures set forth herein and make
available for delivery in the name of the transferee or transferees a new Note
or Notes in authorized denominations for a like aggregate principal amount.
A Holder may transfer a Note only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Note
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee, and any agent of the Company shall treat the
person in whose name the Note is registered as the owner thereof for all
purposes whether or not the Note shall be overdue, and neither the Company, the
Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note
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<PAGE> 56
shall, by acceptance of such Global Note, agree that transfers of beneficial
interests in such Global Note may be effected only through a book entry system
maintained by the Holder of such Global Note (or its agent) and that ownership
of a beneficial interest in the Note shall be required to be reflected in a book
entry. When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Notes of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if the requirements for such
transactions set forth herein are met. To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate Notes at
the Registrar's request.
The Company may require payment of a sum sufficient to cover any tax or
other similar governmental charge that may be imposed in connection with any
exchange or registration of transfer of Notes (other than any such transfer
taxes or other similar governmental charge payable upon exchanges pursuant to
Section 2.10, 7.05 or 9.03). No service charge to any Holder shall be made for
any such transaction.
The Company shall not be required to exchange or register a transfer of
(a) any Notes to be redeemed for a period of 15 days next preceding the first
mailing of notice of redemption of Notes to be redeemed, or (b) any Notes
selected, called or being called for redemption except, in the case of any Note
where public notice has been given that such Note is to be redeemed in part, the
portion thereof not so to be redeemed.
All Notes issued upon any transfer or exchange of Notes shall be valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such transfer or
exchange.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) Each Global
Note shall (1) be registered in the name of the Depositary for such Global Notes
or the nominee of such Depositary, (2) be delivered to the Trustee as custodian
for such Depositary and (3) bear legends as set forth in Section 2.05.
Members of, or participants in, the Depositary ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note 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
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<PAGE> 57
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Note may
be transferred in accordance with the rules and procedures of the Depositary. In
addition, Certificated Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests if (1) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Note or the Depository ceases to be a "CLEARING AGENCY" registered under the
Exchange Act and a successor depositary is not appointed by the Company within
90 days of such notice or (2) an Event of Default relating to such Global Note
of which a Responsible Officer of the Trustee has actual notice has occurred and
is continuing and the Registrar has received a request from the Depositary to
issue such Certificated Securities.
(c) In connection with the transfer of the entire Global Note of either
series to beneficial owners pursuant to paragraph (b) of this Section, such
Global Note 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 Depositary in exchange for its
beneficial interest in such Global Note an equal aggregate principal amount of
Certificated Securities of authorized denominations.
(d) The registered Holder of a Global Note 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 Notes.
SECTION 2.08. Mutilated, Defaced, Destroyed, Lost and Stolen Notes. In
case any temporary or definitive Note shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Company in its discretion may execute,
and upon the written request of any officer of the Company, the Trustee shall
authenticate and make available for delivery, a new Note, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated or
defaced Note, or in lieu of and substitution for the Note so apparently
destroyed, lost or stolen. In every case the applicant for a substitute Note
shall furnish to the Company and to the Trustee and any agent of the Company or
the Trustee such security or indemnity as may be required by them to indemnify
and defend and to save each of them harmless and, in every case of destruction,
loss or theft
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evidence to their satisfaction of the apparent destruction, loss or theft of
such Note and of the ownership thereof.
Upon the issuance of any substitute Note, the Company may require the
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
In case any Note which has matured or is about to mature, or has been called for
redemption in full, shall become mutilated or defaced or be apparently
destroyed, lost or stolen, the Company may, instead of issuing a substitute
Note, pay or authorize the payment of the same (without surrender thereof except
in the case of a mutilated or defaced Note), if the applicant for such payment
shall furnish to the Company and to the Trustee and any agent of the Company or
the Trustee such security or indemnity as any of them may require to save each
of them harmless from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee and any agent of the Company or the Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Note and of the
ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section
by virtue of the fact that any Note is apparently destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the apparently destroyed, lost or stolen Note shall be at any time
enforceable by anyone and shall be entitled to all the benefits of (but shall be
subject to all the limitations of rights set forth in) this Indenture equally
and proportionately with any and all other Notes duly authenticated and
delivered hereunder. All Notes shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Notes and shall preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.09. Cancellation of Notes. All Notes surrendered for payment,
redemption, registration of transfer or exchange, if surrendered to the Company
or any agent of the Company or the Trustee, shall be delivered to the Trustee
for cancellation or, if surrendered to the Trustee, shall be cancelled by it;
and no Notes shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. If the Company shall acquire any of the
Notes, such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.
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SECTION 2.10. Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute and, upon receipt of an order from the Company,
the Trustee shall authenticate and make available for delivery temporary Notes
(printed, lithographed, typewritten or otherwise reproduced, in each case in
form satisfactory to the Trustee). Temporary Notes shall be issuable as
registered Notes without coupons, of any authorized denomination, and
substantially in the form of the definitive Notes but with such omissions,
insertions and variations as may be appropriate for temporary Notes, all as may
be determined by the Company with the concurrence of the Trustee. Temporary
Notes may contain such reference to any provisions of this Indenture as may be
appropriate. Every temporary Note shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Notes. Without unreasonable
delay the Company shall execute and shall furnish definitive Notes and thereupon
temporary Notes may be surrendered in exchange therefor without charge at each
office or agency to be maintained by the Company for the purpose pursuant to
Section 3.02, and the Trustee shall authenticate and make available for delivery
in exchange for such temporary Notes a like aggregate principal amount of
definitive Notes of authorized denominations. Until so exchanged the temporary
Notes shall be entitled to the same benefits under this Indenture as definitive
Notes.
SECTION 2.11. CUSIP Numbers. The Company in issuing the Notes may use a
"CUSIP" number (if then generally in use), and the Trustee shall use the CUSIP
number in notices of redemption or exchange as a convenience to Holders;
provided that any such notice shall state that no representation is made as to
the correctness of such number either as printed on the Notes or as contained in
any notice of redemption or exchange and that reliance may be placed only on the
other identification number printed on the Notes. The Company shall promptly
notify the Trustee of any change in the CUSIP number.
ARTICLE 3
COVENANTS OF THE COMPANY AND THE TRUSTEE
SECTION 3.01. Payment of Principal and Interest. The Company covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, and interest on, each of the Notes at the place or places, at the
respective times and in the manner provided in the Notes. Each installment of
interest on the Notes may be paid by mailing checks for such interest payable to
or upon the written order of the Holders of Notes entitled thereto as they shall
appear on the registry books of the Company, or by wire transfer to such Holders
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in immediately available funds, to such bank or other entity in the continental
United States as shall be designated by such Holders and shall have appropriate
facilities for such purpose, or in accordance with the standard operating
procedures of the Depositary.
SECTION 3.02. Offices for Payments, etc. So long as any of the Notes
remain outstanding, the Company will maintain in the Borough of Manhattan, The
City of New York, the following: (a) an office or agency where the Notes may be
presented for payment, (b) an office or agency where the Notes may be presented
for registration of transfer and for exchange as in this Indenture provided and
(c) an office or agency where notices and demands to or upon the Company in
respect of the Notes or of this Indenture may be served. The Company will give
to the Trustee written notice of the location of any such office or agency and
of any change of location thereof. The Company hereby initially designates the
Corporate Trust Office of the Trustee as the office or agency for each such
purpose. In case the Company shall fail to maintain any such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
Corporate Trust Office.
SECTION 3.03. Appointment to Fill a Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section, a Trustee, so that there shall
at all times be a Trustee hereunder.
SECTION 3.04. Paying Agents. Whenever the Company shall appoint a
paying agent other than the Trustee, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Notes (whether such sums have
been paid to it by the Company or by any other obligor on the Notes) in trust
for the benefit of the Holders of the Notes or of the Trustee,
(b) that it will give the Trustee notice of any failure by the Company
(or by any other obligor on the Notes) to make any payment of the principal of
or interest on the Notes when the same shall be due and payable, and
(c) that it will pay any such sums so held in trust by it to the
Trustee upon the Trustee's written request at any time during the continuance of
the failure referred to in clause (b) above.
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The Company will, prior to each due date of the principal of or
interest on the Notes, deposit with the paying agent a sum sufficient to pay
such principal or interest, and (unless such paying agent is the Trustee) the
Company will promptly notify the Trustee of any failure to take such action.
If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Notes, set aside, segregate
and hold in trust for the benefit of the Holders of the Notes a sum sufficient
to pay such principal or interest so becoming due. The Company will promptly
notify the Trustee of any failure to take such action.
Anything in the prior two paragraphs to the contrary notwithstanding,
in connection with any payment of principal and interest, the Company will, for
so long as the Depository is a Holder of the Notes, deposit sums with the paying
agent sufficient to pay such amounts not later than the time required by the
Depository's rules and regulations as in effect at the time such payment is due.
Anything in this Section to the contrary notwithstanding, the Company
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason, pay or cause to be paid to the Trustee
all sums held in trust by the Company or any paying agent hereunder, as required
by this Section, such sums to be held by the Trustee upon the trusts herein
contained.
Anything in this Section to the contrary notwithstanding, the agreement
to hold sums in trust as provided in this Section are subject to the provisions
of Section 10.05 and Section 10.06.
SECTION 3.05. Certificates to Trustee. (a) The Company will deliver to
the Trustee within 90 days after the end of each fiscal year of the Company a
certificate from the principal executive, financial or accounting officer of the
Company stating that such officer has conducted or supervised a review of the
activities of the Company and its Restricted Subsidiaries and the Company's and
its Restricted Subsidiaries' performance under this Indenture and that, to the
best of such officer's knowledge, based upon such review, there has been no
Default that is continuing thereunder or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default and the nature
and status thereof.
(b) The Company will deliver to the Trustee, as soon as possible and in
any event within 30 days after the occurrence thereof, written notice in the
form of an Officers' Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default, setting forth the status
of such event and what action the Company is taking or proposes to take with
respect thereto.
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(c) The Company will deliver to the Trustee within 120 days after the
end of each fiscal year of the Company a written statement by the Company's
independent public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Notes as they relate to
accounting matters, and (ii) whether, in connection with their audit
examination, any Default that is continuing has come to their attention and, if
such a Default has come to their attention, specifying the nature and period of
the existence thereof.
SECTION 3.06. Noteholders' Lists. If and so long as the Trustee shall
not be the Registrar, the Company will furnish or cause to be furnished to the
Trustee a list in such form as the Trustee may reasonably require of the names
and addresses of the Holders of the Notes pursuant to Section 312 of the Trust
Indenture Act of 1939 (a) semi-annually not more than 15 days after each Regular
Record Date as of such Regular Record Date, and (b) at such other times as the
Trustee may request in writing, within thirty days after receipt by the Company
of any such request as of a date not more than 15 days prior to the time such
information is furnished.
SECTION 3.07. Reports by the Trustee. (a) The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act of 1939 at the times and
in the manner provided pursuant thereto. If required by Section 313(a) of the
Trust Indenture Act of 1939, the Trustee shall, within sixty days after each
August 15 following the date of this Indenture deliver to Holders a brief
report, dated as of such August 15, which complies with the provisions of such
Section 313(a).
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange, if any, upon which
the Notes are listed, with the Commission and with the Company. The Company will
promptly notify the Trustee when the Notes are listed on any stock exchange or
of any delisting thereof.
SECTION 3.08. Limitation on Consolidated Debt. (a) The Company may not,
and may not permit any Restricted Subsidiary to, directly or indirectly, Incur
any Debt, unless, after giving pro forma effect to such Incurrence and the
receipt and application of the net proceeds of such Incurrence, no Default or
Event of Default would occur as a consequence of such Incurrence or be
continuing following such Incurrence and either
(1) the ratio of (A) the aggregate consolidated principal
amount (or, in the case of Debt issued at a discount, the then Accreted
Value) of
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Debt of the Company outstanding as of the most recent available
quarterly or annual balance sheet, after giving pro forma effect to
o the Incurrence of such Debt and any other Debt
Incurred and that remains outstanding on the date as
of which the Debt to be Incurred is to be Incurred
(the "INCURRENCE DATE") since such balance sheet date
and the receipt and application of the net proceeds
thereof, in each case as if such Incurrence, receipt
and application had occurred on such balance sheet
date, and
o the repayment, repurchase, retirement or
extinguishment of any Debt since such balance sheet
date, as if such repayment, repurchase, retirement or
extinguishment had occurred on such balance sheet
date, 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 of such
Debt had been applied, and any material Investment in, or
acquisition or disposition of, any material asset outside the
ordinary course of business consummated during, or since the
end of, such period of four fiscal quarters had occurred at
the beginning of such four fiscal quarters,
would be less than 5.0 to 1.0; or
(2) The Company's Consolidated Capital Ratio is less than 2.25
to 1.0 as of the most recent available quarterly or annual balance
sheet, after giving pro forma effect to
o the Incurrence of such Debt and any other Debt
Incurred and that remains outstanding on the
Incurrence Date since such balance sheet date as if
such Incurrence had occurred on such balance sheet
date,
o the repayment, repurchase, retirement or
extinguishment of any Debt since such balance sheet
date, as if such repayment, repurchase or
extinguishment had occurred on such balance sheet
date,
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o the issuance of any Capital Stock (other than
Disqualified Stock) of the Company since such balance
sheet date, including the issuance of any Capital
Stock to be issued concurrently with the Incurrence
of such Debt, as of such Incurrence had occurred on
such balance sheet date, and
o the receipt and application of the net proceeds of
such Debt or Capital Stock, as the case may be, as if
such receipt and application of the proceeds
therefrom had occurred on the balance sheet date.
(b) The restrictions in paragraph (a) do not prevent the Company or any
Restricted Subsidiary from Incurring any and all of the following, each of which
shall be given independent effect:
(1) Debt under the Notes, the Indenture or any Domestic
Restricted Subsidiary Guarantee;
(2) Debt under Credit Facilities in an aggregate principal
amount outstanding or available (together with all refinancing Debt
outstanding or available pursuant to clause (8) below in respect of
Debt previously Incurred pursuant to this clause (2) at any one time
not to exceed the greater of
(x) $2.0 billion, less
o the amount of all mandatory
principal payments actually made by
the Company or any Restricted
Subsidiary in respect of term loans
thereunder (excluding any such
payments to the extent refinanced
at the time of payment under a new
Credit Facility), and
o in the case of a revolving
facility, reduced by any required
permanent repayments actually made
(which are accompanied by a
corresponding permanent commitment
reduction) under the revolving
facility (excluding any such
repayments and commitment
reductions to the extent refinanced
and replaced at the time under a
new Credit Facility), and
(y) 85% of the Eligible Receivables;
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(3) Purchase Money Debt; provided that the amount of such
Purchase Money Debt does not exceed 100% of the cost of the
construction, installation, acquisition, lease, development or
improvement of the applicable Telecommunications Assets;
(4) Subordinated Debt of the Company; provided, however, that
the aggregate principal amount of such Debt, together with any other
outstanding Debt Incurred pursuant to this clause (4), shall not exceed
$500 million at any one time (which amount shall be permanently reduced
by the amount of Net Available Proceeds used to repay Subordinated Debt
of the Company, and not reinvested in Telecommunications Assets or used
to purchase Notes or repay other Debt, pursuant to the covenant
described in Section 3.15), except to the extent such Debt in excess of
$500 million
(A) is subordinated to all other Debt of the Company
other than Debt Incurred pursuant to this clause (4) in excess
of such $500 million limitation,
(B) does not provide for the payment of cash interest
on such Debt prior to the Stated Maturity of the Notes, and
(C) does not
o provide for payments of principal
of such Debt at stated maturity or
by way of a sinking fund applicable
to the payment of such Debt 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 under such Debt),
in each case on or prior to the
Stated Maturity of the Notes, and
o 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 of such Debt on or
prior to the Stated Maturity of the
Notes,
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other than, in the case of these points under (C) a redemption or 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 or
asset disposition pursuant to provisions substantially similar to those
described in Section 3.15 and Section 3.18;
(5) Debt outstanding on the date of the Indenture;
(6) 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
o upon any subsequent transfer, conveyance or other
disposition by any 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
o if for any reason such Restricted Subsidiary ceases
to be a Restricted Subsidiary,
the provisions of this clause (6) 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, conveyance or other disposition
or when such Restricted Subsidiary ceases to be a Restricted
Subsidiary;
(7) Debt Incurred 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 was not
Incurred with, or in anticipation of, such transaction or such
Person becoming a Restricted Subsidiary;
(8) Debt Incurred to renew, extend, refinance, defease, repay,
replace, prepay, repurchase, redeem, retire, exchange or refund (each,
a "REFINANCING") Debt Incurred pursuant to clause (1), (2), (3), (5),
(7), (12)
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or (13) of this paragraph (b) or this clause (8), in an aggregate
principal amount, or if issued at a discount, the then Accreted Value,
not to exceed the aggregate principal amount, or if issued at a
discount, the then Accreted Value, of and accrued interest on the Debt
so refinanced plus the amount of any premium, accrued interest,
prepayment penalties, fees and expenses required to be paid with such
refinancing pursuant to the terms of the Debt so refinanced or the
amount of any premium or accrued interest reasonably determined by the
Board of Directors of the Company as necessary to accomplish such
refinancing by means of a redemption, tender offer or privately
negotiated repurchase plus the amount of fees and expenses incurred
with such redemption, tender offer or privately negotiated repurchase;
provided, however, that
o the refinancing Debt shall not be senior in right of
payment to the Debt that is being refinanced, and
o in the case of any refinancing of Debt Incurred
pursuant to clause (1), (5), (7) or (12) or, if such
Debt previously refinanced Debt Incurred pursuant to
any such clause, this clause (8), 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 to the payment
of such Debt 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 under such Debt, 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 of such Debt prior to the time the same are
required by the terms of the Debt being refinanced, other than, in the
case of clause (x) or (y), any such payment, redemption or other
retirement, including pursuant to an offer to purchase made by the
Company, which is conditioned upon a change of control or asset sale
pursuant to provisions substantially similar to those in Section 3.15
and Section 3.18.
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provided further that the above clauses (x) and (y) and the limitation on the
aggregate principal amount referred to above in this clause (8) shall not apply
to any refinancing of all of the Notes then outstanding;
(9) Debt
(A) in respect of performance, surety or appeal
bonds, Guarantees, letters of credit or reimbursement
obligations Incurred or provided in the ordinary course of
business securing the performance of contractual, franchise,
lease, self-insurance or license obligations and not in
connection with the Incurrence of Debt, or
(B) in respect of customary agreements providing for
indemnification, adjustment of purchase price after closing,
or similar obligations, or from Guarantees or letters of
credit, surety bonds or performance bonds securing any such
obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, Incurred in
connection with the disposition of any business, assets or
Restricted Subsidiary of the Company (other than Guarantees of
Debt Incurred by any Person acquiring all or any portion of
such business, assets or Restricted Subsidiary of the Company
for the purpose of financing such acquisition) and in an
aggregate principal amount not to exceed the gross proceeds
actually received by the Company or any Restricted Subsidiary
in connection with such disposition;
(10) Debt consisting of Permitted Interest Rate or Currency
Protection Agreements;
(11) 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; provided further, that Receivables shall not be available
at any time to secure Debt under this clause to the extent that they
are used as the basis for the Incurrence of Debt pursuant to clause (2)
(y) of this paragraph (b);
(12) Debt Incurred after the date of the Indenture pursuant to
the Williams Note, including Debt Incurred in lieu of payments under
the Williams Intercompany Arrangements and any accrual of interest that
is capitalized under, or added to the principal amount of, the Williams
Note; provided that the aggregate amount of such Debt Incurred in lieu
of payments under the Williams Intercompany Arrangements, other than in
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respect of any such accrual of interest, in reliance on this clause
(12) does not exceed $25 million in any 12-month period;
(13) Debt Incurred pursuant to the lease, dated as of
September 2, 1998, between 1998 WCI Trust, as lessor, and Williams
Communications, Inc., as lessee, in an aggregate principal amount not
to exceed $750 million at any one time outstanding; and
(14) Debt not otherwise permitted to be Incurred pursuant to
clauses (1) through (13) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (14), has an
aggregate principal amount not in excess of $50 million at any time
outstanding.
Notwithstanding any other provision of this Section, the maximum amount
of Debt that the Company or a Restricted Subsidiary may Incur pursuant to this
Section will not be exceeded solely as a result of fluctuations in the exchange
rates of currencies.
For purposes of determining any particular amount of Debt under this
Section:
o Guarantees, Liens or obligations with respect to letters of
credit supporting Debt otherwise included in the determination
of such particular amount shall not be included; and
o any Liens granted for the benefit of the Notes pursuant to the
equal and ratable provisions referred to in the covenant
described in Section 3.13 shall not be treated as Debt.
For purposes of determining compliance with this Section, if an item of
Debt meets the criteria of more than one of the types of Debt described in the
above clauses, the Company, in its sole discretion, may classify such item of
Debt and only be required to include the amount and type of such Debt in one of
such clauses, but also may classify a portion of such item of Debt in more than
one of such clauses and in any order the Company so chooses.
SECTION 3.09. Limitation on Debt of Restricted Subsidiaries. The
Company may not permit any Restricted Subsidiary that is not a Guarantor to
Incur any Debt except any and all of the following, each of which shall be given
independent effect:
(1) Domestic Restricted Subsidiary Guarantees;
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(2) Debt outstanding on the date of the Indenture;
(3) Debt of Restricted Subsidiaries under Credit Facilities
permitted to be Incurred pursuant to clause (2) of paragraph (b) of
Section 3.08;
(4) Purchase Money Debt of Restricted Subsidiaries permitted
to be Incurred pursuant to clause (3) of paragraph (b) of Section 3.08;
(5) Debt owed by a Restricted Subsidiary to the Company or a
Restricted Subsidiary of the Company permitted to be Incurred pursuant
to clause (6) of paragraph (b) of Section 3.08;
(6) Debt of Restricted Subsidiaries consisting of Permitted
Interest Rate or Currency Protection Agreements permitted to be
Incurred pursuant to clause (10) of paragraph (b) of Section 3.08;
(7) Debt of Restricted Subsidiaries permitted to be Incurred
under clause (7) of paragraph (b) of Section 3.08;
(8) Debt of Restricted Subsidiaries permitted to be Incurred
under clause (9) or (14) of paragraph (b) of Section 3.08;
(9) Debt of Restricted Subsidiaries secured by Receivables
originated by the Company or any Restricted Subsidiary and related
assets permitted to be Incurred under clause (11) of paragraph (b) of
Section 3.08;
(10) Debt permitted to be Incurred pursuant to clause (12) of
paragraph (b) of Section 3.08;
(11) Debt Incurred pursuant to the lease, dated as of
September 2, 1998, between 1998 WCI Trust, as lessor, and Williams
Communications, Inc., as lessee, in an aggregate principal amount not
to exceed $750 million at any one time outstanding; and
(12) Debt which is Incurred to refinance any Debt of a
Restricted Subsidiary permitted to be Incurred pursuant to clauses (1),
(2), (3), (4), (7), (10) or (11) of this paragraph or this clause (12),
in an aggregate principal amount (or if issued at a discount, the then
Accreted Value) not to exceed the aggregate principal amount (or if
issued at a discount, the then Accreted Value) of the Debt so
refinanced, plus the amount of any premium, prepayment penalties,
accrued interest, fees and expenses
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required to be paid for such refinancing pursuant to the terms of the
Debt so refinanced or the amount of any premium or accrued interest
reasonably determined by the Board of Directors of the Company as
necessary to accomplish such refinancing by means of a redemption,
tender offer or privately negotiated repurchase, plus the amount of
fees and expenses of the Company and the applicable Restricted
Subsidiary Incurred with such refinancing; provided, however, that, in
the case of any refinancing of Debt Incurred pursuant to clause (1),
(2) or (7) or, if such Debt previously refinanced Debt Incurred
pursuant to any such clause, this clause (12), 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 at the
stated maturity of such Debt or by way of a sinking fund
applicable to such Debt or by way of any mandatory redemption,
defeasance, retirement or repurchase of such Debt 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 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 at the option of the
holder of such Debt prior to the stated maturity of the Debt
being refinanced,
other than, in the case of clause (x) or (y), any such payment, redemption or
other retirement, including pursuant to an offer to purchase made by the Company
or a Restricted Subsidiary, which is conditioned upon the change of control or
asset sale of the Company pursuant to provisions substantially similar to those
in Section 3.15 and Section 3.18;
provided further that the above clauses (x) and (y) and the limitation on the
aggregate principal amount referred to above in this clause (12) shall not apply
to any refinancing of all of the Notes then outstanding.
Notwithstanding any other provision of this Section, the maximum amount
of Debt that a Restricted Subsidiary may Incur pursuant to this Section will not
be exceeded solely as a result of fluctuations in the exchange rates of
currencies.
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For purposes of determining any particular amount of Debt under this
Section, Guarantees, Liens or obligations with respect to letters of credit
supporting Debt otherwise included in the determination of such particular
amount shall not be included. For purposes of determining compliance with this
Section, if an item of Debt meets the criteria of more than one of the types of
Debt described in the above clauses, the Company, in its sole discretion, may
classify such item of Debt and only be required to include the amount and type
of such Debt in one of such clauses, but also may classify a portion of such
item of Debt in more than one of such clauses and in any order the Company so
chooses.
SECTION 3.10. Limitation on Issuances of Guarantees by, and Debt
Securities of, Domestic Restricted Subsidiaries. The Company will not permit any
of its Domestic Restricted Subsidiaries, directly or indirectly, to issue or
Guarantee any Debt Securities, unless such Domestic Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for the Guarantee of the payment of the Notes by such Domestic
Restricted Subsidiary, which Guarantee shall be senior to or rank equally with
such Debt Securities.
Any such Guarantee by a Domestic Restricted Subsidiary of the Notes
shall provide by its terms that it shall be automatically and unconditionally
released and discharged upon a sale or other disposition, by way of merger or
otherwise, to any Person not an Affiliate of the Company, of the Company's
equity interest in, or the assets of, such Domestic Restricted Subsidiary, which
sale or other disposition results in such Domestic Restricted Subsidiary ceasing
to be a Domestic Restricted Subsidiary and such sale or other disposition is
made in compliance with, and the Net Available Proceeds therefrom are applied in
accordance with, the applicable provisions of the Indenture.
The form of such supplemental indenture is attached as an exhibit to
the Indenture. The foregoing provisions will not be applicable to:
o Guarantees of Debt Securities of a Person by its subsidiaries
in effect prior to the time such Person is merged with or into
or became a Domestic Restricted Subsidiary, provided that such
Guarantees do not extend to any other Debt Securities of such
Person or any other Person; and
o any one or more Guarantees of up to $100 million in aggregate
principal amount of Debt Securities of the Company or any
Domestic Restricted Subsidiary at any time outstanding.
SECTION 3.11. Limitation on Restricted Payments. (a) The Company:
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(1) 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 of its Capital Stock, excluding any
dividends or distributions which are made solely to the Company or a Restricted
Subsidiary (and, if such Restricted Subsidiary declaring, paying or making any
such dividend or distribution is not a Wholly Owned Subsidiary, to the other
stockholders or equity owners of such Restricted Subsidiary on a pro rata basis
or on a basis that results in the receipt by the Company or a Restricted
Subsidiary of dividends or distributions of greater value than it would receive
on a pro rata basis) or any dividends or distributions payable solely in shares
of Capital Stock of the Company, other than Disqualified Stock, or in options,
warrants or other rights to acquire Capital Stock of the Company, other than
Disqualified Stock;
(2) may not, and may not permit any Restricted Subsidiary to, purchase,
redeem, or otherwise retire or acquire for value
o any Capital Stock of the Company or any Restricted
Subsidiary of the Company, or
o any options, warrants or rights to purchase or
acquire shares of Capital Stock of the Company or any
Restricted Subsidiary or any securities convertible
or exchangeable into shares of Capital Stock of the
Company or any Restricted Subsidiary,
except, in any such case, any such purchase, redemption or retirement or
acquisition for value
o 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, to the other stockholders or equity
owners of such Restricted Subsidiary on a pro rata
basis or on a basis that results in the receipt by
the Company or a Restricted Subsidiary of payments of
greater value than it would receive on a pro rata
basis), or
o paid solely in shares of Capital Stock, other than
Disqualified Stock, of the Company;
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(3) may not make, or permit any Restricted Subsidiary to make, any
Investment, other than an Investment in the Company or a Restricted Subsidiary
or a Permitted Investment, in any other Person, including the Designation of any
Restricted Subsidiary as an Unrestricted Subsidiary, or the Revocation of any
such Designation, according to Section 3.20;
(4) 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 Notes (other than any
redemption, defeasance, repurchase, retirement or other acquisition or
retirement for value made in anticipation of satisfying a scheduled maturity,
repayment or sinking fund obligation due within one year thereof); and
(5) may not, and may not permit any Restricted Subsidiary to, issue,
transfer, convey, sell or otherwise dispose of Capital Stock of any Restricted
Subsidiary to a Person other than the Company or another Restricted Subsidiary
if the result thereof is that such Restricted Subsidiary shall cease to be a
Restricted Subsidiary, in which event the amount of such "Restricted Payment"
shall be the Fair Market Value of the remaining interest, if any, in such former
Restricted Subsidiary held by the Company and the other Restricted Subsidiaries;
each of clauses (1) through (5) being a "RESTRICTED PAYMENT," if:
(A) 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
(B) 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 Section 3.08; or
(C) upon giving effect to such Restricted Payment, the
aggregate of all Restricted Payments made on or after the date of the
Indenture, plus Permitted Investments made on or after the date of the
Indenture pursuant to clause (i) or (n) of the definition thereof,
other than any such Permitted Investments that are Permitted
Investments in the Company or any Restricted Subsidiary (the amount of
any such Restricted Payment or
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Permitted Investment, if made other than in cash, to be based upon Fair
Market Value), exceeds the sum of:
o 50% of cumulative Consolidated Net Income (or, in the
case that Consolidated Net Income shall be negative,
100% of such negative amount) since June 30, 1999
through the last day of the last full fiscal quarter
for which consolidated financial statements are
available;
o in the case of any Revocation made after the date of
the Indenture, an amount equal to the lesser of the
portion (proportionate to the Company's direct or
indirect equity interest in the Subsidiary to which
such Revocation relates) of the Fair Market Value of
the net assets of such Subsidiary at the time of
Revocation and the amount of Investments previously
made (and treated as a Restricted Payment) by the
Company or any Restricted Subsidiary in such
Subsidiary; and
o the aggregate amount of Returned Investments since
the date of the Indenture and on or prior to the date
of such Restricted Payment;
provided, however, that the Company or a Restricted Subsidiary of the
Company may, without regard to the limitations in clause (C) but
subject to clauses (A) and (B), make Restricted Payments in an
aggregate amount not to exceed the sum of $50 million and the aggregate
net cash proceeds received after the date of the Indenture
(1) as capital contributions to the Company, or
proceeds from the issuance, other than to a Subsidiary, of
Capital Stock, other than Disqualified Stock, of the Company
and options, warrants or rights to purchase or acquire shares
of Capital Stock (other than Disqualified Stock) of the
Company, and
(2) from the issuance or sale of Debt of the Company
or any Restricted Subsidiary, other than to a Subsidiary, the
Company or a Plan, that after the date of the Indenture has
been converted into or exchanged for Capital Stock, other than
Disqualified Stock, of the Company;
provided, further, that in the case of the issuance of Capital Stock of
the Company to any Plan, if such Plan Incurs any Debt for the purpose
of
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purchasing such Capital Stock, the aggregate net cash proceeds from
such issuance shall be included for purposes of the above proviso only
to the extent of any increase in the Consolidated Net Worth of the
Company resulting from principal repayments made with respect to the
Debt Incurred to finance the purchase of such Capital Stock.
The aggregate net cash proceeds referred to in the immediately
preceding clauses (x) and (y) shall not be utilized to make Restricted Payments
pursuant to such clauses to the extent such proceeds have been utilized to make
Permitted Investments under clause (i) of the definition of "Permitted
Investments."
(b) The restrictions in paragraph (a) do not prevent the following:
(1) The Company or any Restricted Subsidiary may pay any
dividend on Capital Stock of any class of the Company within 60 days
after the declaration of such dividend if, on the date when the
dividend was declared, the Company or such Restricted Subsidiary, as
the case may be, could have paid such dividend in accordance with the
above provisions; provided, however, that at the time of such payment
of such dividend, no other Event of Default shall have occurred and be
continuing, or result from, the payment of such dividend;
(2) The Company or any Restricted Subsidiary may repurchase,
redeem, acquire, cancel or otherwise retire for value any shares of its
Common Stock or options to acquire its Common Stock from Persons who
are currently or were formerly directors, officers or employees of the
Company or any of its Subsidiaries or other Affiliates, or their
estates or beneficiaries under their estates, or from any Plan, upon
death, disability, retirement or termination of employment in an amount
not to exceed $3 million in any 12-month period;
(3) The Company and any Restricted Subsidiary may refinance
any Debt otherwise permitted by clause (8) of paragraph (b) of Section
3.08 or clause (12) of Section 3.09;
(4) The Company and any Restricted Subsidiary may retire or
repurchase any Capital Stock of the Company or of any Restricted
Subsidiary or any Subordinated Debt of the Company in exchange for, or
out of the proceeds of the substantially concurrent sale, other than to
a Subsidiary of the Company or any Plan, of, Capital Stock, other than
Disqualified Stock, of the Company; provided that the proceeds from any
such exchange or sale of Capital Stock shall be excluded from any
calculation pursuant to clause (b) of the definition of "Invested
Capital";
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(5) The Company or any Restricted Subsidiary may purchase
shares of Capital Stock of the Company or any Restricted Subsidiary of
the Company for the purpose of contributing such shares to any Plan;
provided that all such purchases referred to in this clause (5) may not
exceed $10 million in any 12-month period;
(6) The Company or any Restricted Subsidiary may purchase all,
but not less than all, excluding directors' qualifying shares, of the
Capital Stock or other ownership interests in a Subsidiary of the
Company which Capital Stock or other ownership interests were not until
that time owned by the Company or a Subsidiary of the Company such that
after giving effect to such purchase such Subsidiary becomes a Wholly
Owned Subsidiary of the Company;
(7) The Company or any Restricted Subsidiary may redeem,
defease, repurchase, retire or acquire for value any Subordinated Debt
upon a Change of Control or Asset Disposition to the extent required by
the Indenture or other agreement pursuant to which such Subordinated
Debt was issued, but only if the Company has first complied with its
obligations under Section 3.15 and Section 3.18; and
(8) The Company or any Restricted Subsidiary may make
distributions to the stockholders or equity owners of Restricted
Subsidiaries that are partnerships, limited liability companies that
are treated as partnerships for U.S. tax purposes or other similar
pass-through entities in order to reimburse or compensate such other
stockholders or equity owners for income taxes attributable to the
operations of such Restricted Subsidiaries as required by the formation
agreement, operating agreement or partnership agreement or similar
governing document of the Restricted Subsidiary.
The Restricted Payments described in the foregoing clauses (1), (2),
(5), (6) and (7) shall be included in the calculation of Restricted Payments;
the Restricted Payments described in clauses (3), (4) and (8) shall be excluded
in the calculation of Restricted Payments.
SECTION 3.12. 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, other than pursuant to law or regulation, on the ability of any
Restricted Subsidiary:
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(1) 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,
(2) to make loans or advances to the Company or any other
Restricted Subsidiary, or
(3) to transfer any of its Property to the Company or any
other Restricted Subsidiary.
(b) Despite the above limitation, the Company may, and may permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist:
(1) any encumbrance or restriction pursuant to any agreement
in effect on the date of the Indenture and pursuant to the Permanent
Credit Facility (or, in each case, encumbrances or restrictions that
are substantially similar taken as a whole);
(2) any customary (as conclusively determined in good faith by
the Chief Financial Officer of the Company) 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 such encumbrances and
restrictions do not prohibit the distribution of funds to the Company
in an amount sufficient for the Company to make the timely payment of
interest, premium, if any, and principal (whether at stated maturity,
by way of a sinking fund applicable thereto, by way of any mandatory
redemption, defeasance, retirement or repurchase thereof, including
upon the occurrence of designated events or circumstances or by virtue
of acceleration upon an event of default, or by way of redemption or
retirement at the option of the holder of the Debt, including pursuant
to offers to purchase) according to the terms of the Indenture and the
Notes and other Debt that is solely an obligation of the Company, but
provided further that such agreement may nevertheless contain customary
(as so determined) net worth, restricted payment, leverage, interest
coverage invested capital and other financial covenants, customary (as
so determined) covenants regarding the merger of or sale of all or any
substantial part of the assets of the Company or any Restricted
Subsidiary, customary (as so determined) restrictions on transactions
with affiliates and customary (as so determined) subordination
provisions governing Debt owed to the Company or any Restricted
Subsidiary;
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(3) any encumbrance or restriction 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;
(4) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Debt Incurred pursuant to an agreement
referred to in clause (1), (2) or (3) of this paragraph (b); provided,
however, that the provisions contained in such agreement relating to
such encumbrance or restriction are no more restrictive (as so
determined) in any material respect than the provisions contained in
the agreement governing the Debt being refinanced;
(5) in the case of clause (3) of paragraph (a) above, any
encumbrance or restriction 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;
(6) in the case of clause (3) of paragraph (a) above,
customary provisions
o that restrict the subletting, assignment or
transfer of any Property that is a lease,
license, conveyance or similar contract,
o contained in asset sale or other asset
disposition agreements limiting the transfer
of the Property being sold or disposed of
pending the closing of such sale or
disposition, or
o arising or agreed to in the ordinary course
of business, not relating to any Debt, and
that do not, individually or in the
aggregate, detract from the value of
Property of the Company or any Restricted
Subsidiary in any manner material to the
Company or any Restricted Subsidiary,
(7) any encumbrance or 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 Property 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 abandoned and that the
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consummation or abandonment of such transaction occurs within one year
of the date such agreement was entered into;
(8) any encumbrance or restriction pursuant to the Indenture
and the Notes (or encumbrances or restrictions that are substantially
similar taken as a whole); and
(9) Permitted Liens.
SECTION 3.13. Limitation on Liens. The Company may not, and may not
permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to
exist any Lien on or with respect to any Property now owned or acquired after
the date of the Indenture to secure any Debt without making, or causing such
Restricted Subsidiary to make, effective provision for securing the Notes
o equally and ratably with such Debt as to such Property for so
long as such Debt will be so secured, or
o in the event such Debt is Debt of the Company or a Guarantor
which is subordinate in right of payment to the Notes or the
applicable Domestic Restricted Subsidiary Guarantee, prior to
such Debt as to such Property for so long as such Debt will be
so secured.
These restrictions shall not apply to:
(1) Liens existing on the date of the Indenture;
(2) Liens Incurred on or after the date of the Indenture
pursuant to any Credit Facility to secure Debt permitted to be Incurred
pursuant to clause (2) of paragraph (b) of Section 3.08;
(3) Liens securing Debt in an amount which, together with the
aggregate amount of Debt then outstanding or available under all Credit
Facilities (together with all refinancing Debt then outstanding or
available pursuant to clause (8) of paragraph (b) of Section 3.08 in
respect of Debt previously Incurred under Credit Facilities), does not
exceed 1.5 times the Company's Consolidated Cash Flow Available for
Fixed Charges for the four full fiscal quarters preceding the
Incurrence of such Lien for which the Company's consolidated financial
statements are available, determined on a pro forma basis as if such
Debt had been Incurred and the proceeds thereof had been applied at the
beginning of such four fiscal quarters;
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(4) Liens in favor of the Company or any Restricted
Subsidiary; provided, however, that any subsequent issue or transfer of
Capital Stock or other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of the Debt secured by any such Lien, except to the Company or
a Restricted Subsidiary, shall be deemed, in each case, to constitute
the Incurrence of such Lien by the issuer thereof;
(5) Liens to secure Purchase Money Debt permitted to be
Incurred pursuant to clause (3) of paragraph (b) of Section 3.08;
provided that any such Lien may not extend to any Property other than
the Telecommunications Assets installed, constructed, acquired, leased,
developed or improved with the proceeds of such Purchase Money Debt and
any improvements or accessions thereto (it being understood that all
Debt to any single lender or group of related lenders or outstanding
under any single credit facility, and in any case relating to the same
group or collection of Telecommunications Assets financed thereby,
shall be considered a single Purchase Money Debt, whether drawn at one
time or from time to time);
(6) Liens to secure Acquired Debt; provided that
o such Lien attaches to the acquired Property
prior to the time of the acquisition of such
Property, and
o such Lien does not extend to or cover any
other Property,
(7) Liens to secure Debt permitted to be Incurred pursuant to
clause (13) of paragraph (b) of Section 3.08;
(8) Liens to secure Debt Incurred to refinance, in whole or in
part, Debt secured by any Lien referred to in the foregoing clauses
(1), (2), (5), (6) and (7) or this clause (8) so long as such Lien does
not extend to any other Property (other than improvements and
accessions to the original Property) and the principal amount of Debt
so secured is not increased except as otherwise permitted under clause
(8) of paragraph (b) of Section 3.08 or clause (12) of Section 3.09;
(9) Liens to secure Debt consisting of Permitted Interest Rate
and Currency Protection Agreements permitted to be Incurred pursuant to
clause (10) of paragraph (b) of Section 3.08;
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(10) Liens to secure Debt secured by Receivables permitted to
be Incurred pursuant to clause (11) of paragraph (b) of Section 3.08;
(11) Liens granted after the date of the Indenture to secure
the Notes;
(12) Permitted Liens; and
(13) Liens not otherwise permitted by the foregoing clauses
(1) through (12) that, at the time of Incurrence thereof, taken
together with all other Liens Incurred after the date of the Indenture
in reliance on this clause (13) and which remain in existence, secure
Debt in an aggregate principal amount not to exceed 5% of the Company's
Consolidated Tangible Assets as of the most recent balance sheet date
as of which the Company's consolidated balance sheet is available.
SECTION 3.14. 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, unless:
(1) The Company or such Restricted Subsidiary would be
entitled to Incur
o Debt in an amount equal to the Attributable
Value of the Sale and Leaseback Transaction
pursuant to the covenant described in
Section 3.08, and
o a Lien pursuant to the covenant described in
Section 3.13, equal in amount to the
Attributable Value of the Sale and Leaseback
Transaction, without also securing the
Notes; and
(2) the Sale and Leaseback Transaction is treated as an Asset
Disposition and all of the conditions of the Indenture described in
Section 3.15 (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.
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SECTION 3.15. Limitation on Asset Dispositions. The Company may not,
and may not permit any Restricted Subsidiary to, make any Asset Disposition
unless:
(1) 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 Property sold or disposed of; and
(2) at least 75% of the consideration for such disposition
consists of cash or Cash Equivalents or the assumption of Debt of the
Company or any Restricted Subsidiary (other than Debt that is
subordinated to the Notes or any Domestic Restricted Subsidiary
Guarantee) and release of the Company and all Restricted Subsidiaries
from all liability on the Debt assumed (or if less than 75%, the
remainder of such consideration consists of Telecommunications Assets).
The Net Available Proceeds or any portion thereof from Asset
Dispositions may be applied by the Company or a Restricted Subsidiary, to the
extent the Company or such Restricted Subsidiary elects or is required by the
terms of any Debt:
o to the permanent repayment or reduction of Debt then
outstanding under any Credit Facility, to the extent such
Credit Facility would require such application or prohibit
payments pursuant to an Offer to Purchase in accordance with
this Section 3.15 (other than Debt owed to the Company or any
Affiliate of the Company); or
o to reinvest in Telecommunications Assets (including by means
of an Investment in Telecommunications Assets by a Restricted
Subsidiary with Net Available Proceeds received by the Company
or another Restricted Subsidiary).
Any Net Available Proceeds from an Asset Disposition not applied in
accordance with the preceding paragraph within 360 days from the date of the
receipt of such Net Available Proceeds shall constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $10 million, the Company will be
required to make an Offer to Purchase with such Excess Proceeds on a pro rata
basis according to principal amount, or, in the case of Debt issued at a
discount, the then Accreted Value, for
(x) outstanding Notes at a price in cash equal to 100% of the
principal amount of the Notes on the purchase date plus accrued and
unpaid interest, if any, on the notes, subject to the right of Holders
of
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record on the relevant record date to receive interest due on the
relevant interest payment date, and
(y) any other Debt of the Company or any Guarantor that ranks
equally with the Notes, or any Debt of a Restricted Subsidiary that is
not a Guarantor, at a price no greater than 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the
purchase date (or 100% of the then Accreted Value plus accrued and
unpaid interest, if any, to the purchase date in the case of original
issue discount Debt, to the extent, in the case of this clause (y),
required under the terms of such Debt other than Debt owed to the
Company or any Affiliate of the Company).
To the extent there are any remaining Excess Proceeds following the
completion of the Offer to Purchase, the Company shall apply such Excess
Proceeds to the repayment of other Debt of the Company or any Restricted
Subsidiary, to the extent permitted or required under the terms of such other
Debt. Any other remaining Excess Proceeds may be applied to any use as
determined by the Company which is not otherwise prohibited by the Indenture,
and the amount of Excess Proceeds shall be reset to zero.
SECTION 3.16. Limitation on Issuance and Sale 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:
(1) 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 in the section above entitled
Section 3.15 to the extent such provisions apply,
(2) in a transaction that results in such Restricted
Subsidiary becoming a Joint Venture; provided
o such transaction complies with the
provisions described in Section 3.15 to the
extent such provisions apply, and
o the remaining interest of the Company or any
other Restricted Subsidiary in such Joint
Venture would have been permitted as a new
Restricted Payment or Permitted Investment
under the provisions of Section 3.11;
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(3) the issuance, transfer, conveyance, sale or other
disposition of shares of such Restricted Subsidiary so long as after
giving effect to such transaction such Restricted Subsidiary remains a
Restricted Subsidiary and such transaction complies with the provisions
described in Section 3.15 to the extent such provisions apply;
(4) the transfer, conveyance, sale or other disposition of
shares required by applicable law or regulation;
(5) if required, the issuance, transfer, conveyance, sale or
other disposition of directors' qualifying shares;
(6) Disqualified Stock issued in exchange for, or upon
conversion of, or the proceeds of the issuance of which are used to
redeem, replace, refund or refinance, 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, replaced,
refunded or refinanced;
(7) in a transaction where the Company or a Restricted
Subsidiary acquires at the same time not less than its Proportionate
Interest in such issuance of Capital Stock;
(8) Capital Stock issued and outstanding on the date of the
Indenture;
(9) Capital Stock of a Restricted Subsidiary issued and
outstanding prior to the time that such Person becomes a Restricted
Subsidiary so long as such Capital Stock was not issued in
contemplation of such Person's becoming a Restricted Subsidiary or
otherwise being acquired by the Company; and
(10) an issuance of Preferred Stock of a Restricted Subsidiary
(other than Preferred Stock convertible or exchangeable into Common
Stock of any Restricted Subsidiary) otherwise permitted by the
Indenture.
SECTION 3.17. Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, sell, lease, transfer, or otherwise dispose of any of its Property
to, or purchase any Property from, or enter into any contract, agreement,
understanding,
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loan, advance, Guarantee or transaction, including the rendering of services,
with or for the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE
TRANSACTION"), unless:
(a) such Affiliate Transaction or series of Affiliate
Transactions is in the best interest of the Company or such Restricted
Subsidiary and on terms that are fair and reasonable to, and in the
best interests of, the Company or the Restricted Subsidiary, as the
case may be; and
(b) The Company delivers to the Trustee
o with respect to any Affiliate Transaction or
series of related Affiliate Transactions
involving aggregate payments in excess of
$10 million but less than $15 million, a
certificate of the chief executive,
operating or financial officer of the
Company evidencing such officer's
determination that such Affiliate
Transaction or series of Affiliate
Transactions complies with clause (a) above,
and
o with respect to any Affiliate Transaction or
series of related Affiliate Transactions
involving aggregate payments equal to or in
excess of $15 million, a board resolution
certifying that such Affiliate Transaction
or series of Affiliate Transactions complies
with clause (a) above and that such
Affiliate Transaction or series of Affiliate
Transactions has been approved by the Board
of Directors of the Company, including a
majority of the disinterested members of the
Board of Directors of the Company, provided
that, if there shall not be at least two
disinterested members of the Board of
Directors of the Company with respect to the
Affiliate Transaction, the Company shall, in
addition to such board resolution, file with
the Trustee a written opinion 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, which opinion shall be
to the effect that the consideration to be
paid or received in connection with such
Affiliate Transaction is fair, from a
financial point of view, to the Company or
such Restricted Subsidiary.
Despite (a) and (b) above, the following shall not be deemed Affiliate
Transactions:
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(1) any employment agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business
and consistent with industry practice;
(2) any agreement or arrangement with respect to the
compensation of a director or officer of the Company or any Restricted
Subsidiary approved by a majority of the Board of Directors of the
Company and consistent with industry practice;
(3) transactions between or among the Company and its
Restricted Subsidiaries; provided that no more than 10% of the Voting
Stock, on a fully diluted basis, of any such Restricted Subsidiary is
owned by an Affiliate of the Company (other than a Restricted
Subsidiary);
(4) Restricted Payments and Permitted Investments permitted by
the covenant described in Section 3.11 (other than Investments in
Affiliates that are not the Company or Restricted Subsidiaries);
(5) transactions pursuant to the terms of or performance of
any agreement or arrangement as in effect on the date of the Indenture;
(6) transactions pursuant to and any payments under,
compliance with, or performance of obligations under, the Williams
Intercompany Arrangements;
(7) transactions with respect to wireline or wireless
transmission capacity, the lease or sharing or other use of cable or
fiber optic lines, equipment, rights-of-way or other access rights,
between the Company, or any Restricted Subsidiary, and any other
Person; provided that, in the case of this clause (7), such transaction
complies with clause (a) in the immediately preceding paragraph;
(8) loans, advances or extensions of credit to employees,
officers and directors of the Company or any Restricted Subsidiary made
in the ordinary course of business and consistent with past practice or
in connection with employee benefits agreements or arrangements
approved by the Board of Directors of the Company; provided, however,
that if the Company or any Restricted Subsidiary makes loans, advances
or extensions of credit to employees, officers and directors in excess
or $3 million in the aggregate at any one time outstanding, the Board
of Directors of the Company must determine that such loans, advances or
extensions of credit in excess of $3 million are fair and reasonable
to, and
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in the best interests of, the Company or the Restricted Subsidiary, as
the case may be;
(9) the granting or performance of registration rights under
any written registration rights agreement approved by the Board of
Directors of the Company;
(10) transactions with Persons solely in their capacity as
holders of Debt or Capital Stock of the Company or any of its
Subsidiaries, where such Persons are treated no more favorably than
holders of Debt or Capital Stock of the Company generally;
(11) sales or issuances of Capital Stock, other than
Disqualified Stock, in exchange for cash, securities or Property;
provided that such transactions comply with clause (a) in the
immediately preceding paragraph; and
(12) any agreement to do any of the foregoing.
SECTION 3.18. Repurchase of Notes Upon Change of Control Triggering
Event. Within 30 days of both a Change of Control and a Rating Decline with
respect to the Notes (a "CHANGE OF CONTROL TRIGGERING EVENT"), the Company will
be required to make an Offer to Purchase all outstanding Notes in accordance
with this Section 3.18 at a price in cash equal to 101% of the principal amount
of the Notes on the purchase date plus any accrued and unpaid interest, if any,
to such purchase date, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date.
A "CHANGE OF CONTROL" means the occurrence of any of the following
events:
(A) if any "person" or "group" (as such terms are used in
Section 13(d) and Section 14(d) of the Exchange Act or any successor
provisions to either of the foregoing), including any group acting for
the purpose of acquiring, holding, voting or disposing of securities
within the meaning of Rule 13d-5 (b) (1) under the Exchange Act, other
than any one or more of the Permitted Holders, becomes the "BENEFICIAL
OWNER" (as defined in Rule 13d-3 under the Exchange Act, except that a
person will be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the total voting power of the Voting
Stock of the Company at a time when the Permitted Holders are the
"beneficial owners" (as defined in Rule
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13d-3 under the Exchange Act, except that a person will be deemed to
have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, in the aggregate of
a lesser percentage of the total voting power of the Voting Stock of
the Company than such other person or group (for purposes of this
clause (A), such person or group shall be deemed to beneficially own
any Voting Stock of a corporation held by any other corporation so long
as such person or group beneficially owns, directly or indirectly, in
the aggregate a majority of the total voting power of the Voting Stock
of such other corporation); or
(B) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the
assets of the Company and the Restricted Subsidiaries, considered as a
whole (other than a disposition of such assets as an entirety or
virtually as an entirety to one or more Permitted Holders) shall have
occurred; or
(C) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of the Company (together with any new directors whose election or
appointment by such board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or
(D) the shareholders of the Company shall have approved any
plan of liquidation or dissolution of the Company.
If the Company makes an Offer to Purchase the Notes in accordance with
this Section 3.18, 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. To the extent that the provisions of any
applicable securities laws or regulations conflict with the provisions relating
to the Offer to Purchase, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
described above by virtue thereof.
SECTION 3.19. Reports. Whether or not the Company is subject to Section
13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the
Company shall file with the Commission, unless the Commission will not accept
such filing, the annual reports, quarterly reports and other documents
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which the Company would have been required to file with the Commission pursuant
to such Section 13(a) or 15(d) or any successor provision thereto if the Company
were subject to such successor provision, such documents to be filed with the
Commission on or prior to the respective dates by which the Company would have
been required to file them.
The Company shall also in any event:
(a) within 15 days of each required filing date;
o transmit by mail to all Holders, as their names and
addresses appear in the security register, without
cost to such Holders; and
o file with the Trustee copies of the annual reports,
quarterly reports and other documents, without
exhibits, which the Company would have been required
to file with the Commission pursuant to Section 13(a)
or 15(d) of the Exchange Act or any successor
provisions thereto if the Company were subject to
such successor provisions; and
(b) if filing such documents by the Company with the Commission is not
permitted under the Exchange Act, promptly upon written request, supply copies
of such documents, without exhibits, to any prospective Holder.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 3.20. Limitation on Designations of Unrestricted Subsidiaries.
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
Section 3.08; and
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(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 portion (proportionate to the Company's equity
interest in such Restricted Subsidiary) of the Fair Market Value of the
net assets of 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
3.11 for all purposes of the Indenture in the Designation Amount; provided,
however, that, upon a Revocation of any such Designation of a Subsidiary, the
Company shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary of an amount (if positive) equal to (1) the Company's
"Investment" in such Subsidiary at the time of such Revocation less (2) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the Fair Market Value of the net assets of such Subsidiary at the time of such
Revocation less (3) any Returned Investment. At the time of any Designation of
any Subsidiary as an Unrestricted Subsidiary, such Subsidiary shall not own any
Capital Stock of the Company or any Restricted Subsidiary.
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 Capital Stock or Debt, (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 of such Debt 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, Lien or other obligation 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 3.11 and Section 3.17.
Unless Designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company will be classified as a Restricted
Subsidiary; provided, however, that such Subsidiary shall not be designated as a
Restricted Subsidiary and shall be automatically classified as an Unrestricted
Subsidiary if either of the requirements set forth in clauses (a) and (b) of the
immediately following paragraph will not be satisfied immediately following such
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classification. Except as provided in the first sentence of this Section, no
Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.
A Designation may be revoked (a "REVOCATION") by a resolution of the
Board of Directors of the Company; 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
o certifying compliance with the foregoing provisions, and
o giving the effective date of such Designation or Revocation,
such delivery to the Trustee to occur within 45 days after the
end of the fiscal quarter of the Company in which such
Designation or Revocation is made (or, in the case of a
Designation or Revocation made during the last fiscal quarter
of the Company's fiscal year, within 90 days after the end of
such fiscal year).
SECTION 3.21. Existence. Subject to Articles Three and Eight of this
Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Restricted Subsidiary and
the rights (whether pursuant to charter, partnership certificate, agreement,
statute or otherwise), material licenses and franchises of the Company and each
such Restricted Subsidiary, provided that the Company shall not be required to
preserve any such right, license or franchise, or the existence of any
Restricted Subsidiary, if the maintenance or preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 3.22. Payment of Taxes and Other Claims. The Company will pay
or discharge and shall cause each of its Restricted Subsidiaries to pay or
discharge, or cause to be paid or discharged, before the same shall become
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delinquent (a) all material taxes, assessments and governmental charges levied
or imposed upon (i) the Company or any such Restricted Subsidiary, (ii) the
income or profits of any such Restricted Subsidiary which is a corporation or
(iii) the property of the Company or any such Restricted Subsidiary and (b) all
material lawful claims for labor materials and supplies that, if unpaid, might
by law become a lien upon the property of the Company or any such Restricted
Subsidiary; provided that the Company shall not be required to pay of discharge,
or cause to be paid or discharged, any such tax, assessment, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
SECTION 3.23. Maintenance of Properties and Insurance. The Company will
cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section shall prevent the Company or any such Restricted
Subsidiary from discontinuing the use, operation or maintenance of any of such
properties or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Company, desirable in the conduct of the business of the
Company or such Restricted Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which the Company or such Restricted Subsidiary, as the case may be,
is then conducting business.
SECTION 3.24. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not (1) 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 or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of
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this Indenture and the Company will expressly waive all benefit or advantage of
any such law and (2) hinder, delay or impede the execution of any power granted
to the Trustee under this Indenture and will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 4
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
SECTION 4.01. Events of Default. Each of the following constitutes an
"EVENT OF DEFAULT":
(a) default in the payment of principal of, or premium, if
any, on, any Note when the same becomes due and payable, upon
acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the
same becomes due and payable, and such default continues for a period
of 30 days;
(c) default in the payment of principal of and interest on
Notes required to be purchased pursuant to an Offer to Purchase under
Section 3.18;
(d) failure to comply with the requirements of Article Eight;
(e) the Company or any Guarantor defaults in the performance
of or breaches any other covenant or agreement in the Indenture or
under the Notes (other than (a), (b) or (c) above) and such default or
breach continues for a period of 60 consecutive days after written
notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the outstanding 10.70% Notes or 10.875% Notes;
(f) there occurs a default under the terms of any instrument
evidencing or securing Debt of the Company or any Restricted Subsidiary
having an outstanding principal amount of $25 million or its foreign
currency equivalent at the time 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);
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(g) the rendering of a final judgment or judgments, not
subject to appeal or covered by insurance, against the Company or any
Restricted Subsidiary in an aggregate amount in excess of $25 million
or its foreign currency equivalent at the time and which shall not be
waived, satisfied or discharged for any period of 45 consecutive days
after the date on which the right to appeal has expired;
(h) any Domestic Restricted Subsidiary Guarantee ceases to be
in full force and effect, other than in accordance with the terms of
such Domestic Restricted Subsidiary Guarantee, or any Guarantor denies
or disaffirms its obligations under its Domestic Restricted Subsidiary
Guarantee;
(i) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any of its
Restricted Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
(B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any of its
Restricted Subsidiaries or for all or substantially all of the property
and assets of the Company or any of its Restricted Subsidiaries or (C)
the winding up or liquidation of the affairs of the Company or any of
its Restricted Subsidiaries and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive
days; or
(j) the Company or any of its Restricted Subsidiaries (A)
commences a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law,
(B) consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any of its Restricted Subsidiaries or for
all or substantially all of the property and assets of the Company or
any of its Restricted Subsidiaries or (C) effects any general
assignment for the benefit of creditors.
SECTION 4.02. Acceleration. If any Event of Default (other than an
Event of Default described in clause (i) or (j) of Section 4.01) shall occur and
be continuing under the Indenture, either the Trustee or the Holders of at least
25% in aggregate principal amount of the 10.70% Notes or 10.875% Notes then
outstanding, by written notice to the Company (and to the Trustee if such notice
is given by the Holders (the "ACCELERATION NOTICE")), may, and the Trustee at
the request of such Holders shall, declare the principal of, premium, if any,
and
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accrued interest on the 10.70% Notes or 10.875% Notes, as the case may be, to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest shall be immediately due and payable.
In the event of a declaration of acceleration because an Event of Default set
forth in clause (e) of Section 4.01 has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled if the
event of default triggering such Event of Default pursuant to clause (e) of
Section 4.01 shall be remedied or cured by the Company or the relevant Domestic
Restricted Subsidiary or waived by the holders of the relevant Debt within 60
days after the declaration of acceleration with respect thereto. If an Event of
Default specified in clause (i) or (j) of Section 4.01 occurs with respect to
the Company, the principal of, premium, if any, and accrued interest on all the
Notes then outstanding 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.
SECTION 4.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 4.04. Waiver of Past Defaults. The Holders of at least a
majority in principal amount of the outstanding 10.70% Notes or 10.875% Notes,
as the case may be, by written notice to the Company and to the Trustee, may
waive all past defaults and rescind and annul a declaration of acceleration and
its consequences if (1) all existing Events of Default (other than (x) the
nonpayment of the principal of, premium, if any, and interest on the Notes that
have become due solely by such declaration of acceleration or (y) with respect
to a covenant or provision of this Indenture which under Section 7.02 cannot be
modified or amended without the consent of the Holders of each outstanding Note
affected thereby) have been cured or waived and (2) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
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SECTION 4.05. Control by Majority. The Holders of at least a majority
in aggregate principal amount of the outstanding Notes of each series may 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.
However, the Trustee may refuse to follow any direction that conflicts with law
or the Indenture, that may involve the Trustee in personal liability, or that
the Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of Notes not joining in the giving of such direction and may take any
other action it deems proper that is not inconsistent with any such direction
received from Holders of Notes.
SECTION 4.06. Limitation on Suits. A Holder may not pursue any remedy
with respect to the Indenture or the Notes unless:
(i) the Holder gives the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of outstanding applicable series of Notes make a written request to the
Trustee to pursue the remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of at least a
majority in aggregate principal amount of the outstanding applicable
series of Notes do not give the Trustee a direction that is
inconsistent with the request.
SECTION 4.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal, premium, if any, and interest on the Note, on or after the respective
due dates expressed in the Note, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of the Holder.
SECTION 4.08. Collection Suit by Trustee. If an Event of Default
specified in Section 4.01(a) or (b) hereof occurs and is continuing, the Trustee
is authorized to recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor for the whole amount of
principal, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and,
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to the extent lawful, interest and such further amount as shall be sufficient to
cover amounts due the Trustee under Section 5.07 hereof, including the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 4.09. Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and 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, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 5.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 5.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. 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 Notes 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 4.10. Priorities. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 5.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of
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any kind, according to the amounts due and payable on the Notes for principal,
premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section upon five Business Days prior notice to the
Company.
SECTION 4.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 4.06 hereof, or a
suit by Holders of more than 10% in aggregate principal amount of the then
outstanding Notes.
ARTICLE 5
CONCERNING THE TRUSTEE
SECTION 5.01. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee, prior to the occurrence of a Default and
after the curing or waiving of any Default which may have occurred, undertakes
to perform such duties and only such duties as are specifically set forth in
this Indenture. In case an Event of Default has occurred (which has not been
cured or waived) 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 person would exercise under the circumstances in the
conduct of such person's own affairs.
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 wilful misconduct, except that
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(a) prior to the occurrence of an Event of Default of which the Trustee
has actual notice and after the curing or waiving of all such Events of Default
which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of
any such statements, 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 (but need not
confirm or investigate the accuracy of the facts stated therein);
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) 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 not less than a majority in principal amount of the Notes at the
time outstanding 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.
No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
This Section is in furtherance of and subject to Section 315 and
Section 316 of the Trust Indenture Act of 1939.
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SECTION 5.02. Certain Rights of the Trustee. In furtherance of and
subject to the Trust Indenture Act of 1939, and subject to Section 5.01:
(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture;
(e) prior to the occurrence of a Default hereunder, of which the
Trustee has actual notice, and after the curing or waiving of all Defaults, 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, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing so to
do by the Holders of not less than a majority in aggregate principal amount of
the Notes then outstanding; provided that, if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the reasonable opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require indemnity satisfactory to
it against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such examination shall be paid by the Company or,
if paid by the Trustee or any predecessor trustee, shall be repaid promptly by
the Company upon demand;
(f) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is
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received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Notes and this Indenture;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its rights to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
SECTION 5.03. Trustee Not Responsible for Recitals, Disposition of
Notes or Application of Proceeds Thereof. The recitals contained herein and in
the Notes, except the Trustee's certificates of authentication, shall be taken
as the statements of the Company, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Notes. The Trustee shall not
be accountable for the use or application by the Company of any of the Notes or
of the proceeds thereof.
SECTION 5.04. Trustee and Agents May Hold Notes; Collections, etc. The
Trustee or any agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Notes with the same rights it
would have if it were not the Trustee or such agent and may otherwise deal with
the Company and receive, collect, hold and retain collections from the Company
with the same rights it would have if it were not the Trustee or such agent.
However, subject to Section 5.13 hereof, the Trustee will comply with Section
310(b) and Section 311 of the Trust Indenture Act of 1939.
SECTION 5.05. Moneys Held by Trustee. Subject to the provisions of
Section 10.06 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Company or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 5.06. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is actually
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in
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the manner and to the extent provided in Trust Indenture Act of 1939 Section
313(c) notice of the Default or Event of Default within 90 days after it occurs,
unless such Default or Event of Default has been cured; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Note, 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 determine that the withholding of such notice is in the interest of the
Holders.
SECTION 5.07. Compensation and Indemnification of Trustee and Its Prior
Claim. The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as shall be agreed in
writing between the Company and the Trustee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and the Company covenants and agrees to pay or reimburse the Trustee and each
predecessor Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by or on behalf of it in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company agrees to indemnify each
of the Trustee or any predecessor Trustee and their employees, directors and
officers for, and to hold them harmless against, any and all loss, damage,
claims, liability or expense, including taxes (other than taxes based upon,
measured by or determined by the income of the Trustee), arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim (whether asserted by the Company, or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent that such loss, damage, claim, liability
or expense is due to its own negligence or bad faith. The obligations of the
Company under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior lien to that of the
Notes upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular Notes,
and the Notes are hereby subordinated to such senior claim.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 4.01(i) or Section 4.01(j), the
expenses
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(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
SECTION 5.08. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Section 5.01 and Section 5.02, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 5.09. Persons Eligible for Appointment as Trustee. The Trustee
hereunder shall at all times be a corporation having a combined capital and
surplus of at least $50,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State or District of Columbia supervising or
examining authority, then for the purposes of this Section, 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.
SECTION 5.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee may at any time resign by giving written notice of
resignation to the Company. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor trustee,
or any Noteholder who has been a bona fide Holder of a Note or Notes for at
least six months may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
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(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act of 1939, after written
request therefor by the Company or by any Noteholder who has been a
bona fide Holder of a Note or Notes for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 5.09 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; or
(iii) the Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator 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, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to Section 315(e) of the Trust Indenture Act of 1939, any Noteholder who
has been a bona fide Holder of a Note or Notes 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. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The Holders of a majority in aggregate principal amount of either
series of Notes at the time outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Company the evidence provided for in
Section 6.01 of the action in that regard taken by the applicable Noteholders.
If no successor trustee shall have been so appointed and have accepted
appointment 30 days after the mailing of such notice of removal, the Trustee
being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
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effective upon acceptance of appointment by the successor trustee as provided in
Section 5.11.
SECTION 5.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.10 shall execute and
deliver to the Company and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as Trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, upon payment of its charges then
unpaid, the Trustee ceasing to act shall, subject to Section 10.06, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by such Trustee to
secure any amounts then due it pursuant to the provisions of Section 5.07.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Company shall mail notice thereof by first-class mail to the
Holders of Notes at their last addresses as they shall appear in the Note
Register. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 5.10. If the Company fails to
mail such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 5.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or to which the Trustee's assets
may be sold, or any corporation resulting from any merger, conversion,
consolidation or sale to which the Trustee shall be a party or by which the
Trustee's property may be bound, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 5.09, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
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In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor Trustee and deliver such Notes so
authenticated; and, in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Notes in the name
of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 5.13. Preferential Collection of Claims. Reference is made to
Section 311 of the Trust Indenture Act of 1939. For purposes of Section 311(b)
(4) and (6) of such Act, the following terms shall mean:
(a) "CASH TRANSACTION" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and
(b) "SELF-LIQUIDATING PAPER" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by the
Company for the purpose of financing the purchase, processing, manufacturing,
shipment, storage or sale of goods, wares or merchandise and which is secured by
documents evidencing title to, possession of, or a lien upon, the goods, wares
or merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
ARTICLE 6
CONCERNING THE HOLDERS
SECTION 6.01. Evidence of Action Taken by Holders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
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such Noteholders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Proof of execution
of any instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 5.01 and Section 5.02)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Article.
SECTION 6.02. Proof of Execution of Instruments and of Holding of
Notes; Record Date. Subject to Section 5.01 and Section 5.02, the execution of
any instrument by a Noteholder or his agent or proxy may be proved in accordance
with such reasonable rules and regulations as may be prescribed by the Trustee
or in such manner as shall be satisfactory to the Trustee. The holding of Notes
shall be proved by the Note register or by a certificate of the Registrar
thereof. The Company may set a record date for purposes of determining the
identity of Holders of Notes entitled to vote or consent to any action referred
to in Section 6.01, which record date may be set at any time or from time to
time by notice to the Trustee, for any date or dates (in the case of any
adjournment or resolicitation) not more than 60 days nor less than five days
prior to the proposed date of such vote or consent, and thereafter,
notwithstanding any other provisions hereof, only Holders of Notes of record on
such record date shall be entitled to so vote or give such consent or to
withdraw such vote or consent.
SECTION 6.03. Notes Owned by Company Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
10.70% Notes or 10.875% Notes, as the case may be, have concurred in any
direction, consent or waiver under this Indenture, Notes which are owned by the
Company or any other obligor on the Notes or by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Notes shall be disregarded
and deemed not to be outstanding for the purpose of any such determination,
except that for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver only Notes which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Notes 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 Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes. In case of a
dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Trustee in accordance with such advice. Upon
request of the Trustee, the Company shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all
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Notes, if any, known by the Company to be owned or held by or for the account of
any of the above-described persons; and, subject to Section 5.01 and Section
5.02, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Notes not listed therein are outstanding for the purpose of any such
determination.
SECTION 6.04. Right of Revocation of Action Taken. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 6.01, of
the taking of any action by the Holders of the percentage in aggregate principal
amount of the 10.70% Notes or 10.875% Notes, as the case may be, specified in
this Indenture in connection with such action, any Holder of a Note the serial
number of which is shown by the evidence to be included among the serial numbers
of the Notes the Holders of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Note.
Except as aforesaid any such action taken by the Holder of any Note shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Note and of any Notes issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon any
such Note. Any action taken by the Holders of the percentage in aggregate
principal amount of the 10.70% Notes or 10.875% Notes specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the Holders of all such Notes.
ARTICLE 7
SUPPLEMENTAL INDENTURES
SECTION 7.01. Supplemental Indentures Without Consent of Holders. The
Company, the Guarantors, if any, and the Trustee may, at any time and from time
to time, enter into one or more indentures supplemental to the Indenture without
notice to, or the consent of, any Holder:
(i) 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 Notes;
(ii) 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;
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(iii) to add any additional Events of Default;
(iv) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(v) to evidence and provide for the acceptance of appointment
under the Indenture of a successor trustee;
(vi) to secure the Notes;
(vii) to comply with the Trust Indenture Act of 1939;
(viii) to add additional Guarantees with respect to the Notes
or to release Guarantors from Domestic Restricted Subsidiary Guarantees
as provided by the terms of the Indenture; or
(ix) 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 provision 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.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon receipt
by the Trustee of the documents described in Section 7.04 hereof, the Trustee
shall join with the Company and the Guarantors, if any, in the execution of any
supple mental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture which affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 7.02. Supplemental Indentures With Consent of Holders. Except
as provided in the next succeeding paragraphs, this Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in aggregate principal amount of the 10.70% Notes or 10.875% Notes, as
the case may be, then outstanding (including consents obtained in connection
with a tender offer or exchange offer for such Notes), and any existing default
or compliance with any provision of this Indenture or either series of Notes may
be waived with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding 10.70% Notes or 10.875% Notes, as the case may be
(including
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consents obtained in connection with a tender offer or exchange offer for such
Notes).
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent
of the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.04 hereof, the Trustee shall join with the Company and
the Guarantors (if any), in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
Subject to Section 4.04 and Section 4.07 hereof, the Holders of a majority in
aggregate principal amount of the 10.70% Notes or 10.875% Notes, as the case may
be, then outstanding may waive compliance in a particular instance by the
Company with any provision of this Indenture or the applicable series of Notes.
With the consent of the Holders of not less than a majority in principal amount
of the outstanding 10.70% Notes or 10.875% Notes, as the case may be, 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 of the
affected series:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any such Note, or reduce the principal
amount thereof or the interest thereon that would be due and payable
upon the Stated Maturity thereof, or change the place of payment where,
or the coin or currency in which, any such 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 Stated Maturity
thereof;
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(ii) reduce the percentage in principal amount of the
outstanding 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;
(iii) subordinate in right of payment, or otherwise
subordinate, such Notes to any other Debt;
(iv) except as otherwise required by the Indenture, release
any security interest that may have been granted in favor of the
Holders of such Notes;
(v) reduce the premium payable upon the redemption of any such
Note nor change the time at which any such Note may be redeemed, as
described in the Indenture;
(vi) reduce the premium payable upon a Change of Control
Triggering Event;
(vii) make any change in any Domestic Restricted Subsidiary
Guarantee that would adversely affect the Holders of such Notes; or
(viii) modify any provision of this paragraph (except to
increase any percentage set forth herein).
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise to any Holder of any Notes for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 7.03. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the Holders of Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
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SECTION 7.04. Documents to Be Given to Trustee; Compliance with TIA.
The Trustee, subject to the provisions of Section 5.01 and Section 5.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture. Every such supplemental indenture shall comply
with the TIA.
SECTION 7.05. Notation on Notes in Respect of Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article may bear a notation
approved by the Trustee as to form (but not as to substance) as to any matter
provided for by such supplemental indenture or as to any action taken at any
such meeting. If the Company or the Trustee shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Notes then outstanding.
ARTICLE 8
CONSOLIDATION, MERGER OR SALE OF ASSETS
SECTION 8.01. Consolidation, Merger or Sale of Assets. The Company
may not, in a single transaction or a series of related transactions,
(1) consolidate with or merge into any other Person or Persons
or permit any other Person to consolidate with or merge into the
Company, or
(2) directly or indirectly, transfer, sell, lease, convey or
otherwise dispose of all or substantially all its assets to any other
Person or Persons unless:
(a) in a transaction in which the Company is not the
resulting, surviving or transferee Person or in which the
Company transfers, sells, leases, conveys 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 the Indenture;
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(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 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 the
successor entity to the Company) or such Restricted Subsidiary
at the time of the transaction, the Company (or the successor
entity to the Company) could Incur at least $1.00 of
additional Debt pursuant to paragraph (a) of Section 3.08;
(d) if, as a result of any such transaction, Property
of the Company or any Restricted Subsidiary would become
subject to a Lien prohibited by the Company in Section 3.13,
the Company or the successor entity to the Company shall have
secured the Notes as required by said covenant; and
(e) in the case of a transfer, sale, lease,
conveyance or other disposition of all or substantially all of
the assets of the Company, such assets shall have been
transferred as an entirety or virtually as an entirety to one
Person and such Person shall have complied with all the
provisions of this Section.
SECTION 8.02. Successor Corporation Substituted. (a) Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 8.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer, except in the case of a lease, instead to the successor corporation), 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.
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(b) Notwithstanding the foregoing, (1) a consolidation or merger by the
Company with or into, or (2) the sale, assignment, transfer, lease, conveyance
or other disposition by the Company of all or substantially all of its property
or assets to, one or more of its Subsidiaries shall not relieve the Company from
its obligations under this Indenture and the Notes.
(c) Notwithstanding the foregoing, but subject to Section 8.01(2(a))
and (b), the Company may merge or consolidate with or into any Restricted
Subsidiary.
SECTION 8.03. Opinion of Counsel to Trustee. The Trustee, subject to
the provisions of Section 5.01 and Section 5.02, may receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, conveyance,
sale, transfer, lease, exchange or other disposition complies with the
applicable provisions of this Indenture.
ARTICLE 9
REDEMPTION OF NOTES
SECTION 9.01. Right of Optional Redemption; Prices.
The Company may redeem all or part of the 10.70% Notes at any time upon
not less than 30 nor more than 60 days' notice at the Make-Whole Price, plus
accrued and unpaid interest on the 10.70% Notes, if any, to the redemption date.
In addition, at any time or from time to time prior to October 1, 2002,
the Company may redeem up to 35% of the original aggregate principal amount of
the 10.70% Notes at a redemption price equal to 110.70% of the principal amount
of the 10.70% Notes so redeemed, plus accrued and unpaid interest thereon (if
any) to the redemption date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on the relevant Interest
Payment Date), with the net cash proceeds of one or more private placements to
Persons other than Affiliates of the Company or public offerings of common stock
of the Company, in each case resulting in gross proceeds to the Company of at
least $100 million in the aggregate; provided that (1) at least 65% of the
original aggregate principal amount of the 10.70% Notes would remain outstanding
immediately after giving effect to such redemption; (2) any such redemption
shall be made within 90 days of such private placement or public offering upon
not less
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than 30 nor more than 60 days' prior notice; and (3) any such redemption may not
occur in connection with or after the occurrence of a Change of Control.
Prior to October 1, 2004, the Company may redeem all or part of the
10.875% Notes at any time upon not less than 30 nor more than 60 days' notice at
the Make-Whole Price, plus accrued and unpaid interest on the 10.875% Notes, if
any, to the redemption date. On or after October 1, 2004, the Company at its
option may, at any time, redeem all, or from time to time any part of, the
10.875% Notes upon payment of the optional redemption prices set forth in the
form of Note hereinabove recited, together with accrued and unpaid interest to
the date fixed for redemption.
In addition, at any time or from time to time prior to October 1, 2002,
the Company may redeem up to 35% of the original aggregate principal amount of
the 10.875% Notes at a redemption price equal to 110.875% of the principal
amount of the 10.875% Notes so redeemed, plus accrued and unpaid interest
thereon (if any) to the redemption date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on the
relevant Interest Payment Date), with the net cash proceeds of one or more
private placements to Persons other than Affiliates of the Company or public
offerings of common stock of the Company, in each case resulting in gross
proceeds to the Company of at least $100 million in the aggregate; provided that
(1) at least 65% of the original aggregate principal amount of the 10.875% Notes
would remain outstanding immediately after giving effect to such redemption; (2)
any such redemption shall be made within 90 days of such private placement or
public offering upon not less than 30 nor more than 60 days' prior notice; and
(3) any such redemption may not occur in connection with or after the occurrence
of a Change of Control.
SECTION 9.02. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Notes to be redeemed as a whole or in part shall be
given by mailing notice of such redemption by first class mail, postage prepaid,
at least 30 days and not more than 60 days prior to the date fixed for
redemption to such Holders of Notes at their last addresses as they shall appear
upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the Holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
The notice of redemption to each such Holder shall identify the Notes
to be redeemed (including the CUSIP number) and shall specify the principal
amount of each Note held by such Holder to be redeemed, the date fixed for
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redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in said
notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. In case any Note is to be redeemed
in part only the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Notes to be redeemed at the option 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.
No later than 10:00 a.m. on the redemption date specified in the notice
of redemption given as provided in this Section, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 3.04) an amount of money sufficient to redeem on the redemption date all
the Notes so called for redemption at the appropriate redemption price, together
with accrued interest to the date fixed for redemption. The Company will deliver
to the Trustee at least 70 days prior to the date fixed for redemption an
Officers' Certificate stating the aggregate principal amount of Notes to be
redeemed.
If less than all the Notes are to be redeemed, the Trustee shall
select, either pro rata, by lot or by any other method it shall in its sole
discretion deem fair and appropriate, Notes to be redeemed in whole or in part;
provided that no Note of $1,000 in principal amount or less shall be redeemed in
part. The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Notes shall relate, in the case of any Note redeemed or to
be redeemed only in part, to the portion of the principal amount of such Note
which has been or is to be redeemed.
SECTION 9.03. Payment of Notes Called for Redemption. If notice of
redemption has been given as above provided, the Notes or portions of Notes
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the applicable redemption price, together with
interest accrued to the date fixed for redemption, and on and after said date
(unless the Company shall default in the payment of such Notes at the redemption
price, together with interest accrued to said date) interest on the Notes or
portions of Notes so called for redemption shall cease to accrue and, except as
provided in
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Section 5.05 and Section 11.06, such Notes shall cease from and after the date
fixed for redemption to be entitled to any benefit or security under this
Indenture, and the Holders thereof shall have no right in respect of such Notes
except the right to receive the redemption price thereof and unpaid interest to
the date fixed for redemption. On presentation and surrender of such Notes at a
place of payment specified in said notice, said Notes or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption;
provided that any semi-annual payment of interest becoming due on or prior to
the date fixed for redemption shall be payable to the Holders of such Notes
registered as such on the relevant Regular Record Date subject to the terms and
provisions of Section 2.04 hereof.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate borne by the Note.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to or
on the order of the Holder thereof, at the expense of the Company, a new Note or
Notes, of authorized denominations, in principal amount equal to the unredeemed
portion of the Note so presented.
SECTION 9.04. Exclusion of Certain Notes from Eligibility for Selection
for Redemption. Notes shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in a
written statement signed by an authorized officer of the Company and delivered
to the Trustee at least 40 days prior to the last date on which notice of
redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by either (a) the Company or (b) an entity specifically
identified in such written statement as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
ARTICLE 10
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.01. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may at its option by a Board Resolution, at any time,
elect to have either Section 10.02 or Section 10.03 applied to the outstanding
Notes upon compliance with the conditions set forth below in this Article Ten.
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SECTION 10.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 10.01 hereof of the option applicable to this Section,
the Company shall be deemed to have been discharged from any and all Obligations
with respect to all outstanding Notes (and any Guarantor will be discharged from
any and all Obligations in respect of its Subsidiary Guarantee) on the date
which is the 123rd day after the deposit referred to in Section 10.04(a);
provided that all of the conditions set forth below are satisfied (hereinafter,
"LEGAL DEFEASANCE"). For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Debt represented
by the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 10.05 hereof and the other Sections of this
Indenture referred to in clauses (1) and (2) of this Section, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (1) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 10.04 hereof, and as more fully set forth in such Section, payments
in respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (2) the Company's obligations with respect to such Notes
under Sections 2.01, 2.02, 2.05, 2.06, 2.07, 2.08, 2.10, 3.01, 3.02, 3.04 and
10.05 hereof, (3) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including, without limitation, the Trustee's rights under
Section 5.07 hereof, and (4) the Company's obligations in connection therewith
and with this Article Ten. Subject to compliance with this Article Ten, the
Company may exercise its option under this Section notwithstanding the prior
exercise of its option under Section 10.03 hereof with respect to the Notes.
SECTION 10.03. Covenant Defeasance. Upon the Company's exercise under
Section 10.01 hereof of the option applicable to this Section, the Company shall
be released from its obligations under the covenants contained in Section 3.08
through Section 3.18 and clauses (3), (4) and (5) of Section 8.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes shall
thereafter be deemed not 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 Notes, 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
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document and such omission to comply shall not constitute a Default or an Event
of Default under Section 4.01(c) or 4.01(d) hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby.
SECTION 10.04. Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to application of either Section 10.02 or
Section 10.03 hereof to the outstanding Notes:
(a) the Company has deposited with the Trustee, in trust, money and/or
U.S. Government Obligations that through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount 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 the principal of, premium, if any, and accrued interest on the
Notes on the Stated Maturity of such payments in accordance with the terms of
the Indenture and the Notes;
(b) in the case of an election under Section 10.02 hereof, the Company
has delivered to the Trustee (1) either (x) an Opinion of Counsel to the effect
that Holders will not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of its option under this Article
Ten and will be subject to Federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred, which Opinion of Counsel must be
based upon (and accompanied by a copy of) a ruling of the Internal Revenue
Service to the same effect unless there has been a change in applicable Federal
income tax law after the date of this Indenture such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the Internal
Revenue Service to the same effect as the aforementioned Opinion of Counsel and
(2) an Opinion of Counsel to the effect that the creation of the defeasance
trust does not violate the Investment Company Act of 1940 and after the passage
of 123 days following the deposit, the trust fund will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section 15 of the
New York Debtor and Creditor Law;
(c) in the case of an election under Section 10.03 hereof, the delivery
by the Company to the Trustee of (1) an Opinion of Counsel to the effect that,
among other things, the Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred and (2) an Opinion of Counsel to the effect that the creation of
the defeasance trust does not violate the Investment Company Act of 1940 and
after the passage of 123 days following the deposit, the trust fund will not be
subject to
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the effect of Section 547 of the United States Bankruptcy Code or Section 15 of
the New York Debtor and Creditor Law;
(d) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or lapse of
time or both would become an Event of Default, shall have occurred and be
continuing on the date of such deposit or during the period ending on the 123rd
day after the date of such deposit, and such deposit shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which the Company is bound;
(e) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section 10.02 or 10.03 hereof was not made by the Company with
the intent of preferring the Holders of the Notes over the other creditors of
the Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(g) 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 Legal Defeasance under Section
10.02 or the Covenant Defeasance under Section 10.03 (as the case may be) have
been complied with as contemplated by this Section.
SECTION 10.05. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 10.06 hereof, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee pursuant to Section 10.04 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any paying agent (including the Company acting as paying agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal of, premium, if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the money or U.S. Government
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Obligations deposited pursuant to Section 10.04 hereof 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 Notes.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or U.S. Government Obligations held by it as provided in
Section 10.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
10.04(a) hereof), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 10.06. Repayment to Company. Any money deposited with the
Trustee or any paying agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal, premium, if any, or
interest has become due and payable shall be paid to the Company on its written
request or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note 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 The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 10.07. Reinstatement. If the Trustee or paying agent is unable
to apply any money or U.S. Government Obligations in accordance with Section
10.02 or 10.03 hereof, as the case may be, 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 Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 10.02 or 10.03 hereof until such time as the
Trustee or paying agent is permitted to apply all such amounts in accordance
with Section 10.02 or 10.03 hereof, as the case may be; provided, however, that,
if the Company makes any payment of principal of, premium, if any, or interest
on any Note following the reinstatement of its obligations, the Company shall be
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subrogated to the rights of the Holders of such Note to receive such payment
from the amounts held by the Trustee or paying agent.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.01. Incorporators, Stockholders, Officers, Directors,
Employees and Controlling Persons of Company Exempt from Individual Liability.
No recourse for the payment of the principal of, premium, if any, or interest on
any of the Notes or any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
contained in this Indenture, or in any Note, or because of the creation of any
indebtedness evidenced thereby, shall be had against any incorporator, as such,
or against any past, present or future stockholder, officer, director, employee
or controlling person, as such, of the Company or of any successor Person,
either directly or through the Company or any successor Person, under any rule
of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the Notes by
the Holders thereof and as part of the consideration for the issue of the Notes.
SECTION 11.02. Provisions of Indenture for the Sole Benefit of Parties
and Holders. Nothing in this Indenture or in the Notes, expressed or implied,
shall give or be construed to give to any person, firm or corporation, other
than the parties hereto and their successors and the Holders of the Notes, any
legal or equitable right, remedy or claim under this Indenture or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
Holders of the Notes.
SECTION 11.03. Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or in behalf of the Company shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.04. Notices and Demands on Company, Trustee and Holders. Any
notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Notes to or
on the Company may be given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Company is filed by the Company with the Trustee)
to One
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Williams Center, Tulsa, Oklahoma, Attention: Chief Financial Officer, with a
copy to the office of General Counsel. Any notice, direction, request or demand
by the Company or any Noteholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made at the
Corporate Trust Office.
Where this Indenture provides for notice to Holders, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Note Register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. The Trustee may waive notice
to it of any provision herein, and such waiver shall be deemed to be for its
convenience and discretion. 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, it shall be impracticable to mail notice to the Company and
Noteholders 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.
SECTION 11.05. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Company to the Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent provided for in this Indenture 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 have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as
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to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based, (c) a
statement that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with and (d) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
Any certificate, statement 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 that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters or information which is in the possession of the Company,
upon the certificate, statement or opinion of or representations by an officer
or officers of the Company, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
SECTION 11.06. Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or principal of the Notes or the date fixed for
redemption of any Note shall not be a Business Day, then payment of interest or
principal 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 date of maturity
or the date fixed for redemption, and no interest shall accrue for the period
after such date.
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SECTION 11.07. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
by operation of Section 310 to Section 317, inclusive, of the Trust Indenture
Act of 1939 (an "INCORPORATED PROVISION"), such incorporated provision shall
control.
SECTION 11.08. New York Law to Govern. This Indenture and each Note
shall be deemed to be a contract under the laws of the State of New York, and
for all purposes including the obligations of the Company and any Guarantor and
the rights of Holders of the Notes arising out of or in connection with the
Notes, including the obligations of the Company and any Guarantor to pay all
principal, interest or other amounts payable under the Indenture and such Note,
will be governed by and shall be construed in accordance with the laws of said
State, without giving effect to the conflict of laws provisions thereof, except
as may otherwise be required by mandatory provisions of law.
SECTION 11.09. 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 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of October 6, 1999.
WILLIAMS COMMUNICATIONS GROUP, INC.,
as Issuer
By /s/ G.L. BEST
-----------------------------------------
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By /s/ [ILLEGIBLE]
-----------------------------------------
Title: Vice President
<PAGE> 1
EXHIBIT 10.1
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of the 30th day of September, 1999, by and between The Williams
Companies, Inc., a Delaware corporation ("Williams"), those certain subsidiaries
of Williams listed on the Signature Pages of this Agreement (collectively the
"Williams Subsidiaries" and together with Williams, the "Williams Group"),
Williams Communications Group, Inc., a Delaware corporation, ("Communications")
and those certain subsidiaries of Communications listed on the Signature Pages
of this Agreement (collectively the "Communications Subsidiaries").
WITNESSETH:
WHEREAS, Communications plans to sell shares of its Series A Common Stock to
the public in an underwritten Initial Public Offering on the one hand and to SBC
Communications, Inc., Intel Corporation and Telefonos de Mexico, S.A. de C.V.
pursuant to Securities Purchase Agreements on the other, and
WHEREAS, Williams will continue to hold all of the issued and outstanding
Series B Common Stock of Communications after the closing of these sales of the
Series A Common Stock, and
WHEREAS, Communications desires to continue for the term of this Agreement
to obtain certain Support Services from Williams and the Williams Subsidiaries
to facilitate the operations of Communications and the Communications
Subsidiaries (collectively the "Communications Group") upon the terms and
subject to the conditions that are set forth in this Agreement;
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and in consideration of the
foregoing premises and the mutual promises and obligations contained herein, the
Parties hereto agree as follows:
1. Support Services. For so long as and to the extent that Williams or any
of the Williams Subsidiaries (or any of their respective subsidiaries or
affiliates) perform the Support Services for themselves or provide the Support
Services (as hereinafter defined) to their respective subsidiaries or
affiliates, Williams and Williams Subsidiaries will provide Support Services to
the Communications Group in accordance with the terms and subject to the
conditions set forth in this Agreement.
The term "Support Services" as used in this Agreement means the services
provided by each of the cost centers identified on Attachment A to the same
extent provided to Williams and the Williams Subsidiaries and use of the
applicable facilities and employees for other services performed by Williams or
the Williams Subsidiaries for the Communications Group during the 12-month
period ended on the date hereof.
Any additional leases, licenses or purchases specifically required by
Williams or the Williams Subsidiaries to provide Support Services to the
Communications Group at any time during the term of this Agreement and not
specifically covered under any other Agreement will be charged
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directly to the Communications Group on an actual cost basis. Communications
Group will be given written notification of these charges by Williams in the
first invoice for service charges reflecting these costs.
2. Reimbursement for Support Services. In consideration of the performance
of the Support Services on the part of the Williams Group, Communications agrees
to pay or reimburse Williams for Support Services rendered by the Williams Group
on the Communications Group's behalf at the same rate Williams charges its Tulsa
based operating companies, as such rates may be revised from time to time, which
charges shall be consistent with past practices regarding the treatment of any
overrecoveries or underrecoveries of cost, which rates and treatment shall be
subject to good faith negotiations between Williams and Communications
consistent with Williams' policies and practices, as applied to all Williams
Subsidiaries (the "Services Charges"). For informational purposes only, Williams
has set forth the current allocation or charge method and the related logic for
Support Services on Attachment A. The intent of the parties with respect to
payment for Support Services performed hereunder is that (i) the Service Charges
will be remitted to Williams, (ii) other reasonable out-of-pocket expenses
incurred by Williams or any Williams Subsidiaries, and reasonable expenses with
respect to travel and charges by third parties incurred by Williams or Williams
Subsidiaries on Communications Group's behalf will be reimbursed to Williams and
(iii) amounts expended by Williams or Williams Subsidiaries on Communications
Group's behalf with respect to claims and litigation (including settlement costs
and reasonable expenses associated therewith including attorneys' fees and
expenses and court costs) pertaining to the Communications Group will be
reimbursed to Williams.
With respect to the Service Charges, Williams will submit invoices to
Communications on at least a monthly basis in the amounts determined in
accordance with this Section 2. Communications will pay or cause to be paid each
invoice submitted to Communications pursuant to the foregoing sentence within
fifteen (15) business days after the receipt by Communications of such invoice
(except with respect to amounts in any such invoice that are manifestly in
error). In the event that Communications questions the amount of any such bill,
the manner of its computation, or the underlying data on which the bill was
based, it will pay the related invoice in accordance with the preceding sentence
(except with respect to amounts in any such invoice that are manifestly in
error) and thereafter notify Williams of such questions and, for a period of 30
days thereafter, Williams will make or cause to be made available to
Communications, its employees and designees, at a location in Williams
headquarters designated by Williams during normal business hours, all
documentation necessary for Communications to review the bill, the computation
and the data. If, upon completion of the review, Williams and Communications are
not in agreement upon the amount of the bill, the amount will be referred to a
nationally recognized firm of certified public accountants selected by mutual
agreement of Williams and Communications, which firm will make a final binding
decision as to the correct amount of the bill. In the event that it is
determined that the correct amount of the bill is less than the amount that was
paid by Communications with regard thereto, the excess amount will be promptly
refunded to
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Communications by Williams. Williams and Communications will equally share in
the cost associated with retaining such firm of certified public accountants.
Nothing herein will be deemed to prevent either party from proposing adjustments
to prior Communication invoices that were inadvertently omitted from the prior
invoices that were sent to Communications by Williams.
If either Williams or Communications fails to pay as and when due and
payable any amount hereunder (including, without limitation, the Service
Charges), then either Williams or Communications, as the case may be, shall pay
interest on such amount from the due date up to and including the date when such
amount and all interest thereon are paid in full at the rate per annum equal to
the prime rate of Citibank N.A., plus one percent (1%). For the purposes hereof,
the "prime rate of Citibank N.A." shall mean the annual rate of interest
announced from time to time by Citibank N.A. as a reference rate then in effect
for determining annual interest rates of U.S. dollar commercial loans.
3. Manner and Time of Performance. The Williams Group will perform or cause
to be performed the Support Services hereunder with the same degree of care,
skill and diligence with which they perform or would perform similar services
for themselves and their respective subsidiaries and affiliates consistent with
past practices (including, without limitation, with respect to the type,
quantity, quality and timeliness of such services).
4. Books and Records. The Williams Group will maintain books, records,
documents and other written evidence, consistent with their normal accounting
procedures and practices, sufficient to accurately, completely and properly
reflect the performance of the Support Services hereunder and the amounts due in
accordance with any provision of this Agreement (collectively, the "Services
Evidence"). The members of the Communications Group and their respective
representatives will be given access subject to reasonable notice at all times
during normal business hours to the Services Evidence for any purpose deemed
appropriate by Communications relating to the confirming, checking, reviewing,
examining, auditing or verifying the accuracy of the invoices submitted to them.
5. Independent Contractor. In performing the Support Services hereunder,
each member of the Williams Group will operate as and have the status of an
independent contractor, subject only to the general direction of the
Communications Group regarding the Support Services to be rendered as opposed to
the method of performance of the Support Services.
6. Confidentiality. All non-public information provided by any member of the
Communications Group or by any of their respective representatives pursuant to
this Agreement will be confidential and not disclosed to any person except with
the consent of Communications. All non-public information provided by any member
of the Williams Group
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or by any of their respective representatives pursuant to this Agreement will be
confidential and not disclosed to any person except with the consent of
Williams.
7. Term of Agreement. The terms of Section 1 of this Agreement will continue
in force for an initial term of five (5) years after the date hereof (the
"Initial Term"), and will automatically renew for one(1) additional one (1) year
term thereafter (the "Renewal Term"); provided, however, that either
Communications or Williams may terminate Section 1 hereof, in whole or with
respect to any Support Service being provided at any time and from time to time,
at the end of the Initial Term or during the Renewal Term by providing six (6)
months advance written notice of such termination to the other party. Any such
termination will be effective on the time and date stated therein.
Either Communications or Williams may terminate this Agreement or any
addendum to this Agreement for any material breach or default of the other party
if such breach or default is not corrected within thirty (30) days of giving
written notice of such breach or default to the defaulting party.
Upon termination of Section 1, Communications agrees to reimburse Williams
for all unpaid amounts due as provided for in Section 2 (with any usage fees
which are fixed monthly fees being prorated to the date of termination thereof)
incurred by the Williams Group up to such date of termination; provided that if
Williams has received more than the portion of such unpaid amounts due as
provided for under Section 2 as of the date of termination, Williams will
reimburse Communications the portion of such unpaid amounts to which it is not
entitled under Section 2. In the event that Communications fails to pay any
amount that is required to be paid hereunder when due and such payment is not
thereafter made within fifteen (15) business days after the date on which
Williams has notified Communications in writing of such failure to pay, Williams
may at its option and without further notice immediately terminate the Support
Services after the expiration of such fifteen (15) business day period, without
prejudice to any other remedies that Williams has at law or in equity.
Upon termination of this Agreement, the Williams Group will, at the request
of a member of the Communications Group, transfer to such member of the
Communications Group historical data then in Williams' custody of the
Communications Group relating to the Support Services provided hereunder.
8. Assignment. Neither Williams, any Williams Subsidiary, Communications,
nor any Communications Subsidiary, will assign, in whole or in part, any of the
rights, obligations or benefits of this Agreement without the prior written
consent of the other parties, except that Williams may assign its rights (but
not Williams' obligations) hereunder to any of its affiliates or majority owned
subsidiaries.
9. Indemnification. Communications and each member of the Communications
Group will, jointly and severally, and to the fullest extent permitted by
applicable law, indemnify and hold harmless Williams, Williams Subsidiaries and
their respective officers,
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directors, agents and employees (collectively, the "Williams Indemnitees") from
and against all claims, demands, damages, losses, liabilities, costs or expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Costs") incurred or suffered by an Williams Indemnitee as a
result of the Support Services; provided, however, that the foregoing terms of
this sentence will not apply to the extent such Costs result from or arise out
of the negligence or willful misconduct of the Williams Group or any member
thereof. Williams will, to the fullest extent permitted by applicable law,
indemnify and hold harmless the members of the Communications Group and their
respective officers, directors, agents and employees (collectively, the
"Communications Indemnitees") from and against all Costs incurred or suffered by
any Communications Indemnitee as a result of the Support Services to the extent
such Costs result from or arise out of the gross negligence or willful
misconduct of the Williams Group or any member thereof. In no case will Costs be
deemed to include Service Charges. This Section 9 will survive the termination
of the other terms of this Agreement.
10. Delegation. Subject to Section 3 above, Communications delegates to
Williams final, binding, and exclusive authority, responsibility, and discretion
to interpret and construe the provisions of employee welfare benefit plans in
which Communications has elected to participate and which are administered by
Williams under this Agreement (collectively, "Employee Welfare Plans").
Williams may further delegate such authority to plan administrators to:
(i)provide administrative and other services;
(ii) reach factually supported conclusions consistent with the terms of the
Employee Welfare Plans;
(iii) make a full and fair review of each claim denial and decision related
to the provision of benefits provided or arranged for under the Employee
Welfare Plans, pursuant to the requirements of ERISA, if within sixty days
after receipt of the notice of denial, a claimant requests in writing a
review for reconsideration of such decisions. The administrator shall notify
the claimant in writing of its decision on review. Such notice shall satisfy
all ERISA requirements relating thereto; and
(iv) notify the claimant in writing of its decision on review.
11. Williams Litigation. In the event that any litigation, proceeding, or
investigation by or before any court or governmental agency or body is commenced
or threatened against Williams or any member of the Williams Group after the
effective date of this Agreement and which relates to Support Services rendered
hereunder and arises out of or is based solely upon the past, present, or future
business or operations of Communications or of any member of the Communications
Group, then at Williams' option, Williams and Communications shall use their
best reasonable efforts to have Communications or the relevant member of the
Communications Group, as the case may be, substituted in the place of and for
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Williams or the relevant member of the Williams Group, as the case may be, and
to have Williams or the relevant member of the Williams Group, as the case may
be, removed as a party, as promptly as is practicable. Pending such
substitution, and in the cases where such substitution cannot be effected,
Communications, with the full cooperation of Williams and the Williams Group,
shall promptly assume and direct the defense, prosecution, and/or settlement of
the claims concerned, employing for such purpose counsel reasonably satisfactory
to Williams, and shall pay all expenses related thereto. To the extent that any
such expenses are paid by Williams or the relevant member of the Williams Group,
as the case may be, Communications shall promptly reimburse Williams or the
relevant member of the Williams Group, as the case may be, therefor.
12. Communications Litigation. In the event that any litigation, proceeding,
or investigation by or before any court or governmental agency or body is
commenced or threatened against Communications or a member of the Communications
Group after the effective date of this Agreement and which relates to Support
Services rendered hereunder and arises out of or is based solely upon the past,
present, or future business or operations of Williams or any member of the
Williams Group but not of Communications or a member of the Communications
Group, then at Communications' option, Communications and Williams shall use
their best reasonable efforts to have Williams or the relevant member of the
Williams Group, as the case may be, substituted in the place of and for
Communications or the relevant member of the Communications Group, as the case
may be, and to have Communications or the relevant member of the Communications
Group, as the case may be, removed as a party, as promptly as is practicable.
Pending such substitution and in cases where such substitution cannot be
effected, Williams shall, with the full cooperation of Communications and
Communications Group, promptly assume and direct the defense, prosecution,
and/or settlement of the claims concerned, employing for such purpose counsel
reasonable satisfactory to Communications, and shall pay all expenses related
thereto. To the extent that any such expenses are paid by Communications or the
relevant member of the Communications Group, Williams shall promptly reimburse
Communications or the relevant member of the Communications Group, as the case
may be, therefor.
13. Compliance with Laws. Williams and Communications agree to comply and
each of Williams and Communications agrees to cause compliance by the Williams
Group and the Communications Group, respectively, providing or receiving, as the
case may be, Support Services hereunder, with all applicable federal, state, and
local laws and regulations in the performance of this Agreement.
14. Governing Law. This Agreement will be construed in accordance with, and
all disputes hereunder will be governed by, the laws of the State of Oklahoma,
without giving regard to its conflicts of laws principles.
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15. Notices. Any notice, request, instruction, correspondence, document or
other communication to be given hereunder by any party to another (herein
collectively called a "Notice") will be in writing and delivered personally or
mailed by certified mail, postage prepared and return receipt requested, or by
facsimile, as follows:
IF TO WILLIAMS OR ANY WILLIAMS SUBSIDIARY:
THE WILLIAMS COMPANIES, INC.
(OR IF TO A WILLIAMS ONE WILLIAMS CENTER SUBSIDIARY,
TO IT IN CARE OF
TULSA, OKLAHOMA 74172 OF WILLIAMS)
ATTENTION: GENERAL COUNSEL
FACSIMILE NO. 918/573-5942 WITH A COPY TO CORPORATE CONTROLLER
IF TO COMMUNICATIONS:
WILLIAMS COMMUNICATIONS GROUP, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
ATTENTION: GENERAL COUNSEL
Notice given by personal delivery will be effective upon actual receipt.
Notice given by mail will be effective upon forty-eight (48) hours after it is
placed in a mailbox for mailing. Notice given by facsimile will be effective
upon actual receipt if received during the recipient's normal business hours, or
at the beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours; provided that Notices by
facsimile are confirmed promptly after transmission by delivery to the recipient
of a copy thereof in writing by certified mail or personal delivery. Any party
may change any address to which Notice is to be given to it by giving Notice as
provided above of such change of address. For purposes of this Agreement, the
term "business day" means any day other than a Saturday, Sunday or a day on
which national banks in the State of Oklahoma are permitted or required by law
to close.
16. Mutual Cooperation. Williams and Communications will provide each other
with such assistance as may reasonably be required by any of them in connection
with the performance of all obligations under this Agreement.
17. Waiver. No waiver by any party of any term or breach of this Agreement
will be effective unless in writing and signed by the person against whom such
waiver is asserted, and a waiver of any one term or breach may not be construed
as a waiver of any other term or breach hereof or of the same or a similar term
or breach on any other occasion; provided, however, Williams may effect waivers
or amendments for any member of the Williams Group or Williams Indemnitee, and
Communications may effect waivers or amendments for any member of the
Communications Group.
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18. Dispute Resolutions. The parties agree to attempt to resolve any
disagreement they may have under this Agreement through a mutually acceptable
form of alternative dispute resolution prior to initiating litigation in respect
of such dispute.
19. Construction. Except where otherwise expressly provided, all references
to Sections, paragraphs and Schedules in this Agreement will be deemed to be
references to such Sections and paragraphs of this Agreement or Attachment A
attached to this Agreement, respectively. The terms "hereof," "herein,"
"hereunder" and other terms of similar import will be deemed to refer to this
Agreement in its entirety, and not to any Section or paragraph.
20. Force Majeure. For purposes of this Section, "force majeure" means an
event beyond the control of either party, which by its nature could not have
been foreseen by such party, or if it could have been foreseen, was unavoidable,
and includes without limitation, acts of God, storms, floods, riots, fires,
sabotage, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) and failure of energy sources.
Neither party shall be under any liability for failure to fulfill any
obligation under this Agreement, so long as and to the extent to which the
fulfillment of such obligation is prevented, frustrated, hindered, or delayed as
a consequence of circumstances of force majeure, provided always that such party
shall have exercised all due diligence to minimize to the greatest extent
possible the effect of force majeure on its obligations hereunder.
Promptly on becoming aware of force majeure causing a delay in performance
or preventing performance of any obligations imposed by this Agreement (and
termination of such delay), the party affected shall give written notice to the
other party giving details of the same, including particulars of the actual and,
if applicable, estimated continuing effects of such force majeure on the
obligations of the party whose performance is prevented or delayed. If such
notice shall have been duly given, and actual delay resulting from such force
majeure shall be deemed not to be a breach of this Agreement, and the period for
performance of the obligation to which it relates shall be extended accordingly,
provided that if force majeure results in the performance of a party being
delayed by more than 60 days, the other party shall have the right to terminate
this Agreement with respect to any Support Service effected by such delay
forthwith by written notice.
21. Amendment. No modification or amendment of this Agreement will be
binding upon any party unless in writing and signed by the party against which
the modification or amendment is asserted.
22. Entire Agreement. This Agreement and Attachment A (which is hereby
incorporated herein), constitute the entire understanding of the parties with
respect to the subject matter hereof, superseding all negotiations, prior
discussions and preliminary agreements, if any.
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23. Severability. Any Section or any other provision of this Agreement which
is, or becomes, illegal, invalid or unenforceable shall be severed herefrom and
shall be ineffective to the extent of such illegality, invalidity or
unenforceability and shall not affect or impair the remaining provisions hereof,
which provisions shall (a) be severed from any illegal, invalid or unenforceable
Section or any other provision of this Agreement, and (b) otherwise remain in
full force and effect; provided, however, that the parties shall use their best
efforts to achieve the purpose of the invalid or unenforceable provision or part
thereof by a new valid and enforceable stipulation.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Administrative
Services Agreement on and as of the date and year first-above written.
[STAMP]
WILLIAMS:
THE WILLIAMS COMPANIES, INC.
BY: /s/ JACK D. MCCARTHY
--------------------------------------
NAME: Jack D. McCarthy
------------------------------------
TITLE: Sr. V.P. - Finance & CFO
-----------------------------------
WILLIAMS SUBSIDIARIES:
See attached subsidiary list
----------------------------------------------------------------------------
----------------------------------------------------------------------------
COMMUNICATIONS:
WILLIAMS COMMUNICATIONS GROUP, INC.
BY: /s/ G.L. BEST
--------------------------------------
NAME: G.L. Best
------------------------------------
TITLE: VIce President
-----------------------------------
COMMUNICATION SUBSIDIARIES:
See attached subsidiary list
----------------------------------------------------------------------------
----------------------------------------------------------------------------
10
<PAGE> 1
EXHIBIT 10.2
SERVICE AGREEMENT
BETWEEN
WILLIAMS INFORMATION SERVICES CORPORATION
AND
WILLIAMS COMMUNICATIONS GROUP, INC.
THIS SERVICE AGREEMENT ("Agreement") is effective as of the 30th of
September, 1999, by and between WILLIAMS INFORMATION SERVICES CORPORATION, a
Delaware corporation, hereinafter referred to as "WISC" and WILLIAMS
COMMUNICATIONS GROUP, INC., a Delaware corporation, and its majority owned
subsidiaries, hereinafter referred to as "Customer." WISC and Customer are each
a "Party" and together are the "Parties" to this Agreement.
RECITALS:
WHEREAS, WISC has been providing Data Processing and Computer-related
services to Customer and Customer desires to continue purchasing such services,
solely for its internal use and the internal use of its subsidiaries in which
Customer possesses fifty percent (50%) or greater ownership interest;
WHEREAS, the Parties desire to establish the service levels provided under
this Agreement, the reimbursable commitments due upon termination of this
Agreement and other issues related to the provision of Services hereunder.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1. SERVICES. WISC agrees, during the term of this Agreement, to provide use
of WISC employees, facilities and systems in the performance and coordination of
data processing and computer-related services to Customer. Such non-exclusive
service, as more particularly described in Attachment B (the "Services
Profile"), attached hereto and incorporated by reference, includes, but is not
limited to, mainframe operations, payroll processing and support, technical
staff support, data center operations and floorspace, special processing
requirements, system backups, network services, telephone services and
Enterprise services including Help Desk, IT Sourcing and Y2K Compliance Program
(the "Services" or "Service"). The Service provided by WISC will be provided in
accordance with the Service Level Agreements to be developed and mutually agreed
to by the Parties and attached hereto as Attachment A. The Services Profile and
the Service Level Agreements shall be updated or amended from time to time.
2. LIAISON. Customer will designate a person to act as a liaison ("Liaison")
for all contact with WISC. The Liaison has authority to make requests for all
Service and has authority to approve all commitments made by WISC on Customer's
behalf. Approval of all costs, expenditures, expenses, contractual obligations,
and other commitments will be in writing by the designated Liaison.
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3. COMMITMENT LIST. All hardware, software, and Services Customer has
previously committed to pay for ("Existing Commitments") will be listed in a
commitment list ("Commitment List") provided to Customer, a summary of which is
attached hereto as Attachment C, and incorporated by reference. The Commitments
List includes amounts for: (1) estimated taxes; (2) leased equipment; (3) fixed
assets; (4) facilities improvements; (5) third party software; and (6)
miscellaneous expenses. WISC will continue to update the Commitments List each
quarter to add new commitments and to decrease other commitments.
Certain commitments will decrease as a result of WISC fulfilling its
obligations under the commitment. For example, a contractual obligation which
presently has a two (2) year commitment, will be reduced each quarter as WISC
performs the obligations required for that quarter.
Customer will have thirty (30) days after receiving the revised Commitments
List to object to any item on the Commitments List. After this thirty (30) day
review period has passed, Customer will be deemed to have accepted all items on
the Commitments List.
4. FEES AND PAYMENTS. In consideration of WISC entering into purchase,
lease, development and other obligations necessary to perform Services hereunder
for Customer, Customer agrees to pay all costs incurred by WISC and approved in
writing by Liaison including, but not limited to, all costs for equipment,
software, personnel, or other contractual obligations for which WISC has already
paid or remains obligated to pay, arising in connection with the provision of
Services hereunder. All costs for such equipment, software, personnel or other
contractual obligations, will be listed on the Commitment List.
A. ALLOCATION CHARGES AND FEES. In addition to the obligations and
charges set forth in this Agreement, Customer agrees to pay WISC the
allocation amounts per month for the allocated Services set out in the
Services Profile, as well as the amounts per month for other Services used
by Customer at the published rates also set out in the Services Profile. The
Services Profile will be provided annually on or before August 1.
B. MISCELLANEOUS CHARGES AND FEES. Customer will reimburse WISC for
WISC's actual cost for certain items used in providing services to Customer
including but not limited to the following items: Custom forms (except when
forms are purchased or supplied by Customer), the lease of terminal
equipment used on Customer's premises, telephone lines and telephone
equipment related to the Customer's processing and all microfiche charges
related to Customer's reports.
C. TAXES. Customer agrees to pay or reimburse WISC for all taxes for
goods or services procured by WISC pursuant to performance of this Agreement
for Customer.
D. BILLING. Customer shall be billed every month for amounts due for the
previous month. Payment is due thirty (30) days after Customer's receipt of
invoice. Undisputed payments not received by the due date shall accrue
interest at a rate of one and one half percent (1.5%) per month or the
highest rate allowed by law whichever is less.
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E. DISPUTED CHARGES. As to disputed amounts, Customer will place the
disputed amount in an escrow account and provide WISC written notice, which
includes a summary of its dispute, within thirty (30) days of the due date.
Any amount for which Customer does not give notice of a dispute within
thirty (30) days of the due date will be deemed to be an undisputed amount.
As to disputed amounts the Parties will attempt to resolve the dispute in
accordance with Section 23, Dispute Resolution.
5. TERM. The term of this Agreement will begin April ____, 1999, and will
remain in effect until April _____, 2004 (the "Initial Term"), and will
automatically renew for additional terms of twelve (12) months each.
Notwithstanding the foregoing, either Party may terminate this Agreement, at any
time, by giving twelve (12) months prior written notice to the other Party.
6. BACKUP AND RECOVERY PLAN. Customer and WISC, as timing allows, shall
jointly develop and maintain a backup and recovery plan mutually satisfactory to
the Parties which details specific responsibilities and recovery objectives.
WISC will incorporate Customer's backup and recovery priorities in its published
overall disaster and recovery plan which is currently being revised and updated.
The WISC disaster and recovery plan includes a listing of those persons
authorized to declare a disaster. Customer will have the option to contract for
its own disaster recovery services with a vendor of its choice for those
services for which WISC is not directly responsible. This option, however, will
not relieve Customer of any obligations for disaster recovery services on the
Commitments List.
7. PROCESSING STANDARDS. Customer will be subject to all reasonable
processing standards and procedures as set forth in the WISC Data Center
Standards and Operating Procedures Manual. WISC will copy all Customer mainframe
software and ensure synchronization with Customer Data maintained by WISC,
semi-annually, including updates and documentation, and will store in such data
WISC's offsite facility, and will provide Customer with access to such copies
upon request. As to data, programs and software supplied by WISC to Customer,
which are licensed from third party vendors, the Parties recognize that use is
subject to the license agreements for each software product and the Parties
agree to be bound by such agreements. Upon request WISC shall provide to
Customer copies of the terms and conditions of such license agreements.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION. The Parties will take all
reasonable precautions to protect the security of the other Party's confidential
information, including making reasonable efforts to cause its directors,
employees and agents to abide by the terms of this Agreement. Confidential
information ("Confidential Information") shall include, but not be limited to,
the following: business and financial methods; records and practices; pricing
and selling techniques; file or data base materials; price lists; software;
computer programs; credit and financial data; as well as similar information
relating to the parent, subsidiaries and affiliates of either Party. Nothing in
this Agreement shall prohibit or restrict WISC's right to use general ideas,
concepts, methods, expressions, know-how and techniques related to the scope of
WISC's Services and used in the course of its Services that are not unique to
the Confidential Information, or do not include specific elements of the
Confidential Information. Nothing in this Agreement shall prohibit or restrict
WISC's rights to provide to third parties services which are similar to those it
provides to Customer, so long as such provision of services does not breach this
Agreement. Neither
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Party will make copies of the other Party's Confidential Information for its own
use without the prior written permission of the other. The Parties may copy the
software of the other only as permitted in applicable license agreements and
only as reasonably necessary to support authorized use and shall not make such
software available to any person other than employees or agents whose job
performance requires such access.
Files containing Customer's systems inputs and outputs are, and shall
remain, the property of Customer and shall be returned to Customer at its
request. Physical media produced by WISC for Customer must be purchased by
Customer or returned to WISC within thirty (30) days after Customer's receipt of
same.
The Parties hereto may exchange certain Confidential Information for the
purpose of implementing this Agreement. In consideration of the receipt of such
Confidential Information, the Parties agree as follows:
1. Each Party shall retain all rights to its Confidential Information. Each
receiving Party agrees to take such reasonable measures to prevent the
unauthorized disclosure to third parties of Confidential Information as it
would take to prevent disclosure of its own proprietary or Confidential
Information. Disclosure will be limited to such employees and agents as
necessary to perform under this Agreement. To the extent practicable,
information protected by this Agreement shall be marked "Confidential."
Except as necessary for proper evaluation, documents containing Confidential
Information obtained pursuant to this Agreement may not be duplicated in any
manner without the written permission of the originating Party.
2. The Parties agree to keep all Confidential Information confidential for
seven (7) years after the expiration or termination of this Agreement.
Information obtained by receiving Party that (1) is or becomes generally
known or available to the public without breach or any obligation of
confidentiality; (2) is lawfully known to it at the time of receipt as
evidenced by the receiving Party's written records; or (3) is subsequently
furnished to it lawfully by a third party, to the best of the receiving
Party's knowledge, without restriction and without breach or any obligation
of confidentiality; will not be deemed confidential and may be used without
restriction. If disclosure of Confidential Information is required pursuant
to a valid court order or subpoena, receiving Party shall give the
disclosing Party prior written notification of such order or subpoena, and
then shall disclose the Confidential Information only to the extent
necessary to comply with the governmental agency's request. Confidential
Information disclosed pursuant to a valid court order or subpoena does not
lose its confidential status as to third parties. Unless expressly agreed
otherwise, the Parties shall also keep confidential the terms and conditions
of this Agreement and the exchange of information.
Upon reasonable notice, Customer's internal and external auditors shall have
the right during normal working hours to review The Williams Companies, Inc.'s
internal audit department work papers, program design flow charts, programs and
other documents, materials and information relating to the Customer as may
reasonably be requested by Customer's internal and external auditors in
connection with the preparation of a certified financial audit of Customer. All
documents, materials and information made available to or
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disclosed to Customer's internal and external auditors under this Section shall
be kept confidential by Customer's internal and external auditors.
9. IMPROPER PAYMENTS. Neither Customer nor WISC will use any funds received
under the Agreement for illegal or otherwise improper purposes. Neither Customer
nor WISC will pay any commissions, fees or rebates to the other, nor favor any
employee of the other with gifts or entertainment of significant cost or value.
If either Customer or WISC has reasonable cause to believe that provisions of
this paragraph have been violated, such Party may audit the records of the
other, for the sole purpose of establishing compliance with such provisions.
10. WARRANTIES. WISC warrants that the services provided hereunder will be
provided in a workmanlike manner. Services not provided in a workmanlike manner
will be retendered. WISC also agrees that as to software programs and equipment
purchased or acquired for Customer pursuant to this Agreement that WISC will
seek repair, replacement or refund on behalf of Customer pursuant to the terms
of the applicable agreement if such products do not conform to the vendor or
manufacturer warranty. WISC MAKES NO OTHER WARRANTIES OR REPRESENTATIONS,
EXPRESSED OR IMPLIED, IN FACT OR IN LAW, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY
SERVICE, PROGRAM OR EQUIPMENT AVAILABLE THROUGH WISC, WHETHER DEVELOPED BY WISC
OR LICENSED, PURCHASED, OR OTHERWISE OBTAINED BY WISC FROM A THIRD PARTY.
CUSTOMER, IN USING A PROGRAM, SERVICE OR EQUIPMENT PROVIDED BY WISC, WILL BE
DEEMED TO HAVE ACKNOWLEDGED THE ADEQUACY OF THE PROGRAM, SERVICE OR EQUIPMENT
FOR ITS INTENDED USE AFTER SEVEN (7) DAYS USE BY CUSTOMER. IN ADDITION, WISC
SHALL ONLY BE REQUIRED TO PASS THROUGH THE MANUFACTURER OR VENDOR WARRANTY
GRANTED TO WISC. CUSTOMER IS NOT WAIVING ANY MANUFACTURER OR VENDOR WARRANTIES
IF MADE AVAILABLE TO CUSTOMER BY ANY MANUFACTURER OR VENDOR.
11. LIMITATION OF LIABILITY. BECAUSE OF THE DIFFICULTY OF ASCERTAINING AND
MEASURING DAMAGES HEREUNDER, IT IS AGREED THAT EACH PARTIES' LIABILITY TO THE
OTHER FOR ANY TYPE OF COSTS, LOSSES, DAMAGES OR EXPENSES, ARISING OUT OF THIS
AGREEMENT OR THE SERVICES PROVIDED HEREUNDER SHALL NOT EXCEED ONE MILLION
DOLLARS ($1,000,000). THIS LIMIT OF LIABILITY DOES NOT APPLY TO AND IN NO WAY
LIMITS CUSTOMER'S OBLIGATIONS TO PAY FOR ALL ITEMS ON THE FINAL COMMITMENTS LIST
AND ALL AMOUNTS DUE FOR SERVICES HEREUNDER. WISC WILL NOT BE RESPONSIBLE FOR ANY
LOSS OR DAMAGE TO PROPERTY OF ANY KIND OWNED OR LEASED BY CUSTOMER EXCEPT AND TO
THE EXTENT SUCH LOSS OR DAMAGE TO PROPERTY IS CAUSED BY WISC'S NEGLIGENCE OR
WILLFUL MISCONDUCT. IN NO EVENT SHALL EITHER WISC OR CUSTOMER BE LIABLE FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES SUCH AS LOSS OF PROFITS OR
ANTICIPATED PROFITS, LOSS OF USE OR DATA IN CONNECTION WITH, OR ARISING OUT OF
THE SERVICES PROVIDED UNDER THIS AGREEMENT WHETHER BASED UPON ANY THEORY IN
CONTRACT OR IN TORT
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AND WHETHER THE PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
12. INDEMNIFICATION. Subject to Paragraph 11, the Customer will, jointly and
severally, and to the fullest extent permitted by applicable law, indemnify and
hold harmless WISC, The Williams Companies Inc. and any of its subsidiaries and
their respective officers, directors, agents and employees (collectively, the
"WISC Indemnitees") from and against all claims, demands, damages, losses,
liabilities, costs or expenses (including, without limitation, reasonable
attorney's fees and expenses) (collectively, "Costs") incurred or suffered by
any WISC Indemnitee which result from or arise out of the negligent or willful
misconduct of Customer regarding the Services.
Subject to Paragraph 11, WISC will, jointly and severally, and to the
fullest extent permitted by applicable law, indemnify and hold harmless Customer
and any of its subsidiaries and their respective officers, directors, agents and
employees (collectively, the "Customer Indemnities") from and against all
claims, demands, damages, losses, liabilities, costs or expenses (including,
without limitation, reasonable attorney's fees and expenses) (collectively,
"Costs") incurred or suffered by any Customer Indemnitee which result from or
arise out of the negligent or willful misconduct of WISC regarding the Services.
13. TERMINATION.
A. WISC shall have the right to terminate this Agreement (i) after sixty
(60) days written notice upon the failure of Customer to timely and fully pay
any undisputed amounts in any invoice within thirty (30) days of the due date;
or (ii) immediately and without notice upon insolvency or the commencement of
any proceedings under any bankruptcy or insolvency laws by or against Customer;
or (iii) immediately and without notice upon the assignment by Customer of all
or substantially all of its property for the benefit of its creditors.
B. Customer shall have the right to terminate this Agreement or seek
specific performance or pursue other legal remedies upon failure of WISC to cure
any default in the performance of its obligations hereunder after sixty (60)
days of WISC's receipt of written notice regarding such default. Customer shall
further have the right to terminate this agreement (i) immediately and without
notice upon the insolvency or the commencement of any proceedings under any
bankruptcy or insolvency laws by or against WISC; and (ii) immediately and
without notice upon the assignment by WISC of all or substantially all of its
property for the benefit of its creditors.
C. Notwithstanding subsections A, and B above, either Party may terminate
this Agreement by giving twelve (12) months prior written notice.
14. FEES AND COSTS UPON TERMINATION
A. Costs. Upon termination of this Agreement at any time, Customer agrees to
pay WISC the following amounts:
(1) all items listed on the final Commitments List;
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(2) all amounts due for Services hereunder as of the date of termination.
B. Ownership. Upon the termination of this Agreement and upon payment by
Customer of all amounts due, all WISC-owned equipment acquired solely for use by
Customer, excluding leasehold equipment and improvements, for which Customer
remains obligated to pay the entire amount (full purchase price) or for which
Customer has already paid the entire amount (full purchase price) under this
Agreement, shall become the sole property of Customer as well as all other
property and rights due Customer at termination and WISC shall have no ownership
or proprietary rights to such equipment. This Agreement shall serve as the
document of assignment and title transfer of such property and rights to
Customer free and clear of all claims, except as provided to the contrary in
this Agreement. As to software licensed to WISC, solely for the benefit of
Customer, WISC will use its best efforts to assign such software to Customer,
provided the Parties agree to be bound by the license agreements in transferring
or assigning any rights or obligations.
C. Historical Data Services. Upon termination of this Agreement and payment
by Customer of all amounts due, payment of any termination fee, payment for all
commitments listed on the Commitments List, WISC shall supply Customer with
historical data relating to the Services provided hereunder.
15. FORCE MAJEURE. Neither Party will be liable to the other by reason of
failure in performance of this agreement if the failure arises out of acts of
God, acts of the other Party, acts of governmental authority, strikes, fires,
delays in transportation, unavailability of communications or energy sources,
sabotage, riots, or war or any other Force Majeure cause. An event of Force
Majeure shall not operate to relieve the Party affected from the payment of any
fees for services previously rendered under this Agreement or for items on the
Commitments List. However, the party affected by the Force Majeure event shall
promptly notify the other Party and take all reasonable actions to promptly
remedy or remove the Force Majeure situation. If the Force Majeure situation is
not remedied within 30 days, the other Party shall have right to seek
termination of this Agreement.
16. ASSIGNMENT. Customer shall not have the right to assign this Agreement
without the prior written consent of WISC, which consent will not be
unreasonably withheld; provided that either Party may assign this Agreement,
without the consent of the other party, to a successor or a surviving
corporation in a merger or consolidation in which it is a Party or to any person
that acquires all or a majority of its stock or assets. WISC shall not have the
right to assign its obligations under this Agreement, except to a subsidiary or
affiliate, without the prior written consent of Customer, which consent will not
be unreasonably withheld.
17. INSURANCE. Both Parties will procure, pay for and maintain the following
insurance during the term of this Agreement and provide to the other
certificates of insurance with insurance companies satisfactory to each Party
evidencing the maintenance of insurance coverages indicated below:
Certificates shall include a 30-day notice of cancellation in favor of the
other Party, except in the event of non-payment of premium in which case a ten
(10) day notice of cancellation will be acceptable.
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Workers' Compensation Insurance complying with the laws of the state or
states in which work is to be performed, whether or not Customer or its
subcontractors are required by such laws to maintain such insurance and
employer's liability insurance with limits of $100,000 each accident, including
occupational disease coverage with a limit of $100,000 each employee and
$500,000 disease policy limit.
Commercial or Comprehensive General Liability insurance on an occurrence
form with a combined single limit for bodily injury and property damage of
$1,000,000 each occurrence and $2,000,000 annual aggregate, including coverage
for premises operations, independent contractors, personal injury,
products/completed operations, broad form contractual, broad form property
damage and advertising injury.
WISC and Customer waive their rights, and, to the extent possible, their
underwriter's rights, of subrogation against the other, and the other's
officers, directors, agents and employees thereof, and corporate shareholders
and corporate shareholder's officers, directors, agents and employees, providing
that such waiver in writing, prior to loss, does not void or alter coverage.
Such waiver shall also extend to companies and legal entities that control, are
controlled by, are subsidiaries of or are affiliated with the other Party and
the other Party's respective officers, directors, agents, employees and
shareholders of such companies or entities.
In the event coverage is denied or reimbursement of a properly presented
claim is disputed by a Party's insurance carrier(s), the Party shall, upon
written request, provide the other Party with a certified copy of the involved
insurance policy or policies within ten (10) business days of receipt of such
request.
The maintenance of insurance shall in no way limit or affect the extent of
either Party's liability.
18. ENTIRE AGREEMENT. Customer represents that it has read this Agreement,
understands it and agrees to be bound by its terms and conditions. Customer
further agrees that this Agreement constitutes the entire agreement between the
Parties with respect to the subject matter hereof and that this Agreement
supersedes all proposals oral or written, all previous negotiations and
agreements and all other communications between the Parties with respect to the
subject matter hereof. The Parties further agree that any terms and conditions
of any purchase order or other instrument issued by either Party in connection
with this Agreement which are in addition to, or inconsistent with, terms and
conditions of this Agreement, shall not be binding upon either Party unless
signed by both Parties.
19. AMENDMENTS. This Agreement may be modified only by a written instrument
duly executed by an authorized representative of WISC and Customer.
20. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Oklahoma, without regard to its choice of law provisions.
Should any conflict arise concerning the terms of this Agreement which shall
result in litigation, the Parties agree that the exclusive jurisdiction and
venue for such litigation shall be in the applicable state or federal courts in
Tulsa, Oklahoma and the Parties hereby expressly waive
B-8
<PAGE> 9
any and all objections to the exclusive jurisdiction and venue of any such
litigation in Tulsa, Oklahoma.
21. SEVERABILITY. If, but only to the extent that, any provision of this
Agreement is declared or found by a court of competent jurisdiction to be
illegal, unenforceable, or void, then both Parties shall be relieved of all
obligations arising under such provision, it being the intent and agreement of
the Parties that this Agreement shall be deemed amended as it related to the
jurisdiction involved by modifying such provision to the extent necessary to
make it legal and enforceable while preserving its intent. If that is not
possible, another provision that is legal and enforceable and achieves the same
objective shall be substituted. If the remainder of this Agreement is not
affected by such declaration or finding and is capable of substantial
performance, then the remainder shall be enforced to the extent permitted by
law.
22. INDEPENDENT CONTRACTOR. In performing the services hereunder, WISC shall
operate as and have the status of an independent contractor, subject only to the
general direction of the Customer regarding the Services to be rendered as
opposed to the method of performance of the Services.
23. DISPUTE RESOLUTION. The Parties will attempt in good faith to resolve
any claim or controversy arising out of this Agreement by negotiations between
senior executives of the Parties who have settlement authority and who do not
have direct responsibility for the administration of this Agreement. If the
matter has not been resolved within sixty (60) days from the date either Party
notified the other of its dispute, either Party may initiate other means of
alternative dispute resolution of the controversy in accordance with the then
appropriate rules and procedures of the Center for Public Resources or American
Arbitration Association or pursue its rights and remedies with a court of
competent jurisdiction.
24. CONSTRUCTION. Except where otherwise expressly provided, all references
to sections, paragraphs or attachments in this Agreement will be deemed to be
references to such sections and paragraphs of this Agreement or the attachments
to this Agreement, respectively. The recitals are incorporated herein by
reference as though repeated fully.
25. WAIVER. Any waiver of this Agreement or of any covenant, condition, or
agreement to be performed by a Party under this Agreement shall (i) only be
valid if the waiver is in writing and signed by an authorized representative of
the Party against which such waiver is sought to be enforced, and (ii) apply
only to the specific covenant, condition or agreement to be performed, the
specific instance or specific breach thereof and not to any other instance or
breach thereof or subsequent instance or breach.
26. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which shall together
constitute one and the same document.
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<PAGE> 10
27. NOTICES. Any notice required or permitted to be made or given to either
Party hereto shall be in writing, and will be deemed sufficiently served if
dispatched by certified mail, return receipt requested; hand delivered; sent by
overnight delivery service; or facsimile with confirmation of receipt to the
addresses specified below:
If notice is from WISC to Customer:
VICE PRESIDENT, APPLICATIONS-NETWORK
WILLIAMS COMMUNICATIONS GROUP, INC.
ONE WILLIAMS CENTER
TULSA, OK 74172
If notice is from Customer to WISC:
SUPERVISOR, CONTRACT ADMINISTRATION MD 33-1
WILLIAMS INFORMATION SERVICES CORPORATION
ONE WILLIAMS CENTER
P.O. BOX 2400
TULSA OK 74172
AGREED AND ACCEPTED as of the day and year first above written.
"WISC" "CUSTOMER"
WILLIAMS INFORMATION SERVICES WILLIAMS COMMUNICATIONS
CORPORATION GROUP, INC.
[STAMP]
By: /s/ JAMES R. HERBSTER By: /s/ G. L. BEST
------------------------------ ------------------------------
Authorized Signature Authorized Signature
Typed Name: James R. Herbster Typed Name: G. L. Best
---------------------- ----------------------
Title: Senior Vice-President, Title: Vice President
Administration
--------------------------- ---------------------------
Date: September 30, 1999 Date: September 30, 1999
---------------------------- ----------------------------
B-10
<PAGE> 11
SERVICE AGREEMENT
BETWEEN
WILLIAMS INFORMATION SERVICES CORPORATION
AND
WILLIAMS COMMUNICATIONS GROUP, INC.
ATTACHMENT A
(SERVICE LEVEL AGREEMENTS)
APPROVED: APPROVED:
"WISC" "CUSTOMER"
WILLIAMS INFORMATION SERVICES WILLIAMS COMMUNICATIONS
CORPORATION GROUP, INC.
[STAMP]
By: /s/ JAMES R. HERBSTER By: /s/ G. L. BEST
------------------------------ ------------------------------
Authorized Signature Authorized Signature
Typed Name: James R. Herbster Typed Name: G. L. Best
---------------------- ----------------------
Title: Senior Vice-President, Title: Vice President
Administration
--------------------------- ---------------------------
Date: September 30, 1999 Date: September 30, 1999
---------------------------- ----------------------------
B-11
<PAGE> 12
SERVICE AGREEMENT
BETWEEN
WILLIAMS INFORMATION SERVICES CORPORATION
AND
WILLIAMS COMMUNICATIONS GROUP, INC.
ATTACHMENT B
(SERVICES PROFILE)
APPROVED: APPROVED:
"WISC" "CUSTOMER"
WILLIAMS INFORMATION SERVICES WILLIAMS COMMUNICATIONS
CORPORATION GROUP, INC.
[STAMP]
By: /s/ JAMES R. HERBSTER By: /s/ G. L. BEST
------------------------------ ------------------------------
Authorized Signature Authorized Signature
Typed Name: James R. Herbster Typed Name: G. L. Best
---------------------- ----------------------
Title: Senior Vice-President, Title: Vice President
Administration
--------------------------- ---------------------------
Date: September 30, 1999 Date: September 30, 1999
---------------------------- ----------------------------
B-12
<PAGE> 13
SERVICE AGREEMENT
BETWEEN
WILLIAMS INFORMATION SERVICES CORPORATION
AND
WILLIAMS COMMUNICATIONS GROUP, INC.
ATTACHMENT C
(COMMITMENT LIST)
APPROVED: APPROVED:
"WISC" "CUSTOMER"
WILLIAMS INFORMATION SERVICES WILLIAMS COMMUNICATIONS
CORPORATION GROUP, INC.
[STAMP]
By: /s/ JAMES R. HERBSTER By: /s/ G. L. BEST
------------------------------ ------------------------------
Authorized Signature Authorized Signature
Typed Name: James R. Herbster Typed Name: G. L. Best
---------------------- ----------------------
Title: Senior Vice-President, Title: Vice President
Administration
--------------------------- ---------------------------
Date: September 30, 1999 Date: September 30, 1999
---------------------------- ----------------------------
B-13
<PAGE> 1
EXHIBIT 10.3
TAX SHARING AGREEMENT
Agreement entered into as of the 30th day of September, 1999 by and between
The Williams Companies, Inc., a Delaware corporation ("Williams"), and Williams
Communications Group, Inc., a Delaware corporation ("Communications").
RECITALS
Williams and Communications are includible corporations in an affiliated
group of corporations of which Williams is the common parent, all within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as amended (the
"Code").
Williams intends to file consolidated Federal income tax returns on behalf
of itself, Communications and the other members of the "Group" (as hereinafter
defined).
Williams and Communications wish to allocate and settle among themselves the
consolidated Federal income tax liabilities of the Group, the unitary, combined,
consolidated or similar state income tax liabilities of the parties and, if and
as determined by Williams, certain other tax liabilities.
AGREEMENTS
Accordingly, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
The defined terms used in this Agreement shall, except as otherwise
expressly provided or unless the context otherwise requires, have the meanings
specified in this Article I. The singular shall include the plural and the
masculine gender shall include the feminine, the neuter and vice versa, as the
context requires.
"Estimated Tax Payments" means, for any Taxable Period, the aggregate
payments for such Taxable Period provided in Section 2.04.
"Final Determination" means a closing agreement or an accepted offer in
compromise with the Internal Revenue Service, a claim for refund that has been
allowed, a deficiency notice with respect to which the period for filing a
petition with the Tax Court has expired, or a decision of any court of competent
jurisdiction that is not subject to appeal or the time for appeal of which has
expired.
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<PAGE> 2
"Group" means Williams and all other corporations (whether now existing or
hereafter formed or acquired) that at the time would be entitled or required to
join with Williams in filing a consolidated Federal income tax return.
"IPO Date" means the date of the initial public offering of stock of
Communications.
"Subsidiary Separate Tax" means, with respect to any Taxable Period and
subject to the rules set forth below in this definition and Section 2.05, a
hypothetical Federal income tax liability that WCG would have for such Taxable
Period determined as if WCG had filed its own separate Federal income tax return
for such Taxable Period (or for any Taxable Period prior thereto) and calculated
by (x) imposing a tax on the taxable income or alternative minimum taxable
income, as the case may be, of WCG at a rate equal to the highest marginal rate
of corporate tax specified under the Code and applicable to that Taxable Period
and (y) employing the methods and principles of accounting, elections and
conventions that are used by the Group. For purposes of determining Subsidiary
Separate Tax with respect to any Taxable Period, the following special rules
shall apply:
(i) Subsidiary Separate Tax shall include the combined results of WCG.
(ii) Any loss or credit carryover or other similar attribute of WCG existing
on the date preceding the IPO Date shall be deemed to be an attribute of
Williams for all purposes of this Agreement. For this purpose, Williams shall
allocate any loss, credit or other similar attribute realized by WCG in the
taxable year that includes the IPO Date between the period beginning on January
1, 1999 and ending on the date preceding the IPO Date, on the one hand, and the
period beginning on the IPO Date and ending on December 31, 1999, on the other
hand, on a pro rata basis or any other reasonable method as determined by
Williams in its sole and absolute discretion with due regard to clauses (iv) and
(v) of this definition of Subsidiary Separate Tax.
(iii) Any loss or credit carryover or other similar attribute of WCG not in
existence on the IPO Date (as determined by Williams pursuant to clause (ii)
above) and arising thereafter shall, unless otherwise provided by this
Agreement, be deemed to be an attribute of WCG solely for purposes of future
determinations of Subsidiary Separate Tax.
(iv) Any limitations or special rules relating to the recognition, allowance
or other treatment of any item of income, gain, loss, deduction, expense or
basis (including, for example, foreign tax credits, research credits, capital
losses, Section 1231 gains or losses and charitable contribution deductions) may
be determined based on a hypothetical separate Federal income tax return of WCG
or, notwithstanding such hypothetical separate Federal income tax principles,
with due regard to consolidated Federal income tax principles or based on any
hybrid approach, all as determined by Williams in its sole and absolute
discretion.
(v) Williams may from time to time establish any other special rules that
Williams reasonably determines to be necessary or appropriate to carry out the
principles reflected above in the definition of Subsidiary Separate Tax.
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<PAGE> 3
"Taxable Period" means, with respect to any period for which a consolidated
Federal income tax return is filed on behalf of the Group that includes
Communications, (i) the period beginning on the IPO Date and ending on December
31, 1999 and (ii) thereafter, each annual period ending on December 31 of each
year.
"WCG" means the group of corporations consisting of Communications and all
members of the Group owned, directly or indirectly and in whole or in part, by
Communications.
ARTICLE II
PAYMENTS
Section 2.01 Payments by Communications to Williams. For every Taxable
Period in which the Subsidiary Separate Tax exceeds the Estimated Tax Payments,
or the Subsidiary Separate Tax as recomputed according to Section 2.05 exceeds
the Subsidiary Separate Tax, Communications shall pay to Williams an amount
equal to such excess.
Section 2.02 Payments by Williams to Communications. For every Taxable
Period in which the Estimated Tax Payments exceed the Subsidiary Separate Tax,
or the Subsidiary Separate Tax exceeds the Subsidiary Separate Tax as recomputed
according to Section 2.05, Williams shall pay to Communications an amount equal
to such excess.
Section 2.03 Time of Payment. Payment pursuant to Sections 2.01 and 2.02
(other than resulting from a recomputation of Subsidiary Separate Tax under
Section 2.05) shall be made no later than seven (7) days prior to the due date
of the Group's consolidated Federal income tax return for the Taxable Period in
question, not including extensions. If the due date for such return is extended,
such payment shall be made on an estimated basis and shall be recalculated no
later than seven (7) days prior to the extended due date for such return, and
any difference between such recalculated payments and such estimated payments
shall be paid to the party entitled thereto at the time of such recalculation.
The time that any payment is required to be made pursuant to Sections 2.01 and
2.02 by reason of a recomputation of Subsidiary Separate Tax under Section 2.05
is set forth in Section 2.05.
Section 2.04 Estimated Tax Payments. For every Taxable Period,
Communications shall pay to Williams no later than seven (7) days prior to the
fifteenth day of the fourth, sixth, ninth and twelfth months of such Taxable
Period 25%, 50%, 75% and 100%, respectively, of the current annual estimated
Federal income taxes that WCG would be required to pay for such Taxable Period,
less any prior payments for such Taxable Period. Such estimated Federal income
tax liability shall be determined in a manner consistent with the definition of
Subsidiary Separate Tax and subject to approval by Williams.
Section 2.05 Adjustments.
(a) Carryovers of Post-IPO Date Losses or Credits. In the event that WCG
realizes a loss,
3
<PAGE> 4
credit or other similar attribute in any Taxable Period that would be permitted
under applicable Federal income tax law to be carried over to one or more
Taxable Periods that precede or follow such Taxable Period if WCG had filed a
separate Federal income tax return for all such Taxable Periods, the Subsidiary
Separate Tax shall be recomputed for such preceding or subsequent Taxable
Periods to take into account such carryover and the payments pursuant to
Sections 2.01 and 2.02 shall be appropriately adjusted. Any payment from
Williams to Communications required by reason of such adjustment shall be made
within 30 days following the earlier of (i) Williams's receipt of the related
actual refund, if any, from the Internal Revenue Service, (ii) in the case of a
carryback, the date of the filing by Williams of the tax return for the Taxable
Period in which such loss, credit or attribute arises or (iii) in the case of a
carryforward, the date of the filing by Williams of the tax return for the
Taxable Period to which such loss, credit or attribute is carried.
(b) Redeterminations of Post-IPO Date Tax Liability. In the event of any
redetermination of the consolidated Federal income tax liability of the Group
for any Taxable Period as a result of an audit by the Internal Revenue Service,
the allowance of a claim for refund, court determination or otherwise, the
Subsidiary Separate Tax shall be recomputed for such Taxable Period to take into
account such redetermination in a manner consistent with such revised treatment
and the payments pursuant to Sections 2.01 and 2.02 shall be appropriately
adjusted, which payments shall also include, if and to the extent applicable,
any interest received from the Internal Revenue Service and any interest,
penalties and additions to tax paid to the Internal Revenue Service. Any payment
required to be made by a party hereto by reason of such adjustment shall be made
within 30 days of the date of a Final Determination with respect to such
redetermination or as soon as such adjustment can practicably be calculated (if
later).
(c) Inadvertent Deconsolidation. In the event that Communications is
determined not to have been properly treated as an includible corporation in the
Group with respect to any Taxable Period, the amount of any payments made under
Sections 2.01, 2.02 and 2.04 with respect to such Taxable Period (taking into
account any adjustments pursuant to Section 2.05(a) and (b)) shall be refunded
to the party entitled to such net amount within 30 days of the date of a Final
Determination of such deconsolidation or as soon as the amount to be refunded
can practicably be determined (if later).
(d) Ceasing to Be a Member of the Group. In the event Communications or any
other member of WCG ceases to be a member of the Group, (x) Williams shall
allocate the income, gain, loss, deduction and expense of WCG for the Taxable
Period in which such deconsolidation occurs between the pre-deconsolidation
period of such Taxable Period and the post-deconsolidation period of such
Taxable Period in accordance with any permitted method under the consolidation
return provisions of the Code and Treasury Regulations thereunder and (y) the
Group consolidated loss or credit carryovers or other similar attributes
attributable to Communications or such other member of WCG, if any (as
determined by Williams in accordance with any permitted method under the
consolidated return provisions of the Code and Treasury Regulations thereunder),
shall constitute attributes of Communications or such other member of WCG. With
respect to any such attribute so attributable to Communications or any other
member of WCG,
4
<PAGE> 5
Communications shall pay to Williams, within 30 days of the date of filing by
Williams of the first tax return thereafter, an amount equal to the sum of the
following: (1) the amount of any Group consolidated tax credit carryover so
attributable to WCG to the extent that such credit is treated as an attribute of
Williams under clause (ii) of the definition of Subsidiary Separate Tax; (2) the
product of (A) the highest marginal Federal corporate income tax rate and (B)
the amount of the Group consolidated loss carryover or other similar attribute
(other than credit carryovers) so attributable to WCG to the extent that such
attribute is treated as an attribute of Williams under clause (ii) of the
definition of Subsidiary Separate Tax; (3) the amount of any Group consolidated
tax credit carryover so attributable to WCG to the extent that such attribute
(i) relates to periods beginning on or after the IPO Date and (ii) reduced the
amount of Subsidiary Separate Tax; and (4) the product of (A) the highest
marginal Federal corporate income tax rate and (B) the amount of the Group
consolidated loss carryover or other similar attribute (other than credit
carryovers) so attributable to WCG to the extent that such attribute (i) relates
to periods beginning on or after the IPO Date and (ii) reduced the amount of
Subsidiary Separate Tax. No adjustment to Sections 2.01 and 2.02 shall be made
in the event that Communications ceases to be a member of the Group and
thereafter realizes in any taxable year a loss, credit or other attribute that
would be permitted under applicable Federal income tax law to be carried back to
one or more Taxable Periods that precede such taxable year.
Section 2.06 Payments in Respect of Redeterminations of Pre-IPO Date Tax
Liability. In the event of any Final Determination for a period prior to the IPO
Date and pursuant to which there is a reduction of any loss or credit carryover
or other similar attribute of WCG existing on the date preceding the IPO Date as
determined under clause (ii) of the definition of Subsidiary Separate Tax,
Communications shall pay to Williams, within 30 days of the date of the Final
Determination, an amount equal to the sum of (A) the amount of any consolidated
Federal income taxes, interest, penalties and additions to such taxes payable to
the Internal Revenue Service resulting from such reduction of any such loss or
credit carryover or other similar attribute of WCG, (B) the amount of the
reduction of any such credit carryover of WCG to the extent not covered by the
preceding clause (A), and (C) the product of (i) the highest marginal Federal
corporate income tax rate and (ii) the amount of the reduction of any such loss
carryover or other similar attribute (other than credit carryovers) of WCG to
the extent not covered by the preceding clause (A). In the event of any Final
Determination for a period prior to the IPO Date and pursuant to which there is
an increase to any loss or credit carryover or other similar attribute of WCG
existing on the date preceding the IPO Date as determined under clause (ii) of
the definition of Subsidiary Separate Tax, Williams shall pay to Communications
an amount equal to the sum of (1) any refund of consolidated Federal income
taxes, including interest, received from the Internal Revenue Service within 30
days following Williams' receipt of the related actual refund from the Internal
Revenue Service resulting from such increase to any loss or credit carryover or
other similar attribute of WCG, (2) the amount of the increase to any such
credit carryover of WCG to the extent not covered by the preceding clause (1)
within 30 days of the date of the Final Determination, and (3) the product of
(i) the highest marginal Federal corporate income tax rate and (ii) the amount
of the increase to any such loss carryover or other similar attribute (other
than credit carryovers) of WCG to the extent not covered by the preceding clause
(1) within 30 days of the date of the Final Determination.
5
<PAGE> 6
Section 2.07 Form of Payment. Any payment required to be made by a party
pursuant to this Article II shall be made by wire transfer of immediately
available funds or by appropriate adjustment to intercompany indebtedness (as
determined by Williams).
Section 2.08 General. Unless applicable law changes, the parties agree to
treat any payment provided for under this Agreement as a distribution by
Communications to Williams or a capital contribution by Williams to
Communications, as the case may be.
ARTICLE III
TAX MATTERS; COOPERATION; INDEMNIFICATION
Section 3.01 Williams As Agent. Communications hereby irrevocably appoints
Williams as its agent, and Communications hereby agrees that Williams shall have
sole and absolute authority, for the purposes of (i) preparing and filing
consolidated Federal income tax returns for the Group (including, without
limitation, preparing and filing estimated tax returns, amended tax returns and
claims for refund, determining tax return positions, selecting methods of
accounting and making elections), (ii) representing any member of WCG that is a
member of the Group with respect to any consolidated Federal income tax audit or
consolidated Federal income tax controversy (including, without limitation, any
proceeding with the Internal Revenue Service and any judicial proceedings,
whether any such proceedings relate to a claim for additional taxes or a claim
for refund of taxes) and settling or compromising any claim for additional, or
any claim for refund of, Federal income taxes of any member of WCG that is a
member of the Group, (iii) engaging outside counsel, accountants and other
experts with respect to Federal income tax matters relating to any member of WCG
that is a member of the Group and (iv) taking any other action in connection
with Federal income tax matters relating to any member of WCG that is a member
of the Group (or relating to any other member of the Group) as Williams, in its
sole and absolute discretion, determines to be necessary or appropriate.
Section 3.02 Cooperation. Communications shall cooperate (and shall cause
all members of WCG to cooperate) with Williams regarding the application of all
aspects of this Agreement (including, without limitation, the proper and timely
preparation and filing of any tax return to which this Agreement applies, the
calculation or basis of determination of any payment provided for under this
Agreement and the conduct of any tax audit or tax controversy to which this
Agreement applies) (i) by maintaining (or causing all members of WCG to
maintain) such books and records, (ii) by providing (or causing all members of
WCG to provide) such information, (iii) by executing (or causing all members of
WCG to execute) such documents and (iv) by taking (or causing all members of WCG
to take) any such other action (including, without limitation, making any
officers, directors, employees and agents available to Williams), in each such
case as Williams may request from time to time. Communications shall secure (or
shall cause any relevant member of WCG to secure) the covenant of any acquirer
of any member of WCG to comply with this Section 3.02 for the benefit of
Williams and Williams' successors and assigns.
6
<PAGE> 7
Section 3.03 Indemnification. Communications hereby indemnifies and holds
harmless Williams and the other non-WCG members of the Group against any
interest, penalties, additions to tax, expenses, losses, claims, damages or
liabilities for any failure to file, properly or timely, any tax return to which
this Agreement applies to the extent that such failure is attributable to the
failure of Communications to make the payments required under this Agreement or
the failure of any member of WCG to comply with Section 3.02 (which shall
include, without limitation, the failure of any member of WCG to provide
accurate or complete information or to take proper tax reporting positions).
Upon the proper and timely payment by Communications to Williams of an amount
pursuant to Section 2.01 for any Taxable Period, Williams will indemnify
Communications and the other members of WCG for the Federal income tax
liabilities of the Group for such Taxable Period with the exception of any
adjustment to tax liabilities that are attributable to WCG, as determined by
Sections 2.05(b) and 2.06.
ARTICLE IV
STATE, LOCAL, FOREIGN AND OTHER FEDERAL TAXES
The underlying concepts of this Agreement (including, without limitation,
Article II (e.g., treating any loss or credit carryover or other similar
attribute for state income tax purposes existing on the date preceding the IPO
Date as an attribute of Williams for all purposes) and Article III) shall apply
in the same general manner with respect to state income taxes (and, in the sole
and absolute discretion of Williams, with respect to any foreign, local, other
state and other Federal taxes) where unitary, combined, consolidated or similar
returns that include one or more members of WCG and one or more non-WCG members
of the Group are filed. The parties recognize that, among other things, the
utilization of the definition of Subsidiary Separate Tax may not be appropriate
for unitary, combined, consolidated or similar state income and other tax
purposes, and Williams is thus authorized to apply, in good faith, such
principles as would be reasonably expected to result in an allocation of
liabilities for such tax purposes in a manner designed to reflect such taxes
payable on income of members of the Group arising in whole or in part by reason
of other Group member nexus with, or other Group member activity in, a
particular state or other relevant tax jurisdiction. All matters relating to any
Federal, state, local and foreign taxes to which this Agreement does not apply
(including, without limitation, preparing and filing such tax returns, paying
such taxes and handling such tax audits or tax controversies) shall be the
responsibility of the party that is the relevant taxpayer.
ARTICLE V
TERMINATION
This Agreement shall cease to be effective with respect to consolidated
Federal income tax or any unitary, combined, consolidated or similar state
income tax at such time as Communications ceases to be a member of,
respectively, the Group or the relevant unitary, combined, consolidated or
similar state income tax group. This Agreement shall cease to be effective with
respect to any foreign, local, other state and other Federal tax to which this
Agreement applies (as determined
7
<PAGE> 8
by Williams pursuant to Article IV) under analogous concepts or any other
concept as Williams, in its sole and absolute discretion, determines to be
necessary or appropriate for such tax purposes. Notwithstanding all of the
foregoing of this Article V, all provisions of this Agreement (including,
without limitation, payment obligations, adjustments to payment obligations,
cooperation and indemnification) with respect to any Taxable Period, taxable
year or other period (as the case may be) commencing on or before the
termination of this Agreement shall survive such termination.
ARTICLE VI
MISCELLANEOUS
Section 6.01 Interpretations and Determinations. The application of this
Agreement and any dispute or ambiguity concerning the subject matter of this
Agreement shall be determined by Williams in its sole and absolute discretion.
Such determination by Williams shall be final and binding upon Communications.
Section 6.02 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either party
without the prior written consent of the other party.
Section 6.03 Expenses. Any direct and indirect cost and expense (such as
fees or expenses for legal, accounting or other services and overhead items)
incurred by Williams in connection with the application of this Agreement
(including, without limitation, the preparation and filing of any tax return to
which this Agreement applies and the conduct of any tax audit or tax controversy
to which this Agreement applies) shall be allocated in accordance with the
Administrative Services Agreement by and between the parties dated
____________________, 1999.
Section 6.04 Effect of Agreement. This Agreement shall determine the rights
and liabilities of the parties as to the matters provided for in this Agreement,
whether or not such determination is effective for financial reporting or other
purposes.
Section 6.05 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties in respect of the subject matter
contained in this Agreement and supersedes all prior or contemporaneous
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any party or by any officer, employee
or representative of any party.
Section 6.06 Amendments and Waivers. This Agreement shall not be modified,
supplemented or terminated except by a writing duly signed by each of the
parties hereto, and no waiver of any provision of this Agreement shall be
effective unless in a writing duly signed by the party sought to be bound.
8
<PAGE> 9
Section 6.07 Code References. Any references to Sections of the Code shall
be deemed to refer to any corresponding provisions of succeeding law as in
effect from time to time.
Section 6.08 Notices. Any payment, notice, communication or approval
required or permitted to be given under this Agreement shall be deemed to have
been duly given if delivered by hand or deposited in the United States mail,
postage prepaid and sent by certified or registered mail, if addressed to
Williams, at:
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
ATTENTION: JACK MCCARTHY
if addressed to Communications, at:
WILLIAMS COMMUNICATIONS GROUP, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
ATTENTION: HOWARD JANSEN
Section 6.09 Third Parties. Nothing expressed or implied in this Agreement
is intended or shall be construed to confer upon or give to any person other
than the parties hereto any rights or remedies under or by reason of this
Agreement.
Section 6.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law.
Section 6.11 Severability. If any provision of this Agreement or the
application of this Agreement in any circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of this
Agreement in any other circumstance shall not be affected thereby, the
provisions of this Agreement being severable in any such instance.
Section 6.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9
<PAGE> 10
The parties hereto have caused this Tax Sharing Agreement to be duly
executed as of the date first written above.
THE WILLIAMS COMPANIES, INC.
BY: /s/ JACK D. MCCARTHY
---------------------------------------
ITS: Jack D. McCarthy
-------------------------------------
Sr. V. P. - Finance and CFO
WILLIAMS COMMUNICATIONS GROUP, INC.
BY: /s/ G. L. BEST
---------------------------------------
ITS: Vice President
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EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into
this 1st day of September, 1999, by and between The Williams Companies,
Inc., a Delaware corporation ("Williams"), and Williams Communications Group,
Inc., a Delaware corporation ("Communications"),
WITNESSETH:
WHEREAS, Communications plans to sell shares of its Class A Common Stock,
par value $.01 per share ("Common Stock"), to the public in an underwritten
Initial Public Offering ("Initial Public Offering") and to SBC Communications
Inc., pursuant to a Securities Purchase Agreement dated as of February 8, 1999,
and
WHEREAS, Communications plans to sell approximately $1.3 billion in
aggregate principal amount senior notes due (the "Notes") to the public in an
underwritten offering (the "Notes Offering," and together with the Initial
Public Offerings, the "Offerings"), and
WHEREAS, Williams will continue to hold all of the issued and outstanding
Class B Common Stock of Communications, par value $.01 per share, after the
closing of the Initial Public Offering, and
WHEREAS, in connection with each of the Notes Offering and the Initial
Public Offering, Communications has filed a Registration Statement with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended ("1933 Act") and
WHEREAS, each of Williams and Communications desires to indemnify the other,
and to be indemnified by the other, against certain liabilities relating to,
arising out of or resulting from their respective businesses, operations and
assets and the above-mentioned Registration Statement, on the terms set forth in
the Agreement,
NOW, THEREFORE, the parties hereto agree, intending to be legally bound, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this Agreement, in addition to the
terms defined in the Preamble and Recitals hereof, the following terms shall
have the following meanings, applicable to both the singular and plural forms of
the terms described:
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"ACTION" means any action, claim (whether or not filed), suit, arbitration,
inquiry, demand proceeding or investigation.
"BUSINESS DAY" means any calendar day which is not a Saturday, Sunday or
public holiday under the laws of the State of New York.
"CLOSING" means the consummation of the purchase and sale of shares of the
Common Stock pursuant to the Initial Public Offering and the consummation of the
purchase and sale of the Notes pursuant to the Notes Offering.
"CLOSING DATE" means the date on which the Closing occurs.
"COMMUNICATIONS GROUP" shall mean Communications and its direct and indirect
subsidiaries.
"COMMUNICATIONS LIABILITIES" means all Liabilities (other than Liabilities
for Taxes that are allocated pursuant to the Tax Sharing Agreement) to the
extent relating to, resulting from or arising out of the businesses or
operations conducted or formerly conducted or assets owned or formerly owned by
any member of the Communications Group.
"COMMUNICATIONS SECURITIES LIABILITIES" means any Liability under the 1933
Act, the 1934 Act, or any other federal or state securities law or regulation
resulting from or arising out of the Notes Offering or the Initial Public
Offering, including, without limitation, any such Liability arising out of or
based upon: (i) any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or in any Prospectus; or (ii) the
omission or alleged omission to state in a Registration Statement or Prospectus
a material fact required to be stated therein or necessary to make the
statements made therein not misleading; but only to the extent that such
Liability arises out of or is based upon any such untrue statement or alleged
untrue statement or any such omission or alleged omission concerning the
businesses and operations of any member of the Communications Group.
"ENVIRONMENTAL LAW" means any statute, law, regulation and rule in effect
before, on or after the date of this Agreement that has as its principal purpose
the protection of the environment.
"INDEMNIFIABLE LOSSES" shall have the meaning ascribed to it in Section
2.01.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in Section
4.01(a).
"INDEMNITEE" shall have the meaning ascribed to it in Section 4.01(a).
"INDEMNITY PAYMENT" shall have the meaning ascribed to it in Section
4.01(a).
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"INSURANCE PROCEEDS" means those monies: (a) received by an insured from an
insurance carrier, or (b) paid by an insurance carrier on behalf of the insured
in the case of (a) or (b), net of any applicable premium adjustments (including
reserves and retrospectively rated premium adjustments) and net of any costs or
expenses (including allocated costs of in-house counsel and other personnel)
incurred in collection thereof.
"LIABILITIES" means all liabilities and obligations of a party, actual or
contingent, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever and however arising, including all costs and expenses (including
reasonable fees and disbursements of counsel) relating thereto, and including,
without limitation, liabilities and obligations arising in connection with (i)
any actual or threatened claim, action, suit or proceeding by or before any
court or regulatory or administrative agency or commission or any arbitration
panel, and (ii) any violation of any Environmental Law.
"PROSPECTUS" means any prospectus relating to the Notes Offering or the
Initial Public Offering or any amendment or supplement thereto.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement by and between Williams and Communications dated as of the date
hereof.
"REGISTRATION STATEMENT" means any Registration Statement filed with the SEC
in connection with the Notes Offering or the Initial Public Offering and any
amendment or supplement thereto.
"TAX ASSESSMENT" shall have the meaning ascribed to it in Section 12.01(a).
"TAX SHARING AGREEMENT" means that certain Tax Sharing Agreement between
Williams and Communications dated as of the date hereof.
"TAXES" means any and all taxes (including interest, penalties and additions
to tax), fees and charges (including sales, use, excise, value added, personal
property and other taxes) imposed by any federal, state or local or government
tax authority in the United States of America or by any foreign government or
taxing authority.
"THIRD-PARTY CLAIM" shall have the meaning ascribed to it in Section
5.01(a).
"UNDERWRITING AGREEMENTS" means, collectively: (i) that certain underwriting
agreement with respect to the Initial Public Offering to be executed by and
among Lehman Brothers Inc., Salomon Smith Barney Inc., Merrill Lynch, Pierce,
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Fenner & Smith Incorporated, CIBC Oppenheimer, Credit Suisse First Boston,
Donaldson, Lufkin & Jenrette Securities Corporation and NationsBanc Montgomery
Securities LLC (as representatives of the U.S. underwriters for the Initial
Public Offering) as well as Lehman Brothers International (Europe), Salomon
Brothers International Limited, Merrill Lynch International, CIBC Oppenheimer,
Credit Suisse First Boston (Europe) Limited, Donaldson, Lufkin & Jenrette
Securities Corporation and NationsBanc Montgomery Securities LLC (as
representatives of the international underwriters for the Initial Public
Offering); and (ii) that certain underwriting agreement with respect to the
Notes Offering to be executed by and among Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Lehman Brothers Inc., Salomon Smith Barney Inc., CIBC Oppenheimer,
Credit Suisse First Boston, Donaldson, Lufkin & Jenrette Securities Corporation
and NationsBanc Montgomery Securities LLC (as representatives of the
underwriters for the Notes Offering).
"WILLIAMS GROUP" means Williams and each of its direct and indirect
subsidiaries other than members of the Communications Group.
"WILLIAMS GUARANTEE" means any guarantee, surety or performance bond, letter
of credit or other contractual arrangement in effect as of the Closing pursuant
to which any member of the Williams Group has guaranteed or secured, or caused a
third party to guarantee or secure, any liability or obligation of
Communications and its direct and indirect subsidiaries.
"WILLIAMS LIABILITIES" means all Liabilities (other than any Liabilities for
Taxes which are allocated pursuant to the Tax Sharing Agreement) to the extent
relating to, resulting from or arising out of the business or operations
conducted or formerly conducted or assets now or previously owned or operated by
any member of the Williams Group or any predecessor, in whole or in part, of any
such entity.
"WILLIAMS SECURITIES LIABILITIES" means any Liability under the 1933 Act,
the 1934 Act or any other federal or state securities law or regulation
resulting from or arising out of either the Notes Offering or the Initial Public
Offering, including, without limitation, any such Liability arising out of or
based upon: (i) any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or in any Prospectus; or (ii) the
omission or alleged omission to state in a Registration Statement or Prospectus
a material fact required to be stated therein or necessary to make the
statements made therein not misleading; but only to the extent that such
Liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission concerning the business and
operations of any member of the Williams Group.
SECTION 1.02 INTERNAL REFERENCES. Unless the context indicates otherwise,
references to Articles, Sections and Paragraphs shall refer to the corresponding
Articles, Sections and Paragraphs in this Agreement, and references to the
parties shall mean the parties to this Agreement.
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ARTICLE II
INDEMNIFICATION BY COMMUNICATIONS
SECTION 2.01 INDEMNIFICATION BY COMMUNICATIONS. (a) Communications shall
indemnify, defend and hold harmless the Williams Group and the respective past,
present and future directors, officers, partners, employees, agents and
representatives thereof (regardless in each case of whether any such person
serves in one or more similar capacities for Communications) from and against
any and all losses, claims, damages, liabilities, demands, suits and actions,
including all reasonable attorneys' fees and disbursements and other costs and
expenses incurred in connection therewith (collectively, "Indemnifiable
Losses"), relating to, resulting from or arising out of: (i) any Communications
Liabilities; (ii) any Communications Securities Liabilities; or (iii) any
misrepresentation or breach by any member of the Communications Group of any
covenant of any member of the Communications Group or any failure by any member
of the Communications Group to satisfy any condition required to be satisfied by
any member of the Communications Group or any liability of any member of the
Communications Group for taxes arising prior to the Closing Date determined, in
a manner consistent with the principles of tax liability allocation set forth in
the Tax Sharing Agreement, to be owing by any member of the Communications Group
for which any member of the Williams Group may have a secondary liability, in
each case contained in this Agreement, the Underwriting Agreements or any other
agreement executed by any member of the Communications Group in connection with
the Notes Offering or the Initial Public Offering, including, without
limitation, the Registration Rights Agreement and the Tax Sharing Agreement, and
in addition to and notwithstanding any other indemnification between the parties
hereto as provided in any such agreement, except to the extent that such
misrepresentation, breach or failure was caused by or resulted from any
statement, act or omission within the exclusive knowledge or control of any
member of the Williams Group.
(b) Except as specifically set forth in this Agreement, Williams Group
waives any rights and claims Williams Group may have against any member of
Communications Group, whether in law or in equity, relating to the business of
Williams Group or the transactions contemplated hereby. The rights and claims
waived by Williams Group include, without limitation, claims for contribution or
other rights of recovery arising out of or relating to any Environmental Law,
claims for breach of contract, breach of representation or warranty, negligent
misrepresentation and all other claims for breach of duty. This Agreement will
provide the exclusive remedy for any misrepresentation, breach of warranty,
covenant or other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby.
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ARTICLE III
INDEMNIFICATION BY WILLIAMS
SECTION 3.01 INDEMNIFICATION BY WILLIAMS. (a) Williams shall indemnify,
defend and hold harmless the Communications Group and the respective past,
present and future directors, officers, employees, partners, agents and
representatives thereof (regardless in each case of whether any such person
serves in one or more similar capacities for any member of the Williams Group)
from and against any and all Indemnifiable Losses relating to, resulting from or
arising out of: (i) any Williams Liabilities; (ii) any Williams Securities
Liabilities; or (iii) any misrepresentation or breach by any member of the
Williams Group of any covenant of any member of the Williams Group or any
failure of any member of the Williams Group to satisfy any condition required to
be satisfied by any member of the Williams Group or any liability of any member
of the Williams Group for taxes arising prior to the Closing Date determined, in
a manner consistent with the principles of tax liability allocation set forth in
the Tax Sharing Agreement, to be owing by any member of the Williams Group for
which any member of the Communications Group may have a secondary liability,
contained in this Agreement, the Underwriting Agreements, or any other agreement
executed by any member of the Williams Group in connection with the Notes
Offering or the Initial Public Offering, including, without limitation, the
Registration Rights Agreement and the Tax Sharing Agreement, and in addition to
and notwithstanding any other indemnification between the parties hereto as
provided in any such agreement, except to the extent that such
misrepresentation, breach or failure was caused by or resulted from any
statement, act or omission within the exclusive knowledge or control of any
member of the Communications Group.
(b) Except as specifically set forth in this Agreement, Communications Group
waives any rights and claims Communications Group may have against any member of
Williams Group, whether in law or in equity, relating to the business of the
Communications Group or the transactions contemplated hereby. The rights and
claims waived by Communications Group include, without limitation, claims for
contribution or other rights of recovery arising out of or relating to any
Environmental Law, claims for breach of contract, breach of representation or
warranty, negligent misrepresentation and all other claims for breach of duty.
This Agreement will provide the exclusive remedy for any misrepresentation,
breach of warranty, covenant or other agreement or other claim arising out of
this Agreement or the transactions contemplated hereby.
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ARTICLE IV
INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS
AND OTHER AMOUNTS
SECTION 4.01 INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND OTHER
AMOUNTS. (a) The parties intend that any Liabilities subject to indemnification
or reimbursement pursuant to Article II or Article III of this Agreement will be
net of Insurance Proceeds that actually reduce the amount of the Liabilities.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any person entitled to indemnification hereunder (an "Indemnitee") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds
recovery had been received, realized or recovered before the Indemnity Payment
was made.
(b) An insurer who would otherwise be obligated to pay any claim shall not
be relieved of the responsibility with respect thereto or, solely by virtue of
the indemnification provisions hereof, or have any subrogation rights with
respect thereto, it being expressly understood and agreed that no insurer or any
other third party shall be entitled to a "windfall" (i.e., a benefit they would
not be entitled to receive in the absence of the indemnification provisions) by
virtue of the indemnification provisions hereof. Notwithstanding the foregoing,
each member of the Williams Group and Communications Group shall be required to
use commercially reasonable efforts to collect or recover any available
Insurance Proceeds.
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE. Communications shall indemnify, defend and hold
harmless each member of the Williams Group, and their respective directors,
officers, employees, agents and representatives, from and against any
Indemnifiable Losses relating to, resulting from, or arising out of any Williams
Guarantee. Each member of the Williams Group shall not terminate unilaterally or
withdraw any Williams Guarantee and shall abide by the terms of any such
Williams Guarantee. Communications shall reimburse each member of the Williams
Group for any direct fees (such as letter of credit maintenance fee) incurred by
such member in connection with maintaining any Williams Guarantee.
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ARTICLE VI
THIRD-PARTY CLAIMS
SECTION 6.01 THIRD-PARTY CLAIMS. (a) If any Indemnitee receives notice of
the assertion of any claim or of the commencement of any action or proceeding by
any person that is not a party to this Agreement or a subsidiary of any such
party against such Indemnitee (a "Third-Party Claim"), the Indemnitee shall
promptly provide written notice thereof (including a description of the
Third-Party Claim and an estimate of any Indemnifiable Losses, which estimate
shall not be conclusive as to the final amount of such Indemnifiable Losses) to
the Indemnifying Party within twenty (20) Business Days after the Indemnitee's
receipt of notice of such Third-Party Claim. Any delay by the Indemnitee in
providing such written notice shall not relieve the Indemnifying Party of any
liability for indemnification hereunder except to the extent that the rights of
the Indemnifying Party are materially prejudiced by such delay.
(b) The Indemnifying Party shall have the right to participate in or, by
giving written notice to the Indemnitee, to assume the defense of any
Third-Party Claim at such Indemnifying Party's expense and by such Indemnifying
Party's own counsel (which shall be reasonably satisfactory to the Indemnitee),
and the Indemnitee will cooperate in good faith in such defense. The
Indemnifying Party shall not be liable for any legal expenses incurred by the
Indemnitee after the Indemnitee has received notice of the Indemnifying Party's
intent to assume the defense of a Third-Party Claim; provided, however, that if,
under applicable standards of professional conduct a conflict on any significant
issue between the Indemnifying Party and any Indemnified Party exists in respect
of such Third-Party Claim, then the Indemnifying Party shall reimburse the
Indemnified Party for the reasonable fees and expenses of one additional counsel
(who shall be reasonably acceptable to the Indemnifying Party); provided,
further, that if the Indemnifying Party fails to take steps reasonably necessary
to diligently pursue the defense of such Third-Party Claim within twenty (20)
Business Days of receipt of notice from the Indemnitee that such steps are not
being taken, the Indemnitee may assume its own defense and the Indemnifying
Party shall be liable for the reasonable costs thereof.
(c) The Indemnifying Party may settle any Third-Party Claim which it has
elected to defend so long as the written consent of the Indemnitee to such
settlement is first obtained (which consent shall not be unreasonably withheld).
The Indemnitee shall not settle any Third-Party Claim without the written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld).
(d) In the event that a Third-Party Claim involves a proceeding as to which
both Williams and Communications may be Indemnifying Parties, the parties hereto
agree to cooperate in good faith in a joint defense of such Third-Party Claim.
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(e) In the event of payment by or on behalf of any Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right,
defense or claim relating to such Third-Party Claim against any claimant or
plaintiff asserting such Third-Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
SECTION 6.02 NON THIRD-PARTY CLAIMS. In the event that an Indemnified Party
should have a claim against the Indemnifying Party hereunder that does not
involve a claim or demand being asserted against or sought to be collected from
it by a third party, the Indemnified Party shall send a notice with respect to
such claim to the Indemnifying Party. The Indemnifying Party shall have sixty
(60) days from the date such notice is delivered during which to notify the
Indemnified Party in writing of any good faith objections it has to the
Indemnified Party's notice or claims for indemnification, setting forth in
reasonable detail each of the Indemnifying Party's objections thereto. If the
Indemnifying Party does not deliver such written notice of objection within such
sixty-day period, the Indemnifying Party shall be deemed to not have any
objections to such claim. If the Indemnifying Party does deliver such written
notice of objection within such sixty (60) day period, the Indemnifying Party
and the Indemnified Party shall attempt in good faith to resolve any such
dispute within sixty (60) days of the delivery by the Indemnifying Party of such
written notice of objection. If the Indemnifying Party and the Indemnified Party
are unable to resolve any such dispute within such sixty (60) day period, such
dispute shall be submitted to the Separation Committee in accordance with the
procedures set forth in Section [xx] of the Separation Agreement.
ARTICLE VII
CONTRIBUTION
SECTION 7.01 CONTRIBUTION. If the Indemnification provided for in this
Agreement with respect to Communications Securities Liabilities or Williams
Securities Liabilities is for any reason held by a court or other tribunal to be
unavailable on policy grounds or otherwise, Williams and Communications shall
contribute to any Indemnifiable Losses relating to, resulting from or arising
out of the Communications Securities Liabilities or the Williams Securities
Liabilities in such proportion as to reflect each party's relative fault in
connection with such Indemnifiable Losses. The relative fault of the parties
shall be determined by reference to, among other things, whether the conduct or
information giving rise to the Indemnifiable Losses is attributable to Williams
or Communications and each party's relative intent, knowledge, access to
information and opportunity to prevent or correct the Indemnifiable Losses. No
person guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who is not guilty of fraudulent misrepresentation.
ARTICLE VIII
COOPERATION
SECTION 8.01. COOPERATION. So long as any books, records and files retained
after the Closing Date by any member of the Williams Group, on the one hand, or
any member of the Communications Group on the other hand, relating to the
businesses, operations or assets of the other party and its subsidiaries
(including any books, records and files retained by any member of the
Communications Group relating to the conduct of its businesses or operations or
the ownership of its assets prior to the Closing Date) remain in existence and
are available, such other party shall have the right upon prior written notice
to inspect and copy the same at any time during business hours for any proper
purpose; provided that such right will not extend to any books, records or files
the disclosure of which in accordance herewith would result in a waiver of the
attorney-client, work-product or other privileges which permit non-disclosure of
otherwise relevant material in litigation or other proceedings, or which are
subject on the date hereof and at the time inspection is requested to a
non-disclosure agreement with a third party and a waiver cannot reasonably be
obtained. Williams and Communications agree that neither they nor any member of
the Williams Group or the Communications Group, as the case may be, shall
destroy such books, records or files without reasonable notice to the other
party or if such party receives within ten (10) Business Days of such notice any
reasonable objection from the other party to such destruction. Except in the
case of dispute between the parties hereto, each member of the Williams Group
and each member of the Communications Group shall cooperate with one another in
a timely manner in any administrative or judicial proceeding involving any
matter affecting the actual or potential liability of either party hereunder.
Such cooperation shall include, without limitation, making available to the
other party during normal business hours all books, records and information, and
officers and employees (without substantial disruption of operations or
employment) necessary or useful in connection with any inquiry, audit,
investigation or dispute, any litigation or any other matter requiring any such
books, records, information, officers or employees for any reasonable business
purpose. The party requesting or otherwise entitled to any books, records,
information, officers or employees pursuant to this Article VIII shall bear all
reasonable out-of-pocket costs and expenses (except for salaries, employee
benefits and general overhead) incurred in connection with providing such books,
records, information, officers or employees.
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ARTICLE IX
EFFECTIVENESS
SECTION 9.01 EFFECTIVENESS. This Agreement shall become effective at
Closing.
ARTICLE X
SUCCESSORS AND ASSIGNS
SECTION 10.01 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective successors and permitted assigns and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement may not be assigned by either party hereto
to any other person without the prior written consent of the other party hereto.
ARTICLE XI
NO THIRD-PARTY BENEFICIARIES
SECTION 11.01 NO THIRD-PARTY BENEFICIARIES. Except for the persons entitled
to indemnification pursuant to Article II or Article III hereof, each of whom is
an intended third-party beneficiary hereunder, nothing expressed or implied in
this Agreement shall be construed to give any person or entity other than the
parties hereto any legal or equitable rights hereunder.
ARTICLE XII
TAXATION OF PAYMENTS
SECTION 12.01 TAXATION OF PAYMENTS. (a) All sums payable by the Indemnifying
Party to the Indemnified Party under this Agreement shall be paid free and clear
of all deductions, withholdings, set-offs or counterclaims whatsoever save only
as may be required by law. If any deductions or withholdings are required by
law, the Indemnifying Party shall be obliged to pay to the Indemnified Party
such sum as will, after such deduction or withholding has been made, leave the
Indemnified Party with the same amount as it would have been entitled to receive
in the absence of any such requirement to make a deduction or withholding. If
any authority imposes any Taxes on any sum paid to the Indemnified Party under
this Agreement (a "Tax Assessment"), then the amount so payable shall be grossed
up by such amount as will ensure that after payment of the Tax Assessment there
shall be left a sum equal to the amount that would otherwise be payable under
this Agreement.
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(b) The Indemnified Party shall take any action and institute any
proceedings, and give any information and assistance, as the Indemnifying Party
may reasonably request, to dispute, resist, appeal, compromise, defend, remedy
or mitigate any Tax Assessment, in each case on the basis that the Indemnifying
Party shall indemnify the Indemnified Party for all reasonable costs incurred as
a result of a request by the Indemnifying Party.
(c) The Indemnified Party shall not admit liability in respect of, or
compromise or settle, a Tax Assessment without the prior written consent of the
Indemnifying party (such consent not to be unreasonably withheld or delayed).
ARTICLE XIII
ADDITIONAL MATTERS
SECTION 13.01 SURVIVAL OF INDEMNITIES. The rights and obligations of each of
Communications and Williams and their respective Indemnitees under Article II
and Article III, respectively, of this Agreement shall survive the sale or other
transfer by any party of any assets or businesses or the assignment by it of any
Liabilities.
SECTION 13.02 REMEDIES CUMULATIVE. The remedies provided in this Agreement
shall be cumulative and shall not, subject to the provisions of Section 13.04
below, preclude assertion by any Indemnitee of any other rights or the seeking
of any and all other remedies against any Indemnifying Party.
SECTION 13.03 LIMITATION ON LIABILITY. No Indemnifying Party shall be liable
to an Indemnified Party under this Agreement in respect of consequential,
exemplary, special or punitive damages, or lost profits, except to the extent
such consequential, exemplary, special or punitive damages, or lost profits are
actually paid to a third party.
SECTION 13.04 TAX MATTERS. Except as set forth in the Tax Sharing Agreement
and in Sections 2.01(a) and 3.01(a), all indemnification relating to Taxes shall
be governed by the Tax Sharing Agreement
ARTICLE XIV
ENTIRE AGREEMENT
SECTION 14.01 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof.
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ARTICLE XV
AMENDMENT
SECTION 15.01 AMENDMENT. This Agreement may not be amended except by an
instrument signed by the parties hereto.
ARTICLE XVI
REMEDIES AND WAIVERS
SECTION 16.01 REMEDIES AND WAIVERS. No waiver of any term shall be construed
as a subsequent waiver of the same term, or a waiver of any other term, of this
Agreement. The failure of any party to assert any of its rights hereunder will
not constitute a waiver of any such rights. The single or partial exercise of
any right, power or remedy provided by law or under this Agreement shall not
preclude any other or further exercise thereof or the exercise of any right,
power or remedy. Except as provided in this Agreement, the rights, powers and
remedies provided in this Agreement are cumulative and not exclusive of any
rights, powers and remedies provided by law.
ARTICLE XVII
SEVERABILITY
SECTION 17.01 SEVERABILITY. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, such
provision shall be deemed severable and all other provisions of this Agreement
shall nevertheless remain in full force and effect.
ARTICLE XVIII
HEADINGS
SECTION 18.01 HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
ARTICLE XIX
NOTICES
SECTION 19.01 NOTICES. All notices given in connection with this Agreement
shall be in writing. Service of such notices shall be deemed complete: (i) if
hand delivered, on the date of delivery; (ii) if by mail, on the fourth Business
Day following
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the day of deposit in the United States mail, by certified or registered mail,
first-class postage prepaid; (iii) if sent by Federal Express or equivalent
courier service, on the next Business Day; or (iv) if by telecopier, upon
receipt by sender of confirmation of successful transmission. Such notices shall
be addressed to the parties at the following address or at such other address
for a party as shall be specified by like notice (except that notices of change
of address shall be effective upon receipt):
If to Williams:
The Williams Companies, Inc.
One Williams Center
Tulsa, Oklahoma 74172
Attention: William G. von Glahn
Fax No.: 918/573-5942
If to Communications:
Williams Communications Group, Inc.
One Williams Center
Tulsa, Oklahoma 74172
Attention: David P. Batow
Fax No.: 918/573-3005
ARTICLE XX
GOVERNING LAW
SECTION 20.01 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Oklahoma, without giving
effect to the principles of conflict of laws of such state or any other
jurisdiction.
ARTICLE XXI
COUNTERPARTS
SECTION 21.01 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
THE WILLIAMS COMPANIES, INC.
BY: /s/ JAMES G. IVEY
------------------------------------
NAME: James G. Ivey
TITLE: Treasurer
WILLIAMS COMMUNICATIONS GROUP, INC.
BY: /s/ SCOTT E. SCHUBERT
------------------------------------
NAME: Scott E. Schubert
TITLE: Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.5
- --------------------------------------------------------------------------------
WILLIAMS COMMUNICATIONS GROUP, INC.
and
THE BANK OF NEW YORK,
Rights Agent
Rights Agreement
Dated as of September 30, 1999
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
1. Certain Definitions................................................. 3
2. Appointment of Rights Agent......................................... 14
3. Issuance of Rights Certificates..................................... 15
4. Form of Rights Certificates.......................................... 19
5. Countersignature and Registration.................................... 21
6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates..................................... 23
7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.................................................... 25
8. Cancellation and Destruction of Rights
Certificates...................................................... 31
9. Reservation and Availability of Capital Stock........................ 32
10. Preferred Stock Record Date.......................................... 36
11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights..................................... 37
12. Certificate of Adjusted Purchase Price or Number of Shares........... 61
13. Consolidation, Merger or Sale or Transfer of
Assets, Cash Flow or Earning Power................................ 61
14. Fractional Rights and Fractional Shares.............................. 68
15. Rights of Action..................................................... 72
16. Agreement of Rights Holders.......................................... 73
17. Rights Certificate Holder Not Deemed a Stockholder................... 75
18. Concerning the Rights Agent.......................................... 75
19. Merger or Consolidation or Change of
Name of Rights Agent.............................................. 77
20. Duties of Rights Agent............................................... 78
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
21. Change of Rights Agent............................................... 83
22. Issuance of New Rights Certificates.................................. 86
23. Redemption and Termination........................................... 87
24. Exchange............................................................. 91
25. Notice of Certain Events............................................. 94
26. Notices.............................................................. 97
27. Supplements and Amendments........................................... 98
28. Successors...........................................................100
29. Determinations and Action by the Board, etc. ........................101
30. Benefits of this Agreement...........................................102
31. Severability.........................................................103
32. Governing Law........................................................104
33. Counterparts.........................................................104
34. Descriptive Headings.................................................105
</TABLE>
EXHIBITS
Exhibit A -- Form of Certificate of Designation, Preferences and Rights
Exhibit B -- Form of Rights Certificates
Exhibit C -- Form of Summary of Rights
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<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 30, 1999 (the "Agreement"),
between Williams Communications Group, Inc., a Delaware corporation (the
"Company"), and The Bank of New York, a New York banking corporation (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, on September 24, 1999, the Board of Directors of the Company
authorized the issuance and distribution of one Right (as hereinafter defined)
for each share of Class A common stock, par value $0.01 per share, and Class B
common stock, par value $0.01 per share, of the Company (the "Common Stock")
outstanding at the close of business on the date of this Agreement (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
Distribution Date (as hereinafter defined) each Right initially representing the
right to purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock of the
2
<PAGE> 5
Company (the "Preferred Stock") having the rights, powers and preferences set
forth in the form of Certificate of Designation, Preferences and Rights attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i)TWC, (ii) the Company, (iii) any Subsidiary of the Company, (iv) any
employee benefit plan of the Company, or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, or (v) any Person who becomes the
Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock
then outstanding as a result of a reduction in the number of shares of Common
Stock outstanding
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<PAGE> 6
due to the repurchase of shares of Common Stock by the Company unless and until
such Person, after becoming aware that such Person has become the Beneficial
Owner of fifteen percent (15%) or more of the then outstanding shares of Common
Stock, acquires beneficial ownership of additional shares of Common Stock
representing one percent (1%) or more of the shares of Common Stock then
outstanding, or (vi) any such Person who has reported or is required to report
such ownership (but less than 20%) on Schedule 13G under the Securities and
Exchange Act of 1934, as amended and in effect on the date of the Agreement (the
"Exchange Act") (or any comparable or successor report) or on Schedule 13D under
the Exchange Act (or any comparable or successor report) which Schedule 13D does
not state any intention to or reserve the right to control or influence the
management or policies of the Company or engage in any of the actions specified
in Item 4 of such schedule (other than the disposition of the Common Stock) and,
within 10 Business Days of being requested by the Company to advise it regarding
the same, certifies to the Company that such Person acquired shares of Common
Stock in excess of 14.9% inadvertently or without knowledge of the terms of the
Rights and who, together with all Affiliates and Associates,
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<PAGE> 7
thereafter does not acquire additional shares of Common Stock while the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding;
provided, however, that if the Person requested to so certify fails to do so
within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10-Business-Day period.
(b) "Act" shall mean the Securities Act of 1933.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
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<PAGE> 8
rights, warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities issuable
upon exercise of Rights at any time prior to the occurrence of a Triggering
Event (as hereinafter defined), or (C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date (as hereinafter defined) or
pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote
6
<PAGE> 9
or dispose of or has "beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or understanding: (A)
arises solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
7
<PAGE> 10
arrangement or understanding (whether or not in writing), for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subpara-graph (ii) of this paragraph (d)) or
disposing of any voting securities of the Company; provided, however, that
nothing in this paragraph (d) shall cause a Person engaged in business as
an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition, and then only
if such securities continue to be owned by such Person at such expiration
of forty days.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business
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<PAGE> 11
Day, it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(g) "Common Stock" shall mean, collectively, the Class A Common Stock,
par value $0.01 per share, and the Class B Common Stock, par value $0.01 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(h) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Current Market Price" shall have the meaning set forth in Section
11(d)(i) hereof.
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(l) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(m) "Exchange Act" shall mean the Securities and Exchange Act of 1934.
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<PAGE> 12
(n) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
(o) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(p) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(q) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(r) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company, and,
to the extent that there are not a sufficient number of shares of Series A
Junior Participating Preferred Stock authorized to permit the full exercise of
the Rights, any other series of preferred stock of the Company designated for
such purpose containing terms substantially similar to the terms of the Series A
Junior Participating Preferred Stock.
(s) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(t) "Purchase Price" shall have the meaning set forth in Section
4(a)(ii) hereof.
(u) "Qualified Offer" shall have the meaning set forth in Section
11(a)(ii) hereof.
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<PAGE> 13
(v) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(w) "Rights" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(x) "Rights Agent" shall have the meaning set forth in the parties
clause at the beginning of this Agreement.
(y) "Rights Certificate" shall have the meaning set forth in Section
3(a) hereof.
(aa) "Rights Dividend Declaration Date" shall have the meaning set
forth in the WHEREAS clause at the beginning of this Agreement.
(bb) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(cc) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(dd) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ee) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation,
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<PAGE> 14
a report filed or amended pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such
other than pursuant to a Qualified Offer.
(ff) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(gg) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(hh) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(ii) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(jj) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(kk) "TWC" shall mean The Williams Companies, Inc. or any Affiliate or
Associate thereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
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<PAGE> 15
appointment. The Company may from time to time appoint such co-rights agents as
it may deem necessary or desirable upon ten days written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise and shall in no event be
liable for the acts or omissions of, any such co-rights agent.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth Business
Day after the Stock Acquisition Date, or (ii) the close of business on the tenth
Business Day (or such later date as the Board shall determine) after the date
that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would become an Acquiring Person ,in either instance other
than pursuant to a Qualified Offer (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to
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the provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). The Company shall give the
Rights Agent notice upon, or, to the extent practicable, prior to, the
occurrence of the Distribution Date. As soon as practicable after the
Distribution Date and receipt of notice of the Distribution Date from the
Company, the Rights Agent will, at the Company's expense, send by first-class,
insured, postage-prepaid mail, to each record holder of the Common Stock as of
the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more right certificates, in
substantially the form of Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to Section 11(p) hereof,
at the time of distribution of the Rights Certificates, the
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Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) The Company will make available, as promptly as practicable following
the Record Date, a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights") to any holder of Rights
who may so request from time to time prior to the Expiration Date. With respect
to certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section
7(a) hereof), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
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(c) Rights shall be issued in respect of all shares of Common Stock which
are issued (whether originally issued or from the Company's treasury) on or
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Williams
Communications Group, Inc. (the "Company") and the Rights Agent thereunder
(the "Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge, promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration Date,
the Rights associated
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<PAGE> 19
with the Common Stock represented by such certificates shall be evidenced
by such certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to conform to
usage. The Rights Certificates shall be in machine printable format and in
a form reasonably satisfactory to the Rights Agent. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever
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<PAGE> 20
distributed, shall be dated as of the Record Date, show the date of counter
signature, and on their face shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of Preferred Stock as shall be
set forth therein at the price set forth therein (such exercise price per
one one-hundredth of a share, the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a), Section
11(i) or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring
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<PAGE> 21
Person has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
The Company shall supply the Rights Agent with such legended Rights
Certificates.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary
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<PAGE> 22
of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or
by facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
of the Rights Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned
by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights Certificates
had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at
the date of the execution of this Rights Agreement any such person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep, or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise
20
<PAGE> 23
or transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates (other than Rights Certificates
representing Rights that may have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitles such holder (or former holder in the case of a
transfer) to
21
<PAGE> 24
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on
the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 hereof and Section 24 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment by the holders of Rights of a sum sufficient to cover any tax or
governmental charge that
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<PAGE> 25
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate, if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, at any time after the Distribution
Date the registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth in Section
9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
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<PAGE> 26
upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one one-hundredths of a
share (or other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable, at or prior to the
earlier of (i) 5:00 P.M., New York City time, on June 30, 2009, or such
later date as may be established by the Board of Directors prior to the
expiration of the Rights (such date, as it may be extended by the Board,
the ("Final Expiration Date"), or (ii) the time at which the Rights are
redeemed or exchanged as provided in Section 23 and Section 24 hereof (the
earlier of (i) and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$100, and shall be subject to adjustment from time to time as provided in
Section 11 and Section 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
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<PAGE> 27
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one one-hundredth of a share of Preferred Stock
(or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hundredths of
a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer
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<PAGE> 28
agent with the depositary agent) and the Company will direct the depositary
agent to comply with such request, (ii) requisition from the Company the
amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or, upon the
order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase
Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash or by certified bank check or bank draft payable to
the order of the Company. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by the Rights
Agent, if and when appropriate. The Company reserves the right to require
prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock would be issued.
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<PAGE> 29
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon
the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders
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<PAGE> 30
of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
this Section 7(e), shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise.
The Company shall use all reasonable efforts to insure that the provisions
of this Section 7(e) and Section 4(b) hereof are complied with, but shall
have no liability to any holder of Rights Certificates or any other Person
as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
The Rights Agent will endeavor to comply with the provisions hereof to the
extent it has received instructions from the Company concerning such
matters.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
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<PAGE> 31
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation of Rights Certificates. All Rights Certificates
surrendered for the purpose of exercise, transfer, split-up, combination or
exchange shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon
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<PAGE> 32
the exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred
Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares held in its treasury), the number
of shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in this
Agreement including Section 11(a)(iii) hereof, will be sufficient to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on
any national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
shares reserved for
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<PAGE> 33
such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, a registration statement under the Act, with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities, and (B)
the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of
31
<PAGE> 34
this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement and
shall give simultaneous written notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension has been rescinded. In
addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company may temporarily
suspend the exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained, the exercise thereof shall not be permitted under
applicable law, or a registration statement shall not have been declared
effective. The Rights Agent may assume that any Right exercised is
permitted to be exercised under applicable law and shall have no liability
for acting in reliance upon such assumption.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to
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<PAGE> 35
ensure that all one one-hundredths of a share of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-hundredths of
a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-hundredths
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<PAGE> 36
of a share of Preferred Stock (or Common Stock and/or other securities, as
the case may be) in respect of a name other than that of the registered
holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such fractional shares of Preferred Stock
(or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the
Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are closed, such Person
shall be
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<PAGE> 37
deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B)
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<PAGE> 38
subdivide the outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer
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<PAGE> 39
books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, or is an acquisition of
shares of Common Stock pursuant to a tender offer or an exchange offer
for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates
37
<PAGE> 40
of an Acquiring Person, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to
stockholders and not inadequate (taking into account all factors which
such members of the Board deem relevant, including, without
limitation, prices which could reasonably be achieved if the Company
or its assets were sold on an orderly basis designed to realize
maximum value) and (b) otherwise in the best interests of the Company
and its stockholders (a "Qualified Offer")
then, promptly following the occurrence of such event, proper provision
shall be made so that each holder of a Right (except as provided below and
in Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior to
the
38
<PAGE> 41
first occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the Current Market Price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's Restated Certificate of Incorporation,
but which are not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights, are not sufficient to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall (A)
determine the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), and (B) with respect to
each Right (subject to Section 7(e) hereof), make adequate provision
to substitute for the Adjustment Shares, upon the exercise of a Right
and payment of the applicable Purchase
39
<PAGE> 42
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock, such as
the Preferred Stock, which the Board has deemed to have essentially
the same value or economic rights as shares of Common Stock (such
shares of preferred stock being referred to as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the
Board based upon the advice of a nationally recognized investment
banking firm selected by the Board; provided, however, that if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of redemption pursuant to
Section 23(a)
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<PAGE> 43
expires (the later of (x) and (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. For purposes
of the preceding sentence, the term "Spread" shall mean the excess of
(i) the Current Value over (ii) the Purchase Price. If the Board
determines in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended,
is herein called the "Substitution Period"). To the extent that
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<PAGE> 44
action is to be taken pursuant to the first and/or third sentences of
this Section 11(a)(iii), the Company (1) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek such shareholder approval for such authorization of additional
shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect, in each case with
simultaneous written notice to the Rights Agent. For purposes of this
Section - 11(a)(iii), the value of each Adjustment Share shall be the
Current Market Price per share of the Common Stock on the Section
11(a)(ii) Trigger Date and the per share or per unit value of
42
<PAGE> 45
any Common Stock Equivalent shall be deemed to equal the Current
Market Price per share of the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five
(45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of
Preferred Stock ("Equivalent Preferred Stock")) or securities convertible
into Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred Stock
or Equivalent Preferred Stock) less than the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which
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<PAGE> 46
the aggregate offering price of the total number of shares of Preferred
Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of Preferred Stock
and/or Equivalent Preferred Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration, part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights. Shares of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed, and in the event
that such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
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<PAGE> 47
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
evidences of indebtedness, or of subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of
the cash, assets or evidences of indebtedness
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<PAGE> 48
so to be distributed or of such subscription rights or warrants applicable
to a share of Preferred Stock, and the denominator of which shall be such
Current Market Price (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not
been fixed.
(d)(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the Current Market
Price per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days immediately prior to such date, and
for purposes of computations made pursuant to Section 11(a)(iii) hereof,
the Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is
46
<PAGE> 49
determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of
such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification shall not have occurred prior
to the commencement of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, then, and in each such case, the
Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction re- porting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national
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<PAGE> 50
securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers Auto- mated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the aver- age of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board. If on any such
date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board shall
be used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed
or admitted to trading is open for the trans- action of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, Current Market Price per share
shall mean the fair value per
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<PAGE> 51
share as determined in good faith by the Board, whose determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the
same manner as set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last sentence thereof). If the
Current Market Price per share of Preferred Stock cannot be determined
in the manner provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the Current Market Price per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the Current
Market Price per share of the Common Stock. If neither the Common
Stock nor the
49
<PAGE> 52
Preferred Stock is publicly held or so listed or traded, Current
Market Price per share of the Preferred Stock shall mean the fair
value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of a Unit shall be equal to
the Current Market Price of one share of Preferred Stock divided by
100.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required
50
<PAGE> 53
by this Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and
(m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths
of a share of Preferred Stock purchasable from
51
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time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of one one-hundredths of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
one one-hundredths
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of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at
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the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth of a share and the number of one one-hundredth of a share
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the
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then stated value, if any, of the number of one one-hundredths of a share
of Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully
paid and nonassessable such number of one one-hundredths of a share of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date the number of one one-hundredths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the number of one one-hundredths of a share
of Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or
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otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in its good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the Current Market Price, (iii)
issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), (ii) merge with or into any
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other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets, cash flow or earning power aggregating more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as
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permitted by Section 23 or Section 26 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend
on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately
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prior to such event by a fraction the numerator which shall be the total
number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such
certificate, and (c) if a Distribution Date has occurred, mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 27 hereof (or, if prior to the Distribution Date, to each holder of
a certificate representing shares of Common Stock). The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash
Flow or Earning Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and
into,
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any other Person (other than (i) TWC or a (ii) Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation
or merger, (y) any Person (other than (i) TWC or (ii) a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall
be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets, cash flow or
earning power aggregating more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole) to any Person
or Persons (other than (i) TWC or the Company or (ii) any Subsidiary of the
Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case (except as may be contemplated
by Section 13(d)
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hereof), proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number
of one one-hundredths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one
one-hundredths of a share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase
Price in effect immediately prior to such first occurrence), and dividing
that product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2)
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50% of the Current Market Price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal Party on the date
of consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of
any Section 13 Event.
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(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person,
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the Common Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become
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effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) take such all such other action as may be necessary to enable
the Principal Party to issue the securities purchasable upon exercise
of the Rights, including but not limited to the registration or
qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities
on such exchanges and trading markets as may be necessary or
appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
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11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x)
and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a tender
offer or exchange offer for all outstanding shares of Common Stock which is
a Qualified Offer as such term is defined in Section 11(a)(ii) hereof (or a
wholly owned subsidiary of any such Person or Persons), (ii) the price per
share of Common Stock offered in such transaction is not less than the
price per share of Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender offer or exchange
offer and (iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same
as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
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(e) The Rights Agent may rely and be fully protected in relying upon a
certificate of the Company stating that the provisions of this Section 13
have been fulfilled. Notwithstanding anything in this Agreement to the
contrary, the prior written consent of the Rights Agent must be obtained in
connection with any supplemental agreement which alters the rights or
duties of the Rights Agent, which consent shall not be unreasonably
withheld.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof,
or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, the Company shall pay to the registered
holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For purposes of this
Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been
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otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights, selected by
the Board of Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the
Company shall be used.
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(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock). In lieu of fractional shares
of Preferred Stock that are not integral multiples of one one-hundredth of
a share of Preferred Stock, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one one-hundredth of a share of Preferred Stock. For purposes of
this Section 14(b), the current market value of one one-hundredth of a
share of Preferred Stock shall be one one-hundredth of the closing price of
a share of Preferred Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
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(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one (1) share of Common
Stock. For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered
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holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy
at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
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(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer
and with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall be required to
be affected by any notice to the contrary; and
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(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of
a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
one one-hundredths of a share of Preferred Stock or any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any
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Rights Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed in writing between the Company and the Rights Agent for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements
and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or willful misconduct on the part
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of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim (whether
asserted by the Company or any holder of Rights) of liability in the
premises. The provisions of this Section 18(a) shall survive the expiration
of the rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper Person or Persons.
(c) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Rights Agent has
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been advised of the likelihood of the loss or damage and regardless of the
form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust, stock
transfer or other shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; but only if such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in
case
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at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, except as required by law, upon the
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following terms and conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and
the determination of Current Market Price) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or
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suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct; provided, however, that the
Rights Agent shall not be liable for any indirect, special or consequential
damages.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section
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11, Section 13 or Section 24 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after the Rights'
Agent's actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred
Stock to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or Preferred Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable, nor
shall the Rights Agent be responsible for the legality of the terms hereof
in its capacity as an administrative agent.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
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(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in such application on
or after the date specified in such application (which date shall not be
less than three Business Days after the date any officer of the Company
actually receives such application, unless such officer shall have
consented in writing to any
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earlier date) unless prior to taking any such action (or the effective date
in the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be
taken or omitted or unless the Rights Agent shall have acted with gross
negligence or wilful misconduct.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided,
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however, reasonable care was exercised in the selection thereof.
(j) No provision of this Agreement shall require the Rights Agent 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 its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting
with the Company.
(l) In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or
omitted by it in connection with its administration of this Agreement if
such acts or omissions are in reliance upon
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(i) the proper execution of the certification concerning beneficial
ownership appended to the form of assignment and the form of election to
purchase attached hereto unless the Rights Agent shall have actual
knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any
refusal to honor any otherwise permissible assignment or election by reason
of such non-execution.
(m) The Company agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer or
the Rights Certificates.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail. Any successor to the Rights Agent
that so resigns will send notice to the registered holders of the Rights
Certificates by first-class mail if such resignation occurs after the
Distribution Date. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty
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(30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Stock and Preferred Stock, by registered or certified mail. Any successor
to the Rights Agent so removed will send notice to the hodlers of Rights
Certificates by registered or certified mail if such removal occurs after
the Distribution Date. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company, at the expense of the Company),
then the Rights Agent or any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a legal business entity organized and
doing business under the laws of the United States or of the State of New
York
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or of any other state of the United States, in good standing, having an
office in the State of New York, which is authorized under such laws to
exercise corporate trust or stock transfer or shareholder services powers
and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50,000,000 or (b) an affiliate of a legal
business entity described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to
give any notice provided for in this Section 21, however, or any defect
therein, shall not
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affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing
Rights in such form as may be approved by the Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to the redemption
or expiration of the Rights, the Company (a) shall, with respect to shares
of Common Stock so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the
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appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth
Business Day following the Stock Acquisition Date, or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11(a)(ii)
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Event until such time as the Company's right of redemption hereunder has
expired. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Market Price, as defined in
Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by the Board of
Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
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holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof)
for Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or
any such Subsidiary, or any entity holding Common Stock for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common
Stock then outstanding.
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(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to
the Rights Agent and all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
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(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Equivalent Preferred Stock, as
such term is defined in paragraph (b) of Section 11 hereof) for Common
Stock exchangeable for Rights, at the initial rate of one one-hundredth of
a share of Preferred Stock (or Equivalent Preferred Stock) for each share
of Common Stock, as appropriately adjusted to reflect stock splits, stock
dividends and other similar transactions after the date hereof.
(d) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered
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holders of the Rights Certificates with regard to which such fractional
shares of Common Stock would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole share of Common
Stock. For the purposes of this subsection (e), the current market value of
a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company), or (ii) to offer to
the holders of Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares
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of Preferred Stock), or (iv) to effect any consolidation or merger into or
with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o) hereof),
or (v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a Rights
Certificate and to the Rights Agent, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date
is to be fixed, and such notice
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shall be so given in the case of any action covered by clause (i) or (ii)
above at least twenty (20) days prior to the record date for determining
holders of the shares of Preferred Stock for purposes of such action, and
in the case of any such other action, at least twenty (20) days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock whichever shall be
the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate and to
the Rights Agent, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or,
if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights
Certificate
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to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent with the Company) as follows:
Williams Communications Group, Inc.
One Williams Center
Tulsa, Oklahoma 74172
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Rights Agent with the Company) as
follows:
The Bank of New York
101 Barclay Street, Floor 12W
New York, New York 10286
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made if
sent by first-class mail, postage
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pre-paid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of
any holders of certificates representing shares of Common Stock. From and
after the Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may
deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided, this
Agreement may not be supplemented or amended to lengthen any time period
hereunder, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time
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as the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying
the rights of, and/or the benefits to, the holders of Rights. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of
Common Stock. Notwithstanding anything herein to the contrary, this
Agreement may not be amended at a time when the Rights are not redeemable.
Notwithstanding any other provision hereof, the Rights Agent's consent must
be obtained regarding any amendment or supplement pursuant to this Section
27 which alters the Rights Agent's rights or duties, which consent shall
not be unreasonably withheld.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
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Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and binding on
the
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Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board, or any of the directors on the Board to any
liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
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restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the close of business on the tenth Business Day following
the date of such determination by the Board of Directors. Without limiting
the foregoing, if any provision requiring a specific group of Directors of
the Company to act is held to by any court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such determination
shall then be made by the Board of Directors of the Company in accordance
with applicable law and the Company's Restated Certificate of Incorporation
and By-laws.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State; provided,
however,
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that the rights, privileges, protections and immunities of the Rights Agent
shall be governed by and construed in accordance with the laws of the State
of New York.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
WILLIAMS COMMUNICATIONS GROUP, INC.
By /s/ G.L. BEST
--------------------------------------
Name: G.L. Best
Title: Vice President
THE BANK OF NEW YORK, AS RIGHTS AGENT
By /s/ JAMES DIMINO
--------------------------------------
Name: James Dimino
Title: Vice President
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EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of 30th day of September, 1999, by and between The Williams Companies, a
Delaware corporation ("Williams") and Williams Communications Group, Inc., a
Delaware corporation (the "Company").
This Agreement is made in light of the recapitalization of the Company
providing two series of Common Stock of the Company in preparation of an Initial
Public Offering of Series A Common Stock of the Company. In connection with the
recapitalization, Williams received all of the issued and outstanding shares of
Series B Common Stock of the Company. Pursuant to its Certificate of
Incorporation, upon the sale or other transfer of any Series B Common Stock to
any person which is not a Williams Affiliate, such transferred shares will
automatically be converted into an equal number of Class A Common Stock of the
Company.
The parties hereby agree as follows:
1. DEFINITIONS
1.01 "AFFILIATE" means, with respect to a specified Person, any Person
controlling, controlled by or under common control with such Person.
1.02 "COMMISSION" means the Securities and Exchange Commission.
1.03 "COMMON STOCK" means all the common stock, $.01 par value per share, of
the Company including both Series A and Series B.
1.04 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
1.05 "HOLDER" means a holder of Registrable securities. A person is deemed
to be a Holder of Registrable Securities whenever such person owns Registrable
Securities; provided, however, that unless the Company is otherwise notified by
the Holder of a Registrable Security, the Holder of a Registrable Security shall
be deemed to be that person set forth on the books and record of the Company or
the registrar for such Registrable Securities.
1.06 "INSPECTORS" means collectively any Holder, any underwriter
participating in any disposition pursuant to a Registration Statement and any
attorney, accountant or other professional retained by any such Holder or
underwriter.
1.07 "IPO" means the initial public offering of Common Stock by the Company
that is registered under the Securities Act with the Commission.
1.08 "MAJORITY HOLDERS" means the holder or holders of a majority of the
Registrable
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Securities to be registered under a Registration Statement.
1.09 "OTHER SELLING HOLDERS" means all persons and entities other than
Williams who have been granted registration rights by the Company.
1.10 "PERSON" means an individual, a partnership, a corporation, a limited
liability company, a limited liability partnership, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.
1.11 "RECORDS" means all financial and other records, pertinent corporate
documents and properties of Williams.
1.12 "REGISTRABLE SECURITIES" means all shares of Common Stock held at the
relevant time by Williams or any affiliated transferee or assignee of Common
Stock previously held by Williams (provided that pursuant to such transfer or
assignment Williams has specifically assigned certain of its rights hereunder),
and any other issued or issuable shares of Common Stock held by Williams at the
relevant time, either at the time of initial issuance or subsequently, by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities (i) when they have been transferred in a public offering registered
under the Securities Act or in a sale made through a broker, dealer or
market-maker pursuant to Rule 144 under the Securities Act or (ii) when any
Holder requests in writing that such Registrable Securities not be registered
pursuant to the terms of this Agreement.
1.13 "REGISTRATION EXPENSES" means (i) registration and filing fees, (ii)
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing, mailing and
delivery expenses, (iv) internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred in connection with the
listing of the Registrable Securities, (vi) reasonable fees and disbursements of
counsel for the Company and customary fees and expenses for independent
certified public accountants of a comfort letter or comfort letters), (vii) the
reasonable fees and disbursements of one counsel retained by or for the benefit
of all of the holders of Registrable Securities (determined by the Selling
Holders of such securities in any manner in which they collectively choose),
(viii) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration and (ix) the reasonable fees and
expenses of any transfer agents and registrars of the Registrable Securities, as
selected by the Company; provided,
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however, the Company shall not have any obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities, or,
except as provided by clause (ii) above, any out-of-pocket expenses of the
Holders (or the agents who manage their accounts) or the fees and disbursements
of counsel for any underwriter.
1.14 "REGISTRATION STATEMENT" means a registration statement on Form S-1 or
another appropriate form filed by the Company during the period that this
agreement is in effect.
1.15 "RULE 144" means Rule 144 issued under the Securities Act or other
comparable provision that may be adopted by the Commission.
1.16 "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.17 "SELLING HOLDER" means, with respect to any Registration Statement, any
Holder whose securities are included therein.
2. REGISTRATION RIGHTS
2.01 DEMAND REGISTRATION RIGHTS. Upon the written request of a Holder, the
Company shall file with the Commission a Registration Statement (a "Demand
Registration") under the Securities Act covering all or part of then outstanding
Registrable Securities, and shall use its reasonable efforts to cause the
Registration Statement to become effective as soon as practicable; provided,
however, that the number of registrable Securities for which such registration
is sought must exceed 1,000,000 shares of the Company's Common Stock.
(a) NUMBER OF DEMAND REGISTRATIONS. The Company shall be required to effect,
pursuant to this Section 2.01, registrations with respect to Registrable
Securities requested by Williams, so long as Williams beneficially owns in
the aggregate at least three percent of the issued and outstanding shares of
the Company's Class B Common Stock Registrable Securities, Williams shall
have the right to require the Company to effect Required Registrations
provided that the Registrable Securities included therein have an aggregate
Market Value of at least $50 million.
(b) PRIORITY ON DEMAND REGISTRATIONS. In the event that a Demand
Registration is an underwritten offering, and the managing underwriters
advise Williams in writing that in their opinion the number of Registrable
Securities, the Company's securities, and any other securities requested to
be included exceeds the number that can be sold in such offering without
adversely affecting such underwriters' ability to effect an orderly
distribution of such securities
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(including the price thereof), the Company will include in such
registration: (i) first, the number of Registrable Securities requested to
be included by Williams; (ii) second, the number of Registrable Securities
requested to be included by any other Holder; (iii) third, if all the
Registrable Securities requested to be included are included in such
registration, the number of the Company's securities requested to be
included that, in the opinion of such underwriters, can be sold; and (iv)
fourth, if all Registrable Securities and the Company's securities requested
to be included are included in such registration, any other securities
requested to be included in such registration that, in the opinion of such
underwriters, can be sold.
2.02 PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any of its
Common Stock (whether for its own account or the account of others) under
the Securities Act (other than pursuant to a Demand Registration) an
offering and the registration form to be used is suitable for the
registration of Registrable Securities (a "Piggyback registration"), the
Company will give prompt written notice of the proposed registration to each
Holder and, subject to the priority provisions of Section 2.02(b), will
include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within
30 days after receipt of such notice, provided, however, that (i) the
Company will not be required to effect a Piggyback Registration if it is
registering securities in connection with an employee stock option plan, a
merger, exchange offer or another transaction of the type specified in Rule
145 and (ii) the Company may withdraw any proposed Registration Statement or
offering of securities under this Section at any time without liability to
any Holder, in which case the Company will not be required to effect a
registration, unless such Holder converts its request into a Demand
Registration.
(b) PRIORITY ON PRIMARY REGISTRATIONS. In the event that a Piggyback
Registration is in connection with an underwritten primary offering of the
Company's securities and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be
included in such registration exceeds the number that can be sold in such
offering without adversely affecting such underwriters' ability to effect an
orderly distribution of such securities, will include in such registration:
(i) first, the Company's securities proposed to be sold by the Company; (ii)
second, the number of Registrable Securities requested to be included that,
in the opinion of such underwriters, can be sold, pro rata among the Holders
of such securities on the basis of the amount of Registrable securities then
owned by each such Holder; and (iii) third, if all Registrable Securities
requested to be included are included
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in such registration, any other securities requested to be included in such
registration that, in the opinion of such underwriters, can be sold.
(c) PRIORITY ON OTHER REGISTRATIONS. In the event that a Piggyback
Registration is in connection with an underwritten offering of the Company's
securities pursuant to the exercise of registration rights by a stockholder
of the Company who is not a Holder hereunder and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number that can be
sold in such offering without adversely affecting such underwriters' ability
to effect an orderly distribution of such securities, the Company will
include in such registration: (i) first, the shares of the Company's Common
Stock requested to be registered by such Company stockholder pursuant to the
exercise of its registration rights, (ii) second, any of the Company's
securities proposed to be sold by the Company in such offering; (iii) third,
the number of Registrable Securities requested to be included that, in the
opinion of such underwriters, can be sold pro rata among the Holders of such
securities on the basis of the amount of Registrable Securities then owned
by each such Holder; and (iv) fourth, if all Registrable Securities
requested to be included are included in such registration, any other
securities requested to be included in such registration that, in the
opinion of such underwriters, can be sold.
(d) CONDITION TO PIGGYBACK REGISTRATIONS. Registrable Securities and any
other securities registered in a Piggyback Registration shall be offered to
the public at no less than the price at which other equivalent securities of
the company then registered are offered to the public.
3. HOLDBACK AGREEMENT. To the extent not inconsistent with applicable law, each
Holder agrees not to effect any sale or distribution of any securities of the
issue being registered or any securities similar to those being registered, or
any securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144, during the ten (10) business
days prior to, and during the 120-day period beginning on, the effective date of
such registration statement (except as part of such registration), if and to the
extent timely notified in writing by the managing underwriter or underwriters in
the case of an underwritten public offering.
4. SELECTION OF UNDERWRITERS. At the option of the Majority Holders, the
offering of Registrable Securities pursuant to Section 2.01 may be in the form
of an underwritten offering; PROVIDED, that the Majority Holders shall be
entitled to select the book-running managing underwriter subject to the approval
of the Company, which approval will not be unreasonably withheld.
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5. REGISTRATION.
5.01 REGISTRATION PROCEDURES. In connection with the offering the
Registrable Securities pursuant to Section 2, the Company shall:
(a) prepare and file the Registration Statement with the Commission on any
form for which the Company then qualifies or which counsel for the Company
shall deem appropriate and which form shall be available for the sale of the
Registrable Securities thereunder in accordance with the intended method of
distribution thereof, and use its reasonable efforts (subject to Section
2.01(c)) to cause such filed Registration Statement to become effective as
soon as practicable; and after the filing of the Registration Statement, the
Company will promptly notify each Holder of Registrable Securities covered
by the Registration Statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;
(b) in the event of a Demand Registration, prepare and file with the
Commission such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 270 days or
such shorter period which will terminate when all Registrable Securities
covered by such registration statement have been sold and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement during such period in
accordance with the intended methods of disposition by the holders thereof
set forth in the Registration Statement;
(c) furnish to each Holder whose Registrable Securities are to be included
in the Registration Statement, prior to filing the Registration Statement,
if requested, copies of the Registration Statement as proposed to be filed,
and thereafter furnish to such Holder such number of copies of the
Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in the Registration
Statement (including each preliminary prospectus) and such other documents
as such Holder may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Holder;
(d) use its reasonable efforts to register or qualify such Registrable
Securities under such other securities or state blue sky laws of such
jurisdictions as any Holder or managing underwriter reasonably (in light of
the intended plan of distribution) requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
Holder or managing underwriter to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided,
however, that Williams will not be required to (i) qualify generally to do
business in any jurisdiction
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where it would not otherwise be required to qualify but for this Section
5.01(d), (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
(e) use its reasonable efforts to cause such Registrable Securities to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
Williams to enable the Holder or Holders thereof to consummate the
disposition of such Registrable Securities;
(f) notify each Holder of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement
or amendment to such prospectus so that, as thereafter delivered to the
Holders of such Registrable Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading and promptly making available to each Holder any such
supplement or amendment
(g) enter into customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable
securities;
(h) make available for inspection by Inspectors all Records as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspectors in
connection with the Registration Statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement or (ii) release of
such Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction. Each Holder of such Registrable Securities agrees
that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its affiliates unless and
until such is made generally available to the public. Each Holder of such
Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(i) use its reasonable efforts to obtain a comfort letter or comfort letters
from the Company's independent public accounts in customary form and
covering
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such matters of the type customarily covered by comfort letters;
(j) otherwise use its reasonable efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonable, practicable, an earnings statement covering
a period of twelve months, beginning within three months after the effective
date of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed
and, if not so listed, to be listed on the NASDAQ Nation Market ("NASDAQ")
and, if listed on the NASDAQ system, use its reasonable best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Commission or, failing that, to secure
NASDAQ authorization for such Registrable Securities and, without limiting
the generality of the foregoing, to arrange for at least two market makers
to register as such with respect to such Registrable securities with the
National Association of Securities Dealers, Inc.; and
(1) provide a transfer agent and registrar for all such Registrable
Securities (if the Company does not already have such an agent) not later
than the effective date of such registration statement.
The Company may require each Holder of Registrable Securities to promptly
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as it may from time to time reasonably request and
such other information as may be legally required in connection with such
registration.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of any kind described in Section 5.01(f) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement covering such Registrable securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.01(f) hereof. In the event the Company shall give such
notice, the Company shall extend the period during which the Registration
Statement shall be maintained effective (including the period referred to in
Section 5.01(f) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 5.01(f) hereof to
the date when the Company shall make available to the Holders of Registrable
Securities covered by the registration Statement a prospectus supplemented or
amended to conform with the requirements of Section 5.01(f) hereof.
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5.02. REGISTRATION EXPENSES. Williams will pay or cause to be paid all
Registration Expenses, including all fees and expenses (including all Blue Sky,
New York Stock Exchange and National Association of Securities Dealers, Inc.,
filing and registration fees, accounting fees and disbursements, printing costs,
attorneys' fees and disbursements), arising out of the preparation, filing,
amending and supplementing of a Registration Statement pursuant to Section 2.01
hereof and to the amount of such fees and expenses that are reasonably allocable
to the Selling Stockholder for a Registration Statement used under Section 2.02
based on the number of shares offered by Holders relative to the number of other
shares offered by the Company or on behalf of any of its other holders.
6. RULE 144. With a view to making available the benefits of Rule 144 under the
Securities Act (or similar rule then in effect) available to each Holder, the
Company shall:
(a) make and keep available adequate current public information with respect
to the Company within the meaning of Rule 144(c) under the Securities Act
(or similar rule then in effect);
(b) furnish to each Holder forthwith upon request (i) a written statement by
the Company as to its compliance with the informational requirements of Rule
144(c) (or similar rule then in effect) or (ii) a copy of the most recent
annual or quarterly report of the Company; and
(c) comply with all other necessary filing and other requirements so as to
enable each Holder to sell Registrable Securities under Rule 144 under the
Securities Act (or similar rule then in effect).
7. GRANTING OF REGISTRATION RIGHTS. Without Williams' prior written consent, the
Company shall not in the future grant any rights to any other person to register
any shares of capital stock or other securities of the Company; provided,
however, Williams' consent will no longer be required if and when Williams'
direct or beneficial ownership of the Company's voting securities is less than
50% of the total outstanding voting securities.
8. INDEMNIFICATION AND CONTRIBUTION.
8.01 INDEMNIFICATION OF HOLDERS: The Company agrees to indemnify and hold
harmless each Holder and each Person, if any, who controls (within the meaning
of Section 15 of the 33 Act and Section 20 of the 34 Act) such Holder (a
"Control Person") against any losses, claims, damages or liabilities, joint or
several, to which such Holder or any such Control Person may become subject,
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 any material fact
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contained in any preliminary or final registration Statement or prospectus with
respect thereto, or any amendment 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 the Company will reimburse each Holder and each Control Person
for any legal or other expenses reasonably incurred by such Holder or such
Control Person in connection with investigating or defending any such loss,
claim, damage liability or action; provided, 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 an untrue statement or alleged untrue
statement or omission or alleged omission from any of such documents in reliance
upon and in conformity with written information furnished by or on behalf of
such Holder or any such Control Person specifically for use in the preparation
thereof.
8.02 INDEMNIFICATION BY HOLDER OR REGISTRABLE SECURITIES. Each Holder will,
severally and not jointly, indemnify and hold harmless the Company and each of
its directors, officers and each Person, if any, who controls (within the
meaning of Section 15 of the 33 Act and Section 20 of the 34 Act) the Company (a
"Company Control Person") to the same extent as set forth in the foregoing
indemnity from the Company to each Holder but only with reference to written
information included in any preliminary or final Registration Statement or
prospectus with respect thereto, or amendment or supplement thereto, furnished
by or on behalf of such Holder specifically for use in the preparation of such
documents; and will reimburse the Company or any such Company Control Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any loss, claim, damage, liability or action for
which such Holder is obligated to indemnify the Company or any Company Control
Person.
8.03 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by an
indemnified party under this Article VIII of notice of any claim or the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under Section 8.01 or 8.02
above, notify the indemnifying party of any claim or the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
Section 8.01 or 8.02 above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No
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indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
8.04 CONTRIBUTION. If the indemnification provided for in Section 8.01 or
8.02 is unavailable or insufficient in accordance with its terms in respect of
any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits as well as the relative fault of
the Company on the one hand and the Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable consideration. The relative benefits received by the Company on the
one hand and each Holder on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
on the one hand bears to the total net proceeds received by the Holder from the
offering. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Holder on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
8.05 OBLIGATIONS. The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each director of any Holder and
to each person, if any, who controls any Holder or any underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act. The obligations of each Holder under this Section shall be in addition to
any liability which the respective Holder may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed any registration statement and to each
person, if any, who controls the Company or any underwriter (within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act).
9. MISCELLANEOUS.
9.01 NOTICES. All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery or registered first-class mail:
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(i) If to a Holder of Registrable Securities: at the most current address,
and with a copy to be sent to each additional address given by such Holder.
(ii) if to the Company:
General Counsel Williams Communications Group, Inc., One Williams Center,
Tulsa, OK 74172.
All such notices and communications shall be deemed to have been duly given
when delivered by hand, if personally delivered, or two business days after
being deposited in the mail, postage prepaid, if mailed.
9.02 TRANSFER OR REGISTRATION RIGHTS; SUCCESSORS AND ASSIGNS. Williams may
transfer or assign its rights hereunder, in whole or in part, without the prior
approval of the Company. This Agreement and its benefits shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto.
9.03 AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and the Majority Holders.
9.04 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.
9.05 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
9.06 GOVERNING LAW This Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma without regard to principles
of conflicts of law.
9.07 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 contained herein shall not be in any way impaired
thereby, it being intended that all of the rights
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and privileges of each Holder shall be enforceable to the fullest extent
permitted by law.
9.08 SPECIFIC PERFORMANCE. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any other party under this
Agreement in accordance with the terms and conditions of this Agreement in any
court of the United States or any State thereof having jurisdiction.
9.09 ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement supersede all prior agreements and
understandings between the parties with respect to subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed the day and year first written above.
WILLIAMS COMMUNICATIONS GROUP, INC.
BY: /s/ G. L. BEST
---------------------------------------
NAME: G. L. Best
-------------------------------------
TITLE: Vice President
------------------------------------
THE WILLIAMS COMPANIES, INC.
BY: /s/ JACK D. MCCARTHY
---------------------------------------
NAME: Jack D. McCarthy
-------------------------------------
TITLE: Sr. V. P. Finance and CFO
------------------------------------
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EXHIBIT 10.7
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement") is made and entered into this
30th day of September, 1999, by and between THE WILLIAMS COMPANIES, INC.,
a Delaware corporation ("Williams"), and WILLIAMS COMMUNICATIONS GROUP, INC., a
Delaware corporation ("Communications"),
WHEREAS, Communications plans to sell shares of its Class A Common Stock,
par value $.01 per share ("Class A Common Stock"), to the public in an
underwritten initial public offering ("Initial Public Offering") and to certain
other parties pursuant to private placements;
WHEREAS, Williams will continue to hold all of the issued and outstanding
Class B Common Stock ("Class B Common Stock"), par value $.01 per share, of
Communications after the closing of these sales of the Class A Common Stock, and
WHEREAS, it is appropriate and desirable to set forth certain agreements
that will govern certain matters relating to the Initial Public Offering and the
conduct of business after its closing and the relationship of Williams and
Communications and their respective subsidiaries following the Initial Public
Offering,
NOW, THEREFORE, the parties agree, intending to be legally bound, as
follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. As used in this Agreement, in addition to the terms
defined in the Preamble and Recitals hereof, the following terms shall have the
following meanings, applicable to both the singular and plural forms of the
terms described:
"ACTION" shall mean any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local or
foreign or international Governmental Authority or any arbitration or mediation
tribunal.
"ADMINISTRATIVE SERVICES AGREEMENT" means the Agreement attached hereto as
Exhibit 1.
"AGREEMENT" shall have the meaning ascribed to it in the Preamble.
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"ANCILLARY AGREEMENT" shall mean and include the Administrative Services
Agreement, the Registration Rights Agreements, the Tax Sharing Agreement, the
Cross-License Agreement, the Service Agreement, the Indemnification Agreement,
and the Technical, Management and Administrative Services Agreement.
"BUSINESS DAY" means any calendar day which is not a Saturday, Sunday or
public holiday under the laws of the State of New York.
"CLOSING" means the consummation of the purchase and sale of shares of the
Class A Common Stock pursuant to the Initial Public Offering.
"CLOSING DATE" means the date on which the Closing occurs.
"COMMUNICATIONS ACTIVITIES" shall mean and include all business activities
and lines of business conducted by any member of the Communications Group on the
Closing Date that is not a member of the Williams Group at the Closing Date;
provided however, that until such time, if ever, as Communications shall acquire
the Lightel Investment, the Williams Group's activities with respect to the
Lightel Investment, including the making of any additional investment in
Lightel, shall not be deemed to be included in Communications Activities.
"COMMUNICATIONS GROUP" shall mean Communications and its direct and indirect
subsidiaries.
"CROSS-LICENSE AGREEMENT" means the Agreement attached hereto as Exhibit 4.
"EMPLOYEE BENEFITS AGREEMENT" means the Agreement attached hereto as
Exhibit 9.
"ENERGY ACTIVITIES" shall mean and include all business activities and lines
of business conducted by any member of the Williams Group on the Closing Date
that is not a member of the Communications Group at the Closing Date; provided
however, that after such time, if ever, as Communications shall acquire the
Lightel Investment, the Communications Group's activities with respect to the
Lightel Investment, including the making of any additional investment in
Lightel, shall not be deemed to be included in Energy Activities.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory administrative or governmental authority.
"GROUP" means the Communications Group or the Williams Group, as the context
requires.
"INDEMNIFICATION AGREEMENT" means the Agreement attached hereto as
Exhibit 6.
"INFORMATION" means any Information, whether or not patentable or
copyrightable in
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written, oral or electronic or other tangible or intangible forms, stored in any
medium, including studies, reports, records, books, contracts, instruments,
surveys, discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, blueprints, diagrams, models, prototype samples,
computer date, disks, diskettes, tapes, computer programs or other software,
marketing plans, customer names, Communications by or to attorneys, memos and
other materials prepared by attorneys and any other technical, financial
employee or business information or data.
"LIGHTEL" means Lightel S.A. -- Technologic da Informacao.
"LIGHTEL INVESTMENT" means the equity and debt investments of Williams in
Lightel from time to time.
"OPERATION, MAINTENANCE AND REPAIR AGREEMENT" means the Agreement attached
hereto as Exhibit 7.
"REGISTRATION RIGHTS AGREEMENT" means the Agreement attached hereto as
Exhibit 2.
"SEPARATION COMMITTEE" has the meaning specified in Section 3.01.
"SERVICE AGREEMENT" means the Agreement attached hereto as Exhibit 5.
"TAX SHARING AGREEMENT" means the Agreement attached hereto as Exhibit 3.
"WILLIAMS GROUP" shall mean Williams and its direct and indirect
subsidiaries except the Communications Group.
ARTICLE II
CERTAIN BUSINESS MATTERS
2.01 NON-COMPETITION. (a) Except as permitted under this Section 2.01, no
member of the Communications Group shall, for a period of five years from the
Closing Date, engage in Energy Activities or any activities or lines of business
similar to Energy Activities.
(b) Except as permitted under this Section 2.01, no member of the Williams
Group shall, for a period of five years from the Closing Date, engage in
Communications Activities.
(c) No member of the Communications Group or the Williams Group shall have
any duty to refrain from doing business with any potential or actual supplier or
customer with any member of the other Group or engage in or refrain from any
activities whatsoever relating to any of the potential or actual customers or
suppliers of the other Group except as provided herein.
(d) Notwithstanding the other provisions of this Section 2.01 to the
contrary, the Williams
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Group, on the one hand, and the Communications Group, on the other hand, shall
be permitted to pursue business opportunities that are reserved to the other
Group if the Group permitted to pursue such opportunities shall determine not to
pursue them. In this regard, each party agrees that if one of the parties (the
"proposing party") notifies in writing the other party (the "receiving party")
that the proposing party desires to pursue an opportunity that the proposing
party is prohibited from pursuing under this Section 2.01, the receiving party
shall notify the proposing party (i) within ten (10) Business Days following its
receipt of the proposing party's notice whether the receiving party intends in
good faith to pursue the same opportunity and (ii) promptly following any
subsequent determination by the receiving party not to pursue such opportunity
of such determination. The proposing party shall be permitted to pursue an
opportunity as to which it has given a notice pursuant to this Section 2.01(d)
in the event that (i) the receiving party fails to notify the proposing party
within the required period of the receiving party's good faith intention to
pursue such opportunity or (ii) the receiving party notifies the proposing party
of the receiving party's determination not to pursue such opportunity.
(e) Notwithstanding the other provisions of this Section 2.01 to the
contrary, the Williams Group, on the one hand, and the Communications Group, on
the other hand, shall be permitted to make acquisitions of and investments in
any entity engaged in activities that are reserved to the other Group provided
that those activities that are reserved to the other Group represented in such
entity's most recently completed fiscal year not more than 30% of the
consolidated revenues or net income of the entity being acquired or in which the
investment is being made. In the event that the Williams Group or the
Communications Group makes such an acquisition and in connection therewith
acquires all of the equity of the activities reserved to the other Group, it
will provide to the other Group a right of first offer to acquire such
activities should such activities be disposed of prior to five years following
the Closing Date.
2.02 EXCHANGE OF INFORMATION. (a) Each of Williams and Communications on
behalf of its respective Group agrees to provide or cause to provide to the
other Group at any time after the Closing as soon as reasonably practicable
after written notice therefor any Information in the possession or in control of
such respective Group which the requesting party reasonably needs: (i) to comply
with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative tax or other proceedings
or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or
other similar requirements, or (iii) to comply with its obligations under this
Agreement or any similar Agreements; provided, however, that in the event that
any party determines that any such a provision of Information could be
commercially detrimental, violate any law or Agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(b) After the Closing Date, Communications shall have access during regular
business hours (as in effect from time to time) to the documents and objects of
historical significance that relate to the Communications Business that are
located in the Williams records. Communications may obtain copies (but not
originals) of documents for bona fide business purposes. Communications
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shall pay reasonable per hour costs for archives research services. Nothing
herein should be deemed to restrict the access of any member of the Williams
Group to any such documents or objects or to impose any liability on any member
of the Williams Group if any such documents or objects are not maintained or
preserved by Williams.
(c) After the date hereof, (i) Communications shall maintain and effect at
its own cost and expense adequate systems and controls to the extent necessary
to enable members of the Williams Group to satisfy their respective reporting,
accounting, audit and other obligations, and (ii) Communications shall provide
or cause to be provided to Williams such form as Williams shall request at no
charge to Williams all financial and other data and information that Williams
determines necessary in order to prepare Williams' financial statements and
reports or filings with any Governmental Authority.
2.03 OWNERSHIP OF INFORMATION. Any Information owned by one Group that is
provided to a requesting party pursuant to this Agreement shall be deemed to
remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement should be construed as granting or
conferring rights or licenses or otherwise in any such Information.
2.04 COMPENSATION FOR PROVIDING INFORMATION. The party requesting such
Information agrees to reimburse the other party for the reasonable cost, if any,
of creating, gathering or copying such Information, to the extent that such
costs are incurred for the benefit of the requesting party. Except as may be
otherwise specifically provided elsewhere in this Agreement or any other
Agreement between the parties, such cost shall be computed in accordance with
the providing party's standard methodology and procedures.
2.05 RECORD RETENTION. To facilitate the possible exchange of Information
pursuant to this Agreement after the Closing Date, the parties agree to use
their reasonable best efforts to retain all Information in their respective
possession or control in accordance with the records retention policies of
Williams as in effect of the Closing Date as such may from time to time be
changed. No party will destroy or permit any of its subsidiaries to destroy any
Information which the other party may have the right to obtain pursuant to this
Agreement prior to the third anniversary of the Closing Date without first using
its reasonable best efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take possession of
such Information prior to such destruction; provided, however, that in the case
of any Information relating to Taxes or to environmental liabilities, such
period shall be extended to expiration of the applicable statute of limitations
(giving effect to any extensions thereof).
2.06 LIMITATION OF LIABILITY. No party shall have any liability to any other
party in the event that any Information exchanged or provided pursuant to this
Agreement which is an estimate or forecast, or which is based on an estimate or
forecast, is found to be inaccurate in the absence of willful misconduct by the
party providing such Information. No party shall have any liability to any other
party if any Information is destroyed after the reasonable best efforts by such
party to comply with the provisions of this Agreement.
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2.07 OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The rights and
obligations granted under this Agreement are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information as set forth in any other agreement
between the parties.
2.08 PRODUCTION OF WITNESSES, RECORDS AND COOPERATION. After the Closing
Date, taking the case of an adversarial action by one party against another
party, which shall be governed by such discovery rules as may be applicable
under Section III or otherwise, each party hereto shall use its reasonable best
efforts to make available to each other party upon written request the former,
current and future directors, officers, employees, other personnel and agents
and the members of its respective Group as witnesses, and any books, records or
other documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (given consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may be reasonably required in connection with
any Action in which the requesting party may from time to time be involved
regardless of whether such Action is a matter with respect to its
indemnification may be sought. The requesting party shall bear all costs and
expenses (including allocated costs of in-house counsel and other personnel) in
connection therewith.
2.09 CONFIDENTIALITY. Each of the parties hereto on behalf of itself and
each member of its respective Group agrees to hold and to cause its respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives to hold in strict confidence with at least the same degree
of care that applies to Williams confidential and proprietary information
pursuant to policies in effect and practices in place on the Closing Date, all
information concerning each other Group that is either in its possession
(including Information in its possession prior to the Closing Date) or furnished
by any such group or its respective directors, officers, employees, agents,
accountants, counsel or other advisors and representatives at any time pursuant
to this Agreement and shall not use any of such Information other than for
purposes expressly permitted hereunder.
2.10 PROTECTIVE ARRANGEMENTS. In the event that any party and any member of
its Group either determines on the advice of its counsel that it is required to
disclose any Information pursuant to applicable law or receives any demand under
lawful process or from any Governmental Authority to disclose or provide
Information of any other party (or any other member of any other party's Group)
that is subject to the confidentiality provisions hereof, such party shall
notify the other party prior to disclosing or providing such Information and
shall cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that receives such request may thereafter disclose or provide
Information to the extent required by such law (as so advised by counsel) by
lawful process of such Governmental Authority.
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ARTICLE III
SEPARATION COMMITTEE AND ARBITRATION
3.01 SEPARATION COMMITTEE. Immediately after the Closing, Williams and
Communications shall form a committee (the "Separation Committee") comprised of
one representative designated from time to time by the general counsel of
Communications and one representative designated from time to time by the
general counsel of Williams. The Separation Committee shall be responsible for
resolving any and all disputes between any member of the Williams Group and any
member of the Communications Group arising with respect to any matter, whether
based on contract, tort, statute or otherwise (collectively, "Disputes"),
including any Dispute as to (i) whether any Action or other Liability is a
Williams Liability or a Communications Liability, (ii) whether any asset belongs
to a member of the Williams Group or the Communications Group, (iii) the
interpretation of any provision of this Agreement or any Ancillary Agreement,
and (iv) such matters as are contemplated by this Agreement or any Ancillary
Agreement to be resolved by the Separation Committee. In the event of any such
Dispute, each member of the Williams Group and the Communications Group shall
have the right to refer in writing such Dispute to the Separation Committee for
resolution. The Separation Committee shall be required to render a written
decision with respect to any Dispute within thirty (30) days of its receipt of
referral. The decision of the Separation Committee with respect to any Dispute
shall be binding on the Williams Group and the Communications Group and their
respective successors and assigns. In the event that the Separation Committee is
unable to reach a unanimous determination as to any Dispute to which it is
referred within thirty (30) days of such referral, each member of the Williams
Group and Communications Group involved in such Dispute shall have the right to
submit such Dispute to arbitration in accordance with the procedures set forth
below. All out-of-pocket expense and costs incurred by any member of the
Williams Group or any member of the Communications Group in connection with the
procedures set forth in this section shall be borne by the party incurring such
expenses and costs.
3.02 AGREEMENT TO ARBITRATE. Except as otherwise specifically provided in
any Ancillary Agreement, the procedures for discussion, negotiation and
arbitration set forth in this Article III shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of or relate to, or arise under or in connection with this
Agreement or any Ancillary Agreement, or the transactions contemplated hereby or
thereby (including all actions taken in furtherance of the transactions
contemplated hereby or thereby on or prior to the date hereof), or the
commercial or economic relationship of the parties relating hereto or thereto,
between or among any member of the Williams Group or the Communications Group.
Each party agrees on behalf of itself and each member of its respective Group
that the procedures set forth in this Article III shall be the sole and
exclusive remedy in connection with any dispute, controversy or claim relating
to any of the foregoing matters and irrevocably waives any right to commence any
Action in or before any Governmental Authority. Each party on behalf of itself
and each member of its respective Group irrevocably waives any right to any
trial by jury with respect to any claim, controversy or dispute set forth in the
first sentence of this Section 3.01.
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ARTICLE IV
FURTHER ASSURANCE AND ADDITIONAL COVENANTS
4.01 FURTHER ASSURANCES. (a) In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto shall use
its reasonable best efforts, prior to, on and after the Closing Date, to take,
or cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations and
agreements to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the Closing Date,
each party hereto shall cooperate with the other parties, and without any
further consideration, but at the expense of the requesting party, to execute
and deliver, or use its reasonable best efforts to cause to be executed and
delivered, all instruments, including instruments of conveyance, assignment and
transfer, and to make all filings with, and to obtain all consents, approvals or
authorizations of any Governmental Authority or any other Person under any
permit, license, agreement, indenture or other instrument (including any
consents or governmental approvals), and to take all such other actions as such
party may reasonably be requested to take by any other party hereto from time to
time, consistent with the terms of this Agreement and the Ancillary Agreements,
in order to effectuate the provisions and purposes of this Agreement and the
Ancillary Agreements and the transfers of assets and the assignment and
assumption of liabilities and the other transactions contemplated hereby and
thereby. Without limiting the foregoing, each party will, at the reasonable
request, cost and expense of any other party, take such other actions as may be
reasonably necessary to vest in such other party good and marketable title, free
and clear of any security interest, if and to the extent it is practicable to do
so.
(c) Prior to the Closing Date, if one or more of the parties identifies any
commercial or other service that is needed to assure a smooth and orderly
transition of the businesses in connection with the consummation of the
transactions contemplated hereby, and that is not otherwise governed by the
provisions of this Agreement or any Ancillary Agreement, the parties will
cooperate in determining whether there is a mutually acceptable arm's-length
basis on which one or more of the other parties will provide such service.
(d) Communications hereby assumes that portion of Williams' obligations
related to Communications and its subsidiaries under both: (i) that certain
agreement between Williams WPC - I, Inc. ("WPC") and The Williams Companies,
Inc., dated September 21, 1998, whereby Williams compensates WPC for
performances of services by WPC on behalf of Communications and its
subsidiaries; and (ii) that certain agreement among Williams Risk Management
L.L.C. ("WRM") and The Williams Companies, Inc., and Williams WPC - I, Inc.,
dated September 21, 1998, whereby Williams compensates WRM for performance of
Williams' risk management obligations on behalf of Communications and its
subsidiaries.
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ARTICLE V
INSURANCE MAINTAINED BY WILLIAMS
5.01. (a) Williams shall continue to offer and to provide to the members of
the Communications Group the insurance coverage described in Exhibit 8 hereto,
and any other insurance coverage that members of the Communications Group may
from time to time reasonably request, to the extent such insurance is
commercially suitable. Williams shall offer and provide such insurance coverage
on premium and coverage terms that are consistent with past practices or
practices applied to Williams and its subsidiaries. It is understood that some
of the insurance coverages listed in Exhibit 8 may include the interests of
Williams and its subsidiaries as insureds, which interests shall be governed by
and terminated in accordance with past practices. Williams' obligation pursuant
to this Section 5.01 shall terminate ninety (90) days after the date which
members of the Williams Group shall cease to own capital stock representing in
the aggregate more than 50% of the voting power of the outstanding voting stock
of Communications; provided that no such termination shall have the effect of
shortening or terminating the period of coverage of any such insurance policy
then currently in effect; and provided further, that Williams shall cooperate
with the members of the Communications Group after such date to find mutually
acceptable arrangements whereby the insurance coverage referred to in this
Section shall continue to be made available to the members of the Communications
Group if they so choose.
(b) Communications shall be responsible for any and all claims, liabilities
and losses against it (and related expenses), including the deductibles (and
self-insurance retention) applicable to the insurance coverage referred to in
Section 5.01(a). Unless otherwise mutually agreed to in writing, Williams shall
have the sole and absolute authority to administer any and all claims filed
under any policy referred to in this Article V and any other insurance coverage
or self-insurance relating to periods prior to the effective date of this
agreement, against any member of the Communications Group, including, without
limitation, decisions regarding the settlement of any and all claims.
ARTICLE VI
EMPLOYEE BENEFITS
6.01 EMPLOYEE BENEFIT PLAN. The relationship of the parties with respect to
certain matters relating to employees and employee benefits will be governed by
the Employee Benefits Agreement attached hereto as Exhibit 9.
ARTICLE VII
EFFECTIVENESS
7.01 EFFECTIVENESS. This Agreement shall become effective at the Closing.
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ARTICLE VIII
SUCCESSORS AND ASSIGNS
8.01 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by either party hereto to
any other person without the prior written consent of the other party hereto.
ARTICLE IX
NO THIRD-PARTY BENEFICIARIES
9.01 NO THIRD-PARTY BENEFICIARIES. Except for the persons entitled to
indemnification pursuant to Article II or Article III hereof, each of whom is an
intended third-party beneficiary hereunder, nothing expressed or implied in this
Agreement shall be construed to give any person or entity other than the parties
hereto any legal or equitable rights hereunder.
ARTICLE X
ENTIRE AGREEMENT
10.01 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof.
ARTICLE XI
AMENDMENT
11.01 AMENDMENT. This Agreement may not be amended except by an instrument
signed by the parties hereto.
ARTICLE XII
WAIVERS
12.01 WAIVERS. No waiver of any term shall be construed as a subsequent
waiver of the same term, or a waiver of any other term, of this Agreement. The
failure of any party to assert any of its rights hereunder will not constitute a
waiver of any such rights.
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ARTICLE XIII
SEVERABILITY
13.01 SEVERABILITY. If any provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, such
provision shall be deemed severable and all other provisions of this Agreement
shall nevertheless remain in full force and effect.
ARTICLE XIV
HEADINGS
14.01 HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
ARTICLE XV
NOTICES
15.01 NOTICES. All notices given in connection with this Agreement shall be
in writing. Service of such notices shall be deemed complete: (i) if hand
delivered, on the date of delivery; (ii) if by mail, on the fourth Business Day
following the day of deposit in the United States mail, by certified or
registered mail, first-class postage prepaid; (iii) if sent by Federal Express
or equivalent courier service, on the next Business Day; or (iv) if by
telecopier, upon receipt by sender of confirmation of successful transmission.
Such notices shall be addressed to the parties at the following address or at
such other address for a party as shall be specified by like notice (except that
notices of change of address shall be effective upon receipt):
IF TO WILLIAMS:
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
ATTENTION: WILLIAM G. VON GLAHN
FAX NO. 918/573-5942
IF TO COMMUNICATIONS:
WILLIAMS COMMUNICATIONS GROUP, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
ATTENTION: GENERAL COUNSEL
FAX NO.: 918/573-3005
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ARTICLE XVI
GOVERNING LAW
16.01 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with, the laws of the State of Oklahoma, without giving effect to the
principles of conflict of laws of such state or any other jurisdiction.
ARTICLE XVII
COUNTERPARTS
17.01 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute but one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Separation Agreement
to be executed the day and year first written above.
WILLIAMS COMMUNICATIONS GROUP, INC.
BY: /s/ G.L. BEST
----------------------------
NAME: G.L. Best
---------------------------
TITLE: Vice President
--------------------------
THE WILLIAMS COMPANIES, INC.
BY: /s/ JACK D. MCCARTHY
------------------------------
NAME: Jack D. McCarthy
---------------------------
TITLE: Sr. V.P - Finance & CFO
--------------------------
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EXHIBIT 9
EMPLOYEE BENEFITS AGREEMENT
THIS EMPLOYEE BENEFITS AGREEMENT (this "Agreement") is made and entered into
as of September 30, 1999, by and between The Williams Companies, Inc., a
Delaware corporation ("Williams"), and Williams Communications Group, Inc., a
Delaware corporation ("Communications").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Communications has determined that it is
appropriate and desirable for Communications to issue shares of its Class A
Common Stock, par value $0.01 per share, to the public in an initial public
offering (the "Initial Public Offering"); and
WHEREAS, each of Williams and Communications has determined that it is
desirable to set forth herein certain agreements that will govern the
relationship of the parties hereto following the Initial Public Offering with
respect to employees and employee benefits, the terms of which have not resulted
from arms length negotiations between the parties, and accordingly, such terms
may be in some respects less favorable to Communications than those that it
could obtain from unaffiliated third parties.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
SECTION I
DEFINITIONS
SECTION 1.01 DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the following meanings, and the definition of such terms are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neutral genders of such terms:
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
"Benefit Plans" shall have the meaning specified in Section 2.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
United States Treasury regulations promulgated thereunder, including any
successor legislation.
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"Communications" shall mean Williams Communications Group, Inc.
"Communications Affiliated Group" shall mean, collectively, Communications
and all its direct and indirect Subsidiaries now or hereafter existing.
"Communications Benefit Plans" shall have the meaning specified in Section
2.01.
"Communications Business" shall mean the business of any (i) division,
Subsidiary or enterprise of the Communications Affiliated Group managed or
operated as of the date of this Agreement or any prior or future time by any
member of the Communications Affiliated Group, and (ii) entities acquired or
established by or for the Communications Affiliated Group after the date of this
Agreement.
"Communications Employees" shall mean those employees, former employees,
retirees, agents, and subcontractors of the Communications Affiliated Group.
"Communications Expenses" shall mean (i) all costs accrued or incurred by
Communications in respect of the Communications Benefit Plans and the
Communications Employees, including, but not limited to, all costs related to
the participation of a Communications Employee in the Williams Benefit Plans,
(ii) any expenses relating to fixed assets (including any costs for furniture
and personal computers), (iii) any miscellaneous expenses (including insurance,
travel and entertainment, advertising and licenses) accrued or incurred by
Communications and related to the businesses of the parties hereto, and (iv) any
other corporate costs incurred by Communications.
"Communications Liabilities" shall mean, collectively, (i) all the
Liabilities of the Communications Affiliated Group under this Agreement,
including its allocated portion of Williams Expenses, (ii) all the Liabilities
of the parties hereto or their respective Subsidiaries (whenever arising whether
prior to, at or following the closing of the Effective Date) arising out of or
in connection with or otherwise relating to the management or conduct, before or
after the closing on the Effective Date, of the Communications Business, and
(iii) all other Liabilities based upon, arising out of or in connection with or
otherwise relating to any businesses conducted at any time by the Communications
Affiliated Group.
"Effective Date" shall mean the date on which the Initial Public Offering is
consummated.
"Employee Services" shall have the meaning specified in Section 2.01.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Event" shall have the meaning specified in Section 2.04(e).
"Initial Public Offering" shall have the meaning specified in the preamble
to this Agreement.
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"Internal Revenue Service" shall mean the United States Internal Revenue
Service.
"Liabilities" shall mean any and all debts, liabilities and obligations
(relating to performance or otherwise), absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, including those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any court, any governmental or other regulatory or administrative
agency or commission or any award of any arbitration tribunal, and those arising
under any contract, guarantee, commitment or undertaking.
"Ownership Reduction Date" shall mean the date on which Williams and
Communications cease to be in the same "controlled group of corporations" as
defined in Section 1563(a) of the Code.
"Person" shall mean any individual, corporation, partnership, joint venture,
limited liability company, association or other business entity and any trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Records" shall have the meaning specified in Section 3.01(a).
"Shared Services Employee" means a Williams Employee who provides services
to both the Williams Affiliated Group and the Communications Affiliated Group.
"Subsidiary" shall mean any corporation, partnership, joint venture or other
Person of which another Person (i) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the board of directors of such
corporation, partnership, joint venture or other Person (or Persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership, joint venture
or other Person shall or might have such voting power upon the occurrence of any
contingency), or (ii) is a general partner or an entity performing similar
functions (e.g., a trustee or manager).
"Williams" shall mean The Williams Companies, Inc.
"Williams Affiliated Group" shall mean, collectively, Williams and all its
direct and indirect Subsidiaries now or hereafter existing, other than the
Communications Affiliated Group.
"Williams Benefit Plans" shall have the meaning specified in Section 2.01.
"Williams Business" shall mean the businesses of (i) any division,
Subsidiary or enterprise of the Williams Affiliated Group managed or operated as
of the date of this Agreement or any prior or future time by any member of the
Williams Affiliated Group, and (ii) entities acquired or established by or for
the Williams Affiliated Group after the date of this
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Agreement, provided that the term "Williams Business" shall not include the
Communications Business.
"Williams Controlled Group" shall mean, collectively, Williams and all
Persons of which at least eighty percent (80%) of (i) the total combined voting
power, or (ii) the total value of the outstanding capital stock or other equity
interests thereof is beneficially owned by Williams.
"Williams Employees" shall mean those employees, former employees, retirees,
agents, and subcontractors of the Williams Affiliated Group.
"Williams Employee Services" shall have the meaning specified in Section
2.01.
"Williams Expenses" shall mean (i) all costs accrued or incurred by Williams
in respect of the Williams Employee Services, Williams Benefits Plans and
Williams Employees, (ii) any expenses relating to fixed assets (including any
costs for furniture and personal computers), (iii) any miscellaneous expenses
(including insurance, travel and entertainment, advertising and licenses)
accrued or incurred by Williams and related to the businesses of the parties
hereto, and (iv) any other corporate costs (other than any costs relating to the
federal regular income tax liability of Williams' consolidated group) incurred
by Williams.
"Williams Liabilities" shall mean, collectively, (i) all the Liabilities of
the Williams Affiliated Group under this Agreement, and (ii) all the Liabilities
of the parties hereto or their respective Subsidiaries (whenever arising whether
prior to, at or following the closing on the Effective Date) arising out of or
in connection with or otherwise relating to the management or conduct before or
after the closing on the Effective Date of the Williams Business, provided that
the term "Williams Liabilities" shall not include the Communications
Liabilities.
SECTION 1.02 Other Definitional Provisions. The words "hereof", "hereto",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement; references to any Article, Section, Exhibit or Schedule are
references to Articles, Sections, Exhibits or Schedules in or to this Agreement
unless otherwise specified; and the term "including" shall mean "including
without limitation."
SECTION II
SERVICES AND OPERATIONS
SECTION 2.01 Services. (a) Beginning on the Effective Date and continuing
until the termination of this Agreement pursuant to Article V, Williams shall
make available, and shall cause the Williams Affiliated Group to make available,
to the Communications Affiliated Group the employee related and the employee
benefit related services set forth on Schedule 2.01(a)(i) (the "Williams
Employee
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Services" and each, a "Williams Employee Service"), and Communications shall,
and shall cause its Subsidiaries to, utilize such Williams Employee Services in
the conduct of their respective businesses.
(b) Williams has agreed that certain Communications Employees shall be
eligible to continue to participate in the benefit plans and programs described
on Schedule 2.01(b)(i) to the extent that such Communications Employees obtained
rights under such benefit plans prior to the Effective Date or may obtain rights
under the terms of such benefits plans on or after the Effective Date
(collectively, "Williams Benefit Plans"). In addition, certain Communications
Employees shall be eligible to continue to participate in the benefit plans and
programs described on Schedule 2.01(b)(ii) to the extent that such employees
obtained rights under the terms of such benefit plans prior to the Effective
Date or may obtain rights under the terms of such benefit plans on or after the
Effective Date (collectively, the "Communications Benefit Plans" and, together
with the Williams Benefit Plans, the "Benefit Plans"). Williams has agreed that
it shall continue to provide the Williams Employee Services described on
Schedule 2.01(a)(i) with respect to those Communications Employees participating
in Williams Benefit Plans and with respect to the Communications Benefit Plans
until the Ownership Reduction Date. The Williams Employee Services may be
provided by (i) any employee of Williams or its Subsidiaries (other than
Communications and its Subsidiaries), or (ii) any third party designated by
Williams, in its sole discretion; provided, however, that notwithstanding any
such designation by Williams, Williams shall remain responsible in all respects
for the provision of the particular service or services to be provided by such
designated third party.
SECTION 2.02 Expansion, Reduction or Termination of Employee Services.
Except as otherwise provided in Section 6.01 or as otherwise agreed in writing
by the parties hereto, each of the Williams Employee Services provided by
Williams may be expanded, reduced or terminated upon the mutual agreement of the
parties hereto.
SECTION 2.03 Payment of Expenses. (a) Williams shall allocate the portion of
the Williams Expenses incurred on behalf of the Communications Affiliated Group
pursuant to actual expenses incurred to the extent reasonably determinable, and
in all other cases pursuant to allocation methodologies determined on an annual
basis by Williams, in its sole discretion, after consultation with
Communications, which evidence each such party's respective fair and reasonable
share of the Williams Expenses. Communications shall not be required to make a
payment for Williams Expenses if such expenses have been paid to Williams under
the Administrative Services Agreement.
(b) Communications shall pay all the Communications Expenses incurred by
Communications.
(c) Williams shall submit to Communications within thirty (30) working days
following the end of each month an invoice for all charges associated with
Williams Employee Services provided by Williams during the preceding month, any
adjustments for prior months and any other amounts payable in respect of the
preceding month. All invoices shall describe in
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reasonable detail a description of the Williams Employee Services provided and
the charges associated therewith, any prior month adjustments and any other
amounts that are payable.
Except as provided in Section 2.03(d), Communications shall remit payment on a
monthly basis to Williams on behalf of the Communications Affiliated Group for
its portion of all charges invoiced on or before the last working day of the
month in which the invoice is received in respect of Williams Expenses.
(d) In the event of a dispute as to an invoiced amount, Communications shall
promptly pay all undisputed amounts on each invoice, but shall be entitled to
withhold payment of any amount in dispute, and shall promptly notify Williams of
the disputed amount and the reasons each such charge is so disputed. The parties
agree to provide each other with sufficient records and information that will
enable the parties to resolve any such dispute and, without limiting the rights
and remedies of the parties hereunder, to negotiate in good faith a resolution
thereto.
(e) It is understood and agreed that the Williams Employee Services provided
hereunder will be substantially identical in nature and quality (but not
necessarily in amount) to the Williams Employee Services performed by Williams
during the year prior to the date of this Agreement, except as may be required
by virtue of Communications becoming a public company after the Initial Public
Offering.
(f) Performance of any Williams Employee Services will not be required for
the benefit of any entity other than the parties and their respective
Subsidiaries. Communications represents and agrees that it will use the Williams
Employee Services only in accordance with all applicable federal, state and
local laws, regulations and tariffs and in accordance with the reasonable
conditions, rules, regulations and specifications that are or may be set forth
in any manuals, materials, documents or instructions of the party providing the
Williams Employee Services.
(g) Any input or information required by either party in the performance of
the Williams Employee Services pursuant to the provisions of this Agreement
shall be provided by the other party or its Subsidiaries, as the case may be, in
a manner consistent with the practices employed by the parties during the year
prior to the date of this Agreement. If the failure to provide such input or
information renders the performance of the Williams Employee Services impossible
or unreasonably difficult, Williams may, upon reasonable notice, refuse to
provide such Williams Employee Services.
(h) With respect to Communications Employees, Shared Services Employees, or
employees of Williams or any of its Subsidiaries who worked (either
simultaneously or at different times) both in any business conducted by Williams
and its Subsidiaries, and in any business conducted by Communications and its
Subsidiaries prior to the Ownership Reduction Date, Communications shall
reimburse Williams, on demand or as otherwise directed, for all costs (or in the
case of a Shared Employee its proportionate share of all costs) as accrued or
incurred by Williams or members of the Williams Affiliated Group with respect to
such employees pursuant to the Benefit Plans or otherwise.
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(i) The parties recognize that many of the Employee Services provided to
Communications by Williams Employees will be performed by Shared Services
Employees. At or prior to the Ownership Reduction Date, Communications shall pay
Williams an amount equal to its proportionate share of all projected liabilities
with respect to Shared Services Employees as determined from service records,
estimates, calculations and reasonable assumptions developed by Williams'
Actuary. For example, if the Actuary determines that the projected working
career of a Shared Services Employee is twenty-five (25) years and the Shared
Services Employee had performed fifty percent (50%) of his or her services for
Communications for a period of 12-1/2 years at the Ownership Reduction Date,
Communications will pay Williams twenty-five percent (25%) of the present value
of retiree medical, retiree life and other Liabilities associated with such
employee. Similarly, if the Shared Services Employee is projected to lose his or
her position with Williams due to the cessation of Williams Employee Services to
Communications, Communications shall reimburse Williams for its proportionate
share of severance and all other employee termination liabilities with respect
to such employee.
(j) Any expense incurred by either the Williams Affiliated Group or the
Communications Affiliated Group in connection with changing Benefit Plans,
creating new Benefit Plans, transferring employees, or complying with the terms
of this Agreement which are in any way related to an Ownership Reduction Date
shall be paid by Communications.
SECTION 2.04 Employees. (a) Plans and Services. Prior to the Effective Date,
eligible Communications Employees participated in certain Williams Benefit
Plans. On and after the Effective Date, eligible Communications Employees shall
continue to be eligible to participate in certain Williams Benefit Plans,
subject to the terms of the governing plan documents as interpreted by the
appropriate plan fiduciaries. On and after the Effective Date and until the
termination of this Agreement pursuant to Article V, subject to regulatory
requirements, Williams shall continue to provide Williams Employee Services with
respect to Communications Employees participating in Williams Benefit Plans in
substantially the same manner as it administered such plans prior to the
Effective Date and subject to Williams' right to terminate, amend and modify
such Benefit Plans pursuant to Sections 2.04(c).
(b) Direct Cost Reimbursement. Notwithstanding the provisions of Section
2.03, if Williams provides Communications with at least five (5) days' advance
written notice, Communications agrees to make funds available, as and when
required to be paid by Williams, to Williams so that Williams may make
contributions or payments to, for the account of, or in respect of current or
former employees or their spouses or other beneficiaries (i) under tax-qualified
or other benefit plans, or (ii) that are generally made on a predetermined
periodic basis.
(c) Changes; Additional Employee Services and Plan Terms. Nothing contained
in this Agreement shall be construed to limit the ability of Williams or
Communications to amend or modify any of the Williams Benefit Plans or
Communications Benefit Plans, respectively, consistent with the terms of such
plans, as determined in Williams' or Communications' sole discretion, as the
case may be, provided that Williams or Communications, as applicable, shall
provide at least forty-five (45) days' prior written notice to the other of any
proposed significant amendment to or modification of any Benefit Plan.
Communications may request additional
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services that, if agreeable to Williams, shall be provided on a direct cost
basis to Communications.
(d) Regulatory Matters. Williams and Communications agree to cooperate fully
with each other in the administration and coordination of regulatory and
administrative requirements associated with the Benefit Plans that apply either
to the other party or jointly to each party hereto. Such coordination, upon
request, shall include: sharing payroll data for determination of highly
compensated employees, providing census information (including accrued benefits)
for purposes of running discrimination tests, providing actuarial reports for
purposes of determining the funded status of any plan and providing for review
of all summary plan descriptions, requests for determination letters, Forms
5500, financial statement disclosures and plan documents.
(e) Certain Notices. In the event there is an ERISA Event with respect to
Benefit Plans receiving Williams Employee Services, Williams shall advise
Communications as soon as reasonably practicable after Williams determines the
ERISA Event has occurred. For purposes of this Section 2.04(e), an "ERISA Event"
shall mean (i) the termination of a Benefit Plan or the filing of a Notice of
Intent to Terminate such a plan, in either case, under Section 4041(c) of ERISA;
(ii) the institution of proceedings by the Pension Benefit Guaranty Corporation
(or any successor thereof) to terminate a Benefit Plan or to appoint a trustee
to administer such a plan or the receipt of notice by Williams that such an
action has been taken with respect to such a plan; (iii) any substantial
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA is incurred with respect to any Benefit Plan sponsored by
Williams and no waiver of that deficiency has been obtained from the Internal
Revenue Service; (iv) the Internal Revenue Service determines that a Benefit
Plan that is intended to be qualified under Section 401 of the Code fails to
meet the applicable requirements of the Code and disqualifies the plan; or (v)
an amendment to a Benefit Plan sponsored by Williams that results in a
significant underfunding described in Section 401(a)(29) of the Code or Section
307 of ERISA.
(f) Conflicts. In the event of a conflict between the terms of this Section
2.04 and the terms of Section 2.01 hereof relating to providing Services in
connection with Benefit Plans, the terms of this Section 2.04 shall prevail.
SECTION 2.05 Limitation of Liability. No member of the Williams Affiliated
Group, their respective controlling Persons, if any, and their respective
directors, officers, employees, agents or permitted assigns (each, a "Williams
Party"), shall be liable to any member of the Communications Affiliated Group,
their respective controlling Persons, if any, and their respective directors,
officers, employees, agents or permitted assigns (each, a "Communications
Party"), for any Liabilities, claims, damages, losses or expenses, which
constitute special, indirect, incidental or consequential damages, of a
Communications Party arising in connection with this Agreement, the Employee
Services or the Benefit Plans. The Williams Affiliated Group shall be entitled
to be indemnified by Communications, and shall be entitled to the benefit of the
provisions of the Indemnification Agreement which is attached as an exhibit to
the Separation Agreement, with respect to any and all claims, losses, damages,
Liabilities and expenses (including court costs and reasonable attorney fees)
incurred by Williams arising out of the Communications Liabilities, the
Communications Expenses, or the obligations of
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Communications under this Agreement.
SECTION 2.06 WILLIAMS PENSION PLAN.
(a) Following the Effective Date, Communications Employees, who are
eligible, shall continue to participate in the Williams Pension Plan on the same
terms and conditions as immediately prior to the Effective Date. At the
Ownership Reduction Date, Communications Employees shall cease to participate in
the Williams Pension Plan. Unless Williams elects to utilize the plan to plan
transfer option described below prior to the Ownership Reduction Date, the
Williams Pension Plan shall pay Communications Employees their vested accrued
benefits earned under the Williams Pension at the time and in the manner
provided in the Williams Pension Plan. If Williams elects such transfer option,
as soon as practicable after, and in any event within ninety (90) days after,
and effective as of, the Ownership Reduction Date, Communications shall
establish a defined benefit pension plan (with terms and conditions
substantially comparable in all material respects to the Williams Pension Plan)
and a related trust intended to qualify under Section 401(a) and Section 501(a)
of the Code (the "Communications Retirement Plan") under which all
Communications Employees who participated in the Williams Pension Plan
("Communications Retirement Plan Participants") shall participate. To implement
its election of the transfer option, Williams shall, within one hundred eighty
(180) days following the Ownership Reduction Date, but in no event prior to
receipt by Williams of written evidence of the establishment of the
Communications Retirement Plan and the related trust ("Communications Trust") by
Communications and either (A) the receipt by Williams of a copy of a favorable
determination letter issued by the Internal Revenue Service with respect to the
Communications Retirement Plan or (B) an opinion, in a form theretofore agreed
upon, of Communications' counsel to the effect that the terms of the
Communications Retirement Plan and Communications Trust qualify under Section
401(a) and Section 501(a) of the Code, direct the trustee of the trust under the
Williams Pension Plan ("Williams Trust") to transfer (the date of such transfer
hereinafter the "Transfer Date"), in cash or in kind, as agreed to by Williams
and Communications, from the Williams Trust to the trustee of the Communications
Trust, an amount estimated by an Actuary selected by Williams to equal ninety
percent (90%) of the Transfer Amount, as defined below. The "Transfer Amount"
shall mean an amount equal to the present value of the accrued benefits of the
Communications Retirement Plan Participants, as calculated by the Williams
actuary in accordance with Section 414(1) of the Code and the regulations
promulgated thereunder. As soon as practicable following the Transfer Date, but
in no event later than ninety (90) days after such date, Williams shall direct
the trustee of the Williams Trust to transfer to the trustee of the
Communications Trust the excess of the Transfer Amount over the actual amount
previously transferred, plus interest on such excess at six percent (6%)
compounded daily from the Transfer Date. Notwithstanding anything contained
herein to the contrary, no transfer of assets shall take place until the 31st
day following the filing of all required Forms 5310-A in connection therewith.
Upon the receipt of the Transfer Amount (i) Communications and the
Communications Retirement Plan shall assume the liabilities of the Williams
Pension Plan for accrued benefits of Communications Retirement Plan
Participants, theretofore the liability of the Williams Pension Plan, (ii)
Communications participation in Williams Pension Plan shall cease, (iii) neither
Communications nor any of its Subsidiaries shall have any liability with respect
to the Williams Pension Plan, (iv) neither Williams nor any of its
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Subsidiaries shall have any liability with respect to the accrued benefits of
Communications Retirement Plan Participants and (v) Williams and the Williams
Pension Plan shall retain all liabilities for accrued benefits of Williams
Pension Plan participants who are not Communications Retirement Plan
Participants.
(b) The calculation of the transfer amount by the Williams actuary shall be
determinative but shall be subject to review by Communications and the Williams
actuary shall provide the actuary selected by Communications with all the
documentation reasonably necessary for Communications to verify such
calculation. Communications and Williams shall provide each other with such
records and information as may be necessary or appropriate to carry out their
obligations under this Section or for the purposes of administration of the
Communications Retirement Plan and Williams Pension Plan and they shall
cooperate in the filing of documents required by the transfer of assets and
liabilities described herein.
(c) In no event shall any amount transferred to the trustee of the
Communications Retirement Plan be used for any purpose other than to provide
benefits to present or future employees of Communications, and in no event shall
any amount transferred to the trustee of the Communications Retirement Plan
revert to Communications directly or indirectly.
SECTION 2.07 WILLIAMS INVESTMENT PLAN.
(a) Following the Effective Date, Communications Employees, who are
eligible, shall continue to participate in the Williams Investment Plan on the
same terms and conditions as applicable immediately prior to the Effective Date.
As soon as practicable after, and in any event within ninety (90) days after,
and effective as of, the Ownership Reduction Date, Communications shall
establish an employee stock ownership plan (with terms and conditions
substantially comparable in all material respects to the Williams Investment
Plan) and a related trust intended to qualify under Section 401(a), Section
501(a), and Section 4975 of the Code (the "Communications Investment Plan").
Effective as of the Ownership Reduction Date, all Communications Employees who
participated in the Williams Investment Plan ("Communications Investment Plan
Participants") shall participate in the Communications Investment Plan. Williams
shall, within one hundred eighty (180) days following the Ownership Reduction
Date, but in no event prior to receipt by Williams of written evidence of the
establishment of the Communications Investment Plan and the related trust
("Communications Trust") by Communications and either (A) the receipt by
Williams of a copy of a favorable determination letter issued by the Internal
Revenue Service with respect to the Communications Investment Plan or (B) an
opinion, in a form theretofore agreed upon, of Communications' counsel to the
effect that the terms of the Communications Investment Plan and Communications
Trust qualify under Section 401(a) and Section 501(a) of the Code, direct the
trustee of the trust under the Williams Investment Plan ("Williams Trust") to
transfer, in cash or in kind, as agreed to by Williams and Communications, from
the Williams Trust to the trustee of the Communications Trust, an amount equal
to the accrued benefits of the Communications Investment Plan participants in
accordance with Section 414(l) of the Code and the regulations promulgated
thereunder. Notwithstanding anything contained herein to the contrary, no
transfer of assets shall take place until the 31st day following the filing of
all required Forms 5310-A in
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connection therewith. Upon the receipt of the transfer (i) Communications and
the Communications Investment Plan shall assume the liabilities of the Williams
Investment Plan for accrued benefits of Communications Investment Plan
Participants, theretofore the liability of the Williams Investment Plan, (ii)
Communications participation in Williams Investment Plan shall cease, (iii)
neither Communications nor any of its Subsidiaries shall have any liability with
respect to the Williams Investment Plan, (iv) neither Williams nor any of its
Subsidiaries shall have any liability with respect to the accrued benefits of
Communications Investment Plan participants, and (v) Williams and the Williams
Investment Plan shall retain all liabilities for accrued benefits of Williams
Investment Plan participants who are not Communications Investment Plan
Participants. The transfer shall not involve any Williams common stock held in a
suspense account or any loans which were used to acquire such stock.
(b) Communications and Williams shall provide each other with such records
and information as may be necessary or appropriate to carry out their
obligations under this Section or for the purposes of administration of the
Communications Investment Plan and Williams Investment Plan and they shall
cooperate in the filing of documents required by the transfer of assets and
liabilities described herein.
(c) In no event shall any amount transferred to the trustee of the
Communications Investment Plan be used for any purpose other than to provide
benefits to present or future employees of Communications, and in no event shall
any amount transferred to the trustee of the Communications Investment Plan
revert to Communications directly or indirectly.
SECTION 2.08 NON-QUALIFIED PLANS. Following the Effective Date,
Communications Employees who are eligible shall continue to participate in
Williams Supplemental Retirement Plan (the "Williams Restoration Plan") through
December 31, 2000. As soon as practicable following the Effective Date, and in
any event no later than January 1, 2000, Communications shall establish a
benefit restoration plan (the "Communications Restoration Plan") relating to the
Williams Pension Plan for the benefit of the Communications Employees who were,
immediately prior to January 1, 2000, participating in the Williams Restoration
Plan or who become eligible for participation in the Communications Restoration
Plan on or after January 1, 2000. As of the Effective Date, Communications shall
assume and be solely responsible for the liabilities and obligations relating to
the Communications Employees arising under the Williams Restoration Plan.
SECTION 2.09 OTHER WILLIAMS BENEFIT PLANS. Following the Effective Date,
Communications Employees who are eligible shall continue to participate in the
various Williams medical, life, and other Williams Benefit Plans listed on
Schedule 2.09 (the "Other Plans"). As of the Effective Date, Communications
shall assume and be solely responsible for the liabilities and obligations
relating to the Communications Employees arising under the Other Plans. Prior to
Ownership Reduction Date, Communications shall establish plans with terms and
conditions substantially comparable in all material respects to the Other Plans
(the "Communications Other Plans"). Upon the Ownership Reduction Date, all
benefits of Communications Employees who participated in the Other Plans shall
be paid solely by the Communications Other Plans.
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SECTION 2.10 Transfer of Employees. Williams employees who transfer to and
become employed by Communications or any of its Subsidiaries and Communications
employees who transfer to and become employed by Williams or any of its
Subsidiaries, in either case on the United States payroll, prior to the
Ownership Reduction Date shall be transferred in accordance with the terms of
the transfer guidelines established by Williams consistent with practices in
effect immediately prior to the Effective Date (the "Transfer Guidelines") and
such employees and their beneficiaries and survivors will be granted the
benefits provided by the provisions of the applicable Benefit Plans pertaining
to employees who have been transferred between Williams and Communications, as
provided in, and subject to the terms and conditions of, the transfer
guidelines.
SECTION III
INFORMATION
SECTION 3.01 PROVISION OF CORPORATE RECORDS. Subject to applicable law and
privileges, from and after the Effective Date, upon the prior written request by
Williams for specific and identified agreements, documents, books, records or
files, including, without limitation, computer files, microfiche, tape
recordings and photographs (collectively, "Records"), relating to or affecting
Williams, including, but not limited to, the Records concerning Communications
Employees and Communications Benefit Plans necessary for Williams to perform the
Williams Employee Services. Communications shall arrange, as soon as reasonably
practicable following the receipt of such written request, for the provision of
appropriate copies of such Records (or the originals thereof if the party making
the request has a reasonable need for such originals) in the possession of
Communications or any of its Subsidiaries, but only to the extent such items are
not already in the possession of the requesting party.
SECTION 3.02 ACCESS TO INFORMATION. Subject to applicable law and
privileges, from and after the Effective Date, Communications shall afford to
Williams and its authorized accountants, counsel and other designated
representatives reasonable access during normal business hours, subject to
appropriate restrictions for classified, privileged or confidential information,
to the personnel, properties, books and records of Communications and its
Subsidiaries insofar as such access is reasonably required by Williams.
SECTION 3.03 REIMBURSEMENT; OTHER MATTERS. Except to the extent otherwise
contemplated by any Ancillary Agreement, a party providing Records or access to
information to another party hereto pursuant to this Article III shall be
entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses, as may be reasonably incurred in providing such
Records or access to information.
SECTION 3.04 CONFIDENTIALITY. Each of Communications and Williams shall not
(without the prior written consent of the other party) use or permit the use of,
and shall hold, and shall
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cause its consultants and advisors to hold, in strict confidence, all
information concerning the other party in its possession, its custody or under
its control (except to the extent that (a) such information has been in the
public domain through no fault of such party, (b) such information has been
later lawfully acquired from a source other than the other party to this
Agreement, or (c) this Agreement or any other Ancillary Agreement permits the
use or disclosure of such information), and each party shall not (without the
prior written consent of the other) otherwise release or disclose such
information to any other Person, except to such party's officers, directors,
employees, auditors, attorneys and agents, in each case on a confidential and
need-to-know basis, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by law and such
party has used commercially reasonable efforts to consult with the other
affected party or parties prior to such disclosure. To the extent that a party
hereto is compelled by judicial or administrative process to disclose such
information under circumstances in which any evidentiary privilege may be
available, such party agrees to assert such privilege in good faith prior to
making such disclosure. Each of the parties hereto agrees to consult immediately
with the other party in connection with any such judicial or administrative
process, including, without limitation, in determining whether any privilege is
available, and further agrees to allow each such relevant party and its counsel
to participate in any hearing or other proceeding (including, without
limitation, any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.
SECTION 3.05 DESTRUCTION OF RECORDS. In the event that Williams intends to
destroy any records relating to the employment of, or participation in Williams
Benefit Plans by, Communications Employees (including, but not limited to,
personnel records and records relating to medical and other health and welfare
benefit plans), Williams shall provide written notice to Communications of its
intention to do so at least ninety (90) days in advance of the date that such
destruction is expected to be undertaken. Communications shall have thirty (30)
days after receiving such notice to advise Williams in writing whether
Communications wishes to obtain copies of such records pertaining to its
employees. If Communications desires such records, Williams shall, at the sole
expense of Communications, either provide the originals thereof to
Communications or shall copy such records and provide them to Communications.
SECTION IV
ASSUMPTION AND SATISFACTION OF LIABILITIES
SECTION 4.01 From and after the date hereof, (i) Williams shall assume, pay,
perform and discharge all Williams Liabilities, but it shall be entitled to
recover from Communications the amounts due under Sections 2.03 and 2.04 hereof,
and (ii) Communications shall assume, pay, perform and discharge all
Communications Liabilities. Consistent with this agreement, Communications or
the appropriate Subsidiary of Communications, shall assume all Liabilities
arising out of or resulting from any claim by any Communications Employee which
arises under federal, state or local statute (including, without limitation,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1990, the Equal Pay Act, the Americans with
Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974
and all other statutes regulating the terms and conditions of employment),
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regulation or ordinance, under the common law or in equity (including any claims
for wrongful discharge or otherwise), or under any policy, agreement,
understanding or promise, written or oral, formal or informal, between Williams
or Communications (or any Subsidiary of Williams or Communications) and the
Communications Employee, whether arising out of actions, events or omissions
that occurred (or, in the case of omissions, failed to occur) prior to, or
after, the Effective Date. Subject to its rights under Sections 2.03 and 2.04
hereof, Williams or an appropriate Subsidiary of Williams shall assume all
liabilities arising out of or resulting from any claim by any Williams Employee
which arises under federal, state or local statute (including, without
limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Age Discrimination in Employment Act of 1990, the Equal Pay Act, the
Americans with Disabilities Act of 1990, the Employee Retirement Income Security
Act of 1974 and all other statutes regulating the terms and conditions of
employment), regulation or ordinance, under the common law or in equity
(including any claims for wrongful discharge or otherwise), or under any policy,
agreement, understanding or promise, written or oral, formal or informal,
between Williams or any of its Subsidiaries and the Williams Employee, whether
arising out of actions, events or omissions that occurred (or, in the case of
omissions, failed to occur) prior to, or after, the Effective Date.
SECTION V
TERM OF AGREEMENT
SECTION 5.01 TERMINATION. (a) Except as otherwise provided in this Article V
or as otherwise agreed to in writing by the parties hereto, this Agreement shall
be subject to termination by either Williams or Communications, upon the
Ownership Reduction Date.
(b) Williams may terminate any Williams Employee Services at any time if
Communications shall have failed to perform any of its material obligations
under this Agreement relating to any such Williams Employee Services, provided
that Williams has notified Communications in writing of such failure and such
failure shall have continued for a period of sixty (60) days after receipt by
Communications of notice of such failure.
(c) Communications may terminate any Williams Employee Services at any time
if Williams shall have failed to perform any of its material obligations under
this Agreement relating to any such Williams Employee Services, provided that
Communications has notified Williams in writing of such failure and such failure
shall have continued for a period of sixty (60) days after receipt by Williams
of notice of such failure.
SECTION 5.02 EFFECT OF TERMINATION. (a) Other than as required by law, upon
termination of any Employee Services pursuant to Section 5.01, and upon
termination of this Agreement in accordance with its terms, Williams will have
no further obligation to provide the terminated Employee Service (or any
Employee Services, in the case of termination of this Agreement) and
Communications shall have no obligation to pay any costs relating to such
Employee Services or make any other payments hereunder, provided that
notwithstanding any such termination (i) Communications shall remain liable to
Williams for costs owed and payable in respect of
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Employee Services provided prior to the effective date of such termination or
any costs attributable to, arising out of or in connection with such termination
(including, but not limited to, severance costs, long-term lease obligations and
rent), and (ii) Williams shall continue to charge Communications for
administrative and other costs relating to benefits provided after but incurred
prior to the termination of any Employee Services and other services required to
be provided after the termination of such Employee Service and Communications
shall be obligated to pay such costs in accordance with the terms of this
Agreement.
(b) Following termination of any Williams Employee Services under this
Agreement, Williams and Communications agree to cooperate in providing for an
orderly transition of such Williams Employee Services to Communications or to a
successor service provider. Without limiting the foregoing, Williams agrees to
provide to Communications, within ninety (90) days of the termination of all
Williams Employee Services in respect of any Communications Employees
participating in Williams Benefit Plans, copies in a format designated by
Williams, of all records relating directly or indirectly to benefit
determinations of the participants in Benefit Plans, including compensation and
service records or records required to be maintained by law, and (iii) Williams
and Communications shall work with the other party in developing a reasonable
transition schedule with respect thereto.
SECTION 5.03 SURVIVAL OF TERMINATION. Notwithstanding any provisions in this
Agreement to the contrary, any obligations of or covenants and agreements made
by each of Williams and Communications under this Article V, Article III,
Article IV, Section 2.03, and Section 3.04 shall survive (i) the sale or other
transfer by either of them of any assets or businesses or the assignment by
either of them of any Liabilities and (ii) the termination of this Agreement,
and shall continue in full force and effect (subject to the terms of such
provisions).
SECTION VI
MISCELLANEOUS
SECTION 6.01 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement, including the
Exhibits and Schedules, and the Ancillary Agreements shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments and writings with respect
to such subject matter. In the event of any inconsistency between this Agreement
and any Exhibit or Schedule hereto, such Exhibit or Schedule shall prevail.
Notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be a conflict between the provisions of
this Agreement and the provisions of any Ancillary Agreement, such Ancillary
Agreement shall control.
SECTION 6.02 ANCILLARY AGREEMENTS. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements. In the event of any inconsistency
between this Agreement and any Ancillary Agreement, the terms of such Ancillary
Agreement shall govern.
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SECTION 6.03 WAIVERS. The failure of either party to require strict
performance by the other party of any provision in this Agreement shall not
waive or diminish that party's right to demand strict performance thereafter of
that or any other provision hereof.
SECTION 6.04 ASSIGNMENT. This Agreement shall be assignable, in whole in
connection with a merger or consolidation or the sale of all or substantially
all the assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other party to this Agreement. Otherwise this Agreement
shall not be assignable, in whole or in part, directly or indirectly, by any
party hereto without the prior written consent of the others, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.
SECTION 6.05 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective permitted successors and permitted assigns.
SECTION 6.06 SUBSIDIARIES. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements,
covenants and obligations set forth herein to be performed by any Subsidiary of
such party or by any entity that is contemplated to be a Subsidiary of such
party on and after the Effective Date, provided that Williams shall not have
this obligation with respect to Communications and its Subsidiaries.
SECTION 6.07 THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and their respective Subsidiaries and should not
be deemed to confer upon or entitle any third party, including employees of
Williams or Communications any remedy, claim, liability, benefit, reimbursement,
compensation, claim of action or otherwise establish or create any rights on the
part of such third party in excess of those existing without reference to this
Agreement. Nothing in this Agreement is intended to restrict or limit Williams
or Communications, as applicable, in the exercise of its rights or the
fulfillment of its duties as a plan sponsor of any Benefit Plans.
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IN WITNESS WHEREOF, the parties hereto have caused this Employee Benefits
Agreement to be executed the day and year first written above.
WILLIAMS COMMUNICATIONS GROUP, INC.
BY: /s/ G.L. BEST
--------------------------------------
NAME: G.L. Best
------------------------------------
TITLE: Vice President
-----------------------------------
THE WILLIAMS COMPANIES, INC.
[STAMP]
BY: /s/ MICHAEL P. JOHNSON
--------------------------------------
NAME: Michael P. Jhonson
------------------------------------
TITLE: Senior Vice President
-----------------------------------
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SCHEDULE 2.01(A)(I)
WILLIAMS EMPLOYEE SERVICES
(i) Employee and benefit plan related services of the same type that were
performed by Williams on behalf of the Communications Affiliated Group prior to
the Effective Date, including, but not limited to:
(a) Human Resource Management Services; (b) Executive Compensation Design
and Administration; (c) Employee Benefit Plan Design and Administration; (d)
Risk Management; and (e) Training.
(ii) Services related to the foregoing services performed by Williams on behalf
of the Communications Affiliated Group as a result of the Initial Public
Offering, and the ongoing administrative obligations resulting therefrom.
SCHEDULE 2.01(B)(I)
WILLIAMS BENEFIT PLANS
(i) The employee benefit plans as defined in section (3)(3) of ERISA in which
Williams Employees and Communications Employees participated prior to the
Effective Date and any other employee benefit plans as defined in Section (3)(3)
of ERISA created after the Effective Date in which Williams Employees and
Communications Employees participate, including, but not limited to:
The Williams Companies, Inc. Consolidated Pension Plan The Williams
Companies, Inc. Investment Plus Plan The Williams Companies Supplemental
Retirement Plan The Williams Companies Group Insurance Plan The Williams
Companies Long-Term Disability Plan The Williams Companies, Inc. Group
Medical-Health Plus Plan The Williams Companies Personal Accident Insurance
Plan The Williams Companies Severance Pay Plan The Williams Companies
Pre-Tax Premium and Flexible Reimbursement Account Plan The Williams
Companies, Inc. Educational Assistance Plan The Williams Companies, Inc.
Group Medical-Health Plus Plan for Part-Time Employees The Williams
Companies, Inc. Change-In-Control Severance Protection Plan The Williams
Companies, Inc. Loss of Flight Status Plan The Williams Companies, Inc.
Employee Assistance Plan The Williams Companies, Inc. Legal Services Plan
The Williams Companies, Inc. Vision Services Plan
(ii) each of the following in which Williams Employees and Communications
Employees participated prior to the Effective Date or which are created after
the Effective Date and cover Williams Employees and Communications Employees:
personnel policy, stock option plan, bonus plan or arrangement, incentive award
plan or arrangement, vacation policy, severance pay plan, policy, program or
agreement, deferred compensation agreement or arrangement, retiree benefit plan
or arrangement, fringe benefit program or practice (whether or not taxable),
employee loan, consulting agreement, employment agreement and each other
employee benefit plan, agreement, arrangement, program, practice or
understanding which is not described in paragraph (i) of this Schedule.
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SCHEDULE 2.01(B)(II)
COMMUNICATIONS BENEFIT PLANS
(i) The employee benefit plans as defined in section (3)(3) of ERISA, which are
not Williams Benefit Plans, in which Communications Employees, participated
prior to the Effective Date and any other employee benefit plans as defined in
section (3)(3) of ERISA created for Communications Employees after the Effective
Date which are not Williams Benefit Plans, including, but not limited to:
WilTel Communications, LLC Pension Plan WilTel Communications, LLC
Investment Plan Pension Plan for Bargaining Unit Employees of WilTel
Communications, LLC WilTel Saving and Retirement Plan WilTel Communications
Systems, Inc. Employees 401(k) Savings Plan Global Access Telecommunications
Services 401(k) Plan ITC 401(k) Savings Plan Critical Technologies 401(k)
Plan Comlink Incorporated Profit Sharing 401(k) Plan WilTel Data Network
Services, Inc. 401(k) Plan SoftIron Systems, Inc. 401(k) Plan WilTel
Communications Systems, Inc. Pretax Premium Plan and Flexible Reimbursement
Accounts WilTel Communications Systems, Inc Group Medical and Dental
Assistance Plan for Full-Time Employees WilTel Communications Systems, Inc.
Group Medical and Dental Assistance Plan for Part-Time Employees WilTel
Communications Systems, Inc. Group Insurance Plan WilTel Communications
Systems, Inc. Personal Accident Insurance Plan WilTel Communications
Systems, Inc. Long Term Disability Plan WilTel Communications Systems, Inc.
Educational Assistance Plan WilTel Communications Systems, Inc. Legal
Service Plan WilTel Communications Systems, Inc. Vision Service Plan WilTel
Communications Systems, Inc. Employee Assistance Plan WilTel Communications
Systems, Inc. Severance Pay Plan WilTel Communications Systems, Inc. Pre-Tax
Premium and Flexible Reimbursement Account Plan (for collectively bargained
employees) WilTel Communications Systems, Inc. Group Medical Health Plus
Plan (for collectively bargained employees) WilTel Communications Systems,
Inc. Group Insurance Plan (for collectively bargained employees) WilTel
Communications Systems, Inc. Personal Accident Insurance Plan (for
collectively bargained employees) WilTel Communications Systems, Inc.
Long-Term Disability Plan (for collectively bargained employees) WilTel
Communications Systems, Inc. Educational Assistance Plan (for collectively
bargained employees)
WilTel Communications Systems, Inc. Vision Service Plan (for collectively
bargained employees) WilTel Communications Systems, Inc. Employee
Assistance Plan (for collectively bargained employees) WilTel
Communications Systems, Inc. Severance Plan (for collectively bargained
employees) All multi-employer plans maintained or formerly maintained
pursuant to any collective bargaining agreement between any member of
the Communications Affiliated Group and any union
(ii) each of the following, whether created before or after the Effective Date,
that cover
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Communications Employees who do not participate in the Williams Benefit Plans,
before or after the Effective Date: personnel policy, stock option plan, bonus
plan or arrangement, incentive award plan or arrangement, vacation policy,
severance pay plan, policy, program or agreement, deferred compensation
agreement or arrangement, retiree benefit plan or arrangement, fringe benefit
program or practice (whether or not taxable), employee loan, consulting
agreement, employment agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described in
paragraph (i) of this Schedule.
SCHEDULE 2.09
OTHER PLANS
(i) The employee benefit plans as defined in section (3)(3) of ERISA in which
Williams Employees and employees of Communications participated prior to the
Effective Date and any other employee benefit plans as defined in Section (3)(3)
of ERISA created after the Effective Date in which Williams Employees and
Communications Employees participate, including, but not limited to:
The Williams Companies Group Insurance Plan The Williams Companies Long-Term
Disability Plan The Williams Companies, Inc. Group Medical-Health Plus Plan
The Williams Companies Personal Accident Insurance Plan The Williams
Companies Severance Pay Plan The Williams Companies Pre-Tax Premium and
Flexible Reimbursement Account Plan The Williams Companies, Inc. Educational
Assistance Plan The Williams Companies, Inc. Group Medical-Health Plus Plan
for Part-Time Employees The Williams Companies, Inc. Change-In-Control
Severance Protection Plan The Williams Companies, Inc. Loss of Flight Status
Plan The Williams Companies, Inc. Employee Assistance Plan The Williams
Companies, Inc. Legal Services Plan The Williams Companies, Inc. Vision
Services Plan
(ii) each of the following in which Williams Employees and Communications
Employees participated prior to the Effective Date or which are created after
the Effective Date and cover Williams Employees and Communications Employees:
personnel policy, stock option plan, bonus plan or arrangement, incentive award
plan or arrangement, vacation policy, severance pay plan, policy, program or
agreement, deferred compensation agreement or arrangement, retiree benefit plan
or arrangement, fringe benefit program or practice (whether or not taxable),
employee loan, consulting agreement, employment agreement and each other
employee benefit plan, agreement, arrangement, program, practice or
understanding which is not described in paragraph (i) of this Schedule.
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EXHIBIT 10.8
CROSS-LICENSE AGREEMENT
THIS CROSS-LICENSE AGREEMENT ("Agreement") is made effective as of the 30th day
of September, 1999 (the "Effective Date") between WILLIAMS INFORMATION SERVICES
CORPORATION ("WISC"), THE WILLIAMS COMPANIES, INC. ("TWC"), WILLIAMS
COMMUNICATIONS GROUP, INC. ("WCG"), and WCG's affiliates in which it owns at
least a controlling interest ("WCG Affiliates") (as used herein, the term "WCG
Group" refers, according to context, either individually to WCG or collectively
to WCG and the WCG Affiliates). WISC, TWC and the WCG Group are each a "Party"
and together are the "Parties" to this Agreement.
WHEREAS, the WCG Group has developed and owns a body of intellectual property
including, without limitation, trademarks, software and technical writings some
of which may be protected by, or sought to be protected by, copyright, patents,
and trademark registrations (the "WCG IP"); and
WHEREAS, WISC has developed and owns a body of intellectual property including,
without limitation, trademarks, software and technical writings some of which
may be protected by copyright, patents and trademark registrations (the "WISC
IP"); and
WHEREAS, TWC has developed and owns a body of intellectual property including,
without limitation, trademarks, software and technical writings some of which
may be protected by copyright, patents and trademark registrations (the "TWC
IP"); and
WHEREAS, WISC and TWC desire to obtain, and the WCG Group desires to grant to
WISC and TWC, certain rights to the WCG IP; and
WHEREAS, the WCG Group desires to obtain, and WISC and TWC desire to grant to
the WCG Group, certain rights to the WISC IP and the TWC IP;
NOW, THEREFORE, in consideration of the covenants and representations set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, WISC, TWC and the WCG Group agree to the
following:
ARTICLE 1
DEFINITIONS
1.01 "TWC AFFILIATES" shall mean all direct and indirect subsidiaries,
divisions, companies, and affiliates in which TWC or one of its direct or
indirect subsidiaries owns at least a controlling interest, but shall not
include WCG or the WCG Group.
1.02 "INTERNAL USE" shall mean internal use by each Party's employees for
the benefit of the
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Party, its affiliates and other TWC Affiliates, specifically excluding use
for the benefit of or for providing services to or disclosure thereof to any
third parties including without limitation any customer of the Party, or
customer of any other TWC Affiliate, if such customer is not a TWC
Affiliate.
1.03 "SOFTWARE" shall mean source code, object code, all instructions
relevant to assembling or compiling the source code, and all other
documentation and instructions relevant to the use thereof, developed by
each Party as of the Effective Date, plus any enhancements, upgrades,
modifications and new versions of such developed software, including but not
limited to the software listed on the respective Exhibits attached hereto,
as amended from time to time, and any software related to the Inventions,
defined herein, as they exist as of the Effective Date.
1.04 "INVENTIONS" shall mean each Party's inventions, including but not
limited to the inventions listed on the Exhibits attached hereto, as amended
from time to time, and any inventions or discoveries arising from or
inextricably related to each Party's Software, whether or not such
inventions or discoveries (i) have been disclosed or are otherwise known to
the Party/Licensee, (ii) have been described in patent applications, (iii)
are disclosed in issued patents, or (iv) are protected by trade secret, and
specifically including any inventions or discoveries disclosed in patents or
patent applications assigned to the Party/Licensee, if any, all of the
foregoing as they exist as of the Effective Date.
1.05 "MARKS" shall mean all trademarks, tradenames, logos and/or service
marks, if any, including those trademarks, tradenames, service marks and
logos associated with each Party's Software, Inventions, or with the subject
matter of other licenses granted hereunder.
1.06 "PERSON" shall mean any natural person, firm, partnership,
association, corporation, company, trust, business trust, Governmental
Authority or other entity.
ARTICLE 2
LICENSE FROM TWC AND WISC TO THE WCG GROUP
2.01 WISC and TWC hereby grant to each member of the WCG Group, and each
member of the WCG Group hereby accepts, a non-exclusive, world-wide,
non-transferable, royalty-free, perpetual license on an "AS IS, WHERE IS"
basis to use (subject to the rights of third parties) the particular WISC
and TWC Software, Marks, and Inventions which exist as of the Effective Date
including without limitation the WISC and TWC Software, Marks, and
Inventions listed on the attached Exhibit I, solely for the WCG Group's
Internal Use.
2.02 Notwithstanding anything to the contrary contained herein, WISC and
TWC do not grant to the WCG Group hereunder, nor shall the WCG Group claim
any right pursuant hereunder, to any intellectual property belonging to WISC
and TWC, other than the WISC and TWC Software, Marks and Inventions which
exist as of the Effective Date of this Agreement. Further, nothing in this
Agreement shall be deemed to transfer title to any of the Software,
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Inventions or Marks to any other Party.
ARTICLE 3
LICENSE FROM THE WCG GROUP TO WISC AND TWC
3.01 The WCG Group hereby grants both to WISC and to TWC, and WISC and TWC
each hereby accept, a non-exclusive, world-wide, non-transferable,
royalty-free, perpetual license on an "AS IS, WHERE IS" basis to use
(subject to the rights of third parties) the particular WCG Software, Marks,
and Inventions which exist as of the Effective Date including without
limitation the WCG Software, Marks, and Inventions listed on the attached
Exhibit II, solely for WISC's and TWC's Internal Use.
3.02 Notwithstanding anything to the contrary contained herein, the WCG
Group does not grant to WISC and TWC hereunder, nor shall WISC and TWC claim
any right pursuant hereunder, to any intellectual property belonging to the
WCG Group, other than the WCG Software, Marks and Inventions which exist as
of the Effective Date of this Agreement. Further, nothing in this Agreement
shall be deemed to transfer title to any of the Software, Inventions or
Marks to any other party.
ARTICLE 4
QUALITY CONTROL REGARDING USE OF MARKS
Each Party shall abide by commercially reasonable guidelines regarding use of
the other Party's Marks, provided, however, that each Party acknowledges and
agrees that the quality standards maintained by the other Party as of the
Effective Date are and will be acceptable. Further, neither Party will take any
action that, it knew or reasonably should be known, would jeopardize the other
Party's rights to its Marks.
ARTICLE 5
CONFIDENTIALITY
Each Party shall maintain all Software and Inventions licensed hereunder (the
"Licensed Subject Matter") in strict confidence by limiting disclosure of the
Licensed Subject Matter to those of its employees, contractors or agents having
a need to access the Licensed Subject Matter for the purpose of exercising
rights granted hereunder. Each Party shall exercise at least the same degree of
care as it utilizes to protect its own proprietary information of a similar
nature to prevent unauthorized disclosures of the Licensed Subject Matter, but
in no event less than a reasonable degree of care.
ARTICLE 6
ASSIGNABILITY
6.01 This Agreement and any of the licenses granted herein to WISC and TWC
hereunder are assignable by WISC and TWC, in whole or in part, to TWC
Affiliates, provided that the assignee agrees in writing to abide by the
relevant terms and conditions of this Agreement.
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Otherwise no license granted herein to WISC or TWC is assignable without the
prior written consent of the entity within the WCG Group holding title or
licensing rights or its successors in interest, which consent shall not be
unreasonably withheld; provided, however, that consent shall not be withheld
for any assignment made as the result of (i) a corporate merger, (ii) a sale
of all or substantially all of the corporate assets of such entity, (iii) a
sale of a controlling interest in such entities' corporate stock, (iv) a
corporate restructuring, or (v) as a result of a corporate name change.
6.02 This Agreement and any of the licenses granted herein to the WCG Group
are fully assignable by the WCG Group, in whole or in part, to TWC
Affiliates, provided that the assignee agrees in writing to abide by the
relevant terms and conditions of this Agreement. Otherwise, no license
granted herein to the WCG Group is assignable without the prior written
consent of WISC or TWC, as applicable, or its successor in interest, which
consent shall not be unreasonably withheld, provided, however, that consent
shall not be withheld for any assignment made as the result of (i) a
corporate merger, (ii) a sale of all or substantially all of the corporate
assets of such entity, (iii) a sale of a controlling interest in such
entities' corporate stock, (iv) a corporate restructuring, or (v) as a
result of a corporate name change.
6.03 Any attempt to assign, or purported assignment of, this Agreement or
any of the licenses granted hereunder in violation of the provisions of this
Article 6 shall be null and void and of no effect.
ARTICLE 7
WARRANTIES; DISCLAIMERS
7.01 Each Party represents and warrants that it owns and has the right to
license the software, marks, and inventions licensed under this Agreement.
7.02 EXCEPT FOR THE WARRANTIES, REPRESENTATIONS, COVENANTS, OBLIGATIONS,
AND AGREEMENTS DESCRIBED IN SECTION 7.01, EACH PARTY DISCLAIMS ANY AND ALL
WARRANTIES, CONDITIONS, OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR
WRITTEN) WITH RESPECT TO THE SUBJECT MATTER HEREOF, OR ANY PART THEREOF,
INCLUDING ANY AND ALL IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER THE
PARTY KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT
AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF
CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING.
ARTICLE 8
LIMITATIONS OF LIABILITY / ALLOCATION OF RISK
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY (NOR TO ANY PERSON CLAIMING RIGHTS DERIVED FROM THE
OTHER PARTY'S RIGHTS, INCLUDING ANY
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SUBLICENSEE) FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY
DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, LOSS OF DATA, LOST PROFITS,
LOSS OF BUSINESS, OR OTHER ECONOMIC DAMAGE, AND FURTHER INCLUDING INJURY TO
PROPERTY, AS A RESULT OF BREACH OF ANY TERM OF THIS AGREEMENT, REGARDLESS OF
WHETHER THE PARTY LIABLE OR ALLEGEDLY LIABLE WAS ADVISED, HAD OTHER REASON TO
KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.
ARTICLE 9
BREACH
Breach of any provision hereof shall not automatically terminate any license
granted hereunder nor give the non-breaching Party the right to terminate any
license granted hereunder; however, the non-breaching Party shall be entitled to
seek any remedy available to it under law or equity due to such breach. Further,
the Party in breach shall immediately take actions to remedy the breach. The
Parties hereby agree that damages resulting from breach of any material
provision hereof may be difficult if not impossible to ascertain, and therefore
agree that the non-breaching Party shall be entitled to injunctive relief to
prevent or stop any threatened or actual breach of any material provision
hereof, including without limitation provisions dealing with confidentiality and
license rights.
ARTICLE 10
GENERAL INDEMNITY
10.01 Each member of the WCG Group shall jointly and severally, and to the
fullest extent permitted by applicable law, defend, indemnify and hold
harmless WISC, TWC, and the TWC Affiliates and their respective successors
and assigns authorized hereunder and any of their respective officers,
directors, employees, agents and representatives (collectively the "WISC and
TWC Indemnitees") from and against any and all claims, demands, damages,
losses, liabilities, costs and expenses (including but not limited to
reasonable attorneys' fees and expenses) ("Costs") incurred or suffered by
any WISC and TWC Indemnitees to the extent that such Costs arise out of
claims, actions or proceeding brought as a result of the negligent or
willful misconduct of any member of the WCG Group regarding this Agreement.
10.02 WISC, TWC and the TWC Affiliates shall jointly and severally, and to
the fullest extent permitted by applicable law, defend, indemnify and hold
harmless any member of the WCG Group and their respective successors and
assigns authorized hereunder and any of their respective officers,
directors, employees, agents and representatives (collectively the "WCG
Group Indemnitees") from and against any and all claims, demands, damages,
losses, liabilities, costs and expenses (including but not limited to
reasonable attorneys' fees and expenses) ("Costs") incurred or suffered by
any WCG Group Indemnitee to the extent that such Costs arise out of claims,
actions or proceeding brought as a result of the negligent or willful
misconduct of any member of WISC, TWC or the TWC Affiliates regarding this
Agreement.
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ARTICLE 11
DISPUTE RESOLUTION
11.01 NEGOTIATIONS. Except as otherwise provided herein, WISC, TWC and each
member of the WCG Group shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement (a "Dispute") by negotiations
between senior executives of the ultimate parent corporation of such
Parties. Such negotiations may be commenced by any such Party by written
notice to the other Party (the "Negotiation Request"). In the event that
such Dispute has not been resolved by such negotiations within thirty (30)
days of the delivery of the Negotiation Request, and one Party hereto
requests non-binding mediation by written notice to the other Party given
prior to the end of such 30-day period, such member of WISC and/or TWC and
such member of the WCG Group shall attempt in good faith to resolve such
Dispute by non-binding mediation before a mediator mutually agreeable to
such member of WISC and/or TWC and such member of the WCG Group. Neither
Party shall be required to continue with such negotiations or with such
non-binding mediation for more than ninety (90) days after the delivery of
the Negotiation Request. All such negotiations and mediation proceedings
shall be confidential, and shall be treated as compromise and settlement
negotiations for all evidentiary purposes, including but not limited to for
purposes of the Federal Rules of Evidence and any state rules of evidence.
11.02 OTHER REMEDIES. Except as otherwise provided herein, the Parties
hereto shall not initiate litigation with respect to the Dispute unless the
Dispute has not been resolved within ninety (90) days of the delivery of the
Negotiation Request, and shall not initiate litigation with respect to such
Dispute except upon five (5) days' prior written notice to the other Party;
provided that (i) if one such Party has delivered a Negotiation Request or
has so requested non-binding mediation and the other such Party has not
responded to any such request within ten (10) days of its receipt or is
failing to participate in good faith in the procedures specified In Section
11.01, the requesting Party may initiate litigation prior to the expiration
of such ninety-day (90-day) period and without giving the five (5) day
notice, and (ii) either such Party may at any time with or without notice
file a complaint or seek an injunction or provisional judicial relief, if in
such Party's sole judgment such action is necessary to avoid irreparable
damage or to preserve the status quo (including but not limited to statute
of limitations reasons or to preserve any defense based upon the passage of
time). Despite such action, such member of WISC and/or TWC and such member
of the WCG Group will continue to participate in the procedures specified in
this Article 11 for so long and to the extent so specified.
ARTICLE 12
NOTICES
All notices, consents, requests, demands, and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given (a) on the date received when delivered in person, (b) on the
first day after being sent if sent by a generally recognized overnight delivery
company, or (c) on the third day after being mailed by registered
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or certified mail, return receipt requested, with postage prepaid to the
addresses set forth below the signature blocks of this Agreement (or to such
additional or other persons, at such other address or addresses as may be
designated by notice of the appropriate Party).
ARTICLE 13
TERMINATION
13.01 In the event that, at any time, TWC or a TWC Affiliate no longer
controls the WCG Group this Agreement shall terminate 90 days from the date
control was lost. For the purposes of this provision the term "control"
means ownership of 50% or more of the issued and outstanding shares of the
WCG Group stock.
13.02 In the event of termination of this Agreement, for whatever reason,
either Party's right to utilize and/or possess Marks, Software, Inventions,
or any other intellectual property of another Party licensed under this
Agreement shall cease. Within fifteen (15) days after any termination of
this Agreement, each Party shall (i) return to the appropriate Party or
destroy the original and all copies, in any form, of all Software and
Inventions, or parts thereof, for which it has received a license hereunder;
and (ii) provide a certified affidavit executed by an officer of the Party
to the effect that this has been done.
ARTICLE 14
GENERAL PROVISIONS
14.01 No modification or amendment to this Agreement or any Exhibit to this
Agreement, nor any waiver of any provision contained in this Agreement,
shall be valid or binding unless reduced to writing and executed by an
authorized representative of the Party against whom enforcement of the same
is sought.
14.02 The Article headings used herein are for reference purposes only and
shall not in any way control the meaning or interpretation of this
Agreement.
14.03 This Agreement shall be construed in accordance with the laws of the
State of Oklahoma without giving effect to its internal conflicts of law
principles.
14.04 If any term of this Agreement is determined to be invalid or
unenforceable, such term shall be deemed to be deleted from this Agreement
and, if reasonable to do so, the Parties shall negotiate in good faith a
replacement therefore, and the remainder of this Agreement shall remain in
full force and effect.
14.05 This Agreement, constitute(s) the entire understanding and agreement
among the Parties hereto regarding the subject matter hereof and supersedes
any prior or contemporaneous agreement or understanding between the Parties
regarding same.
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14.06 Each person signing this Agreement on behalf of one of the Parties has
full authority to do so.
14.07 Each Party shall be deemed independent contractors with respect to
each other, and nothing herein shall create any association, partnership,
joint venture or agency relationship between any of them.
14.08 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute one and the same instrument.
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The parties hereto have caused this Cross-License Agreement to be duly
executed as of the date first written above.
WILLIAMS INFORMATION SERVICES CORPORATION
BY: /s/ JAMES R. HERBSTER
-----------------------------------------
NAME: James R. Herbster
---------------------------------------
TITLE: Senior Vice-President, Administration
--------------------------------------
NOTICE ADDRESS:
WILLIAMS INFORMATIONAL SERVICES CORPORATION
ONE WILLIAMS CENTER
P.O. BOX 2400
TULSA, OKLAHOMA 74172
ATTN: SENIOR VICE PRESIDENT
WILLIAMS COMMUNICATION GROUP, INC.
BY: /s/ G.L. BEST
-----------------------------------------
NAME: G.L. Best
---------------------------------------
TITLE: Vice President
--------------------------------------
NOTICE ADDRESS:
VICE PRESIDENT,
APPLICATIONS-NETWORK WILLIAMS COMMUNICATIONS GROUP, INC.
ONE WILLIAMS CENTER
TULSA, OK 74172
THE WILLIAMS COMPANIES, INC.
BY: /s/ JACK D. MCCARTHY
-----------------------------------------
NAME: Jack D. McCarthy
---------------------------------------
TITLE: Sr. V.P - Finance & CFO
--------------------------------------
NOTICE ADDRESS:
One Williams Center
Tulsa, OK 74172
Attention: Jack McCarthy
9
<PAGE> 1
EXHIBIT 10.9
TECHNICAL, MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT
THIS TECHNICAL, MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT (the
"Agreement") is made and effective as of May 27, 1999 between WILLIAMS
INTERNATIONAL COMPANY, a corporation organized under the laws of Delaware
("WIC") and Williams Communications Group, Inc., a corporation organized under
the laws of Delaware ("WCG").
WHEREAS, WIC or an affiliate of WIC was the owner of Williams International
Ventures Company, a Delaware corporation, Williams Australian Telecom Limited, a
Cayman Islands company and Williams International AR Limited, a Cayman Islands
company (the "International Companies"); and
WHEREAS, under and pursuant to that certain Agreement and Plan of
Reorganization dated as of May 27, 1999 by and among WIC, Williams Holdings of
Delaware, Inc. ("WHD") and Williams International Telecom Limited ("WITL"), WIC
transferred the stock of the International Companies to WHD, which in turn
transferred the stock of the International Companies to WCG or a subsidiary
thereof; and
WHEREAS, prior to the transfer of the International Companies to WCG, WIC
provided certain technical, management, administrative, and other services
("Services") with respect to the operations of the International Companies; and
WHEREAS, WCG desires that WIC from and after the date hereof continue to
provide such Services with respect to the International Companies and WIC
desires to do so.
NOW, THEREFORE, in consideration of the promises and respective
representations, warranties, covenants, and agreements herein contained, the
parties hereby agree as follows:
1. EXTENT OF SERVICES. WCG hereby requests, and WIC hereby agrees, that
various employees of WIC shall from time to time provide, to and for the benefit
of WCG the following services: (i) advising and making recommendations to WCG
regarding the design, engineering and management of the Projects, (ii)
assistance to and coordination and oversight of consultants, contractors,
subcontractors, agents and employees of WCG and (iii) such other technical,
management, administrative and oversight services with respect to the Projects
as are required by the Project Agreements and as the parties may from time to
time agree.
2. COMPENSATION. As consideration for the Services, WCG shall compensate WIC
monthly for all costs and expenses incurred by WIC in performing the Services,
which compensation shall in no event include a profit margin.
<PAGE> 2
3. INVOICING. WIC shall invoice WCG for all charges hereunder on or before
the 15th of each month for Services performed in the preceding month. Payment
shall be due within 15 days of receipt of WIC's invoice.
4. QUALITY. WIC, in performing the Services hereunder, shall use all
commercially reasonable efforts to assure that such Services are provided with
no less than that degree of quality and care as WIC applies in its own affairs.
5. CONFIDENTIALITY. WIC undertakes on behalf of itself and its affiliates
that it shall keep confidential and shall not, without prior written consent of
the party to whom the information relates, disclose to any person other than its
respective employees, agents or affiliates requiring such information for
purposes of the performance of this Agreement, any confidential, proprietary or
trade secret information obtained in connection with or as a result of the
performance of this Agreement. In performing its obligations under this Section
5, WIC shall apply such standards of confidentiality as it applies generally in
relation to its own confidential information. WIC shall use all reasonable
efforts to ensure that its employees and agents and those of its affiliates
observe such confidentiality.
6. INTELLECTUAL PROPERTY RIGHTS. Unless otherwise specifically described in
writing, any intellectual property acquired by WIC through the Services shall be
used by WIC for purposes of providing Services to WCG. Furthermore, WCG shall
use its best efforts to protect any of WIC's intellectual property provided or
licensed to WCG pursuant to this Agreement.
7. RECORDS. WIC shall maintain at its principal offices such records and
accounts supporting the costs and expenses incurred in performing the Services
as are consistent with recognized business practice, which records and accounts
shall be available for inspection by representatives of WCG and its auditors at
all reasonable times upon reasonable notice.
8. INDEPENDENT CONTRACTOR. WIC is and shall remain an independent contractor
in its performance of this Agreement. Neither party to this Agreement, nor any
person engaged in any work or services at the request of such party, shall be
deemed a partner, employee, or agent of the other party. Neither party to this
Agreement shall have any right or authority, and shall not attempt, to enter
into any contract, commitment or agreement to incur any debt or liability, of
any nature, in the name of the other party.
9. WIC EMPLOYEES. The Services to be provided hereunder are provided by WIC
to, and at the request and for the benefit of, WCG and the various employees of
WIC engaged from time to time in performing the Services shall under no
circumstances be, or be deemed to be, at any time performing such Services as
employees of WCG or under the control or supervision of WCG. WIC shall have full
and exclusive liability for the payment of such employees'
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<PAGE> 3
compensation and for the payment of all taxes, termination, retirement, or other
benefits, pensions, and other obligations or liabilities of any nature now or
hereafter imposed upon employers by the U.S. government in respect of such
employees, and WIC shall make such payments and shall make and file all reports
and returns and do all other things necessary to comply with the law imposing
such taxes, contributions, withholdings or other payments.
10. FORCE MAJEURE. Except for the payment of money when due, should WIC be
unable, in whole or in part, to perform its obligations under this Agreement by
reason of force majeure, WIC shall be excused from performance to the extent it
is affected by such force majeure. If WIC is affected by force majeure, WIC
shall use its best efforts to remedy the impediment to its performance. The term
"force majeure" shall mean any cause which is not within the control of WIC or
which by the exercise of due diligence, WIC is unable to prevent or overcome.
11. ARBITRATION. In case a dispute arises from the interpretation or
performance of this Agreement, the parties shall use their best efforts in order
to resolve such dispute in an amicable manner. If, such efforts are not
sufficient, any disputes arising out of or relating to this Agreement shall be
resolved exclusively and finally by Arbitration. The Arbitration shall be
conducted and heard by three (3) arbitrators in accordance with the Rules of the
American Arbitration Association with the laws of the State of Oklahoma applied
as the substantive law governing the Agreement. Any decision or award of the
arbitral tribunal shall be final and binding upon the parties. Judgment for
execution of any award rendered by the arbitral tribunal may be entered by any
court of competent jurisdiction. To the extent permitted by applicable Law, any
rights to appeal from or to cause a review of any such award by any court or
tribunal are hereby waived by the parties.
12. INDEMNIFICATION. WCG shall indemnify and hold harmless WIC, its parent,
subsidiary, and affiliated companies and the directors, officers, shareholders,
employees and agents thereof from and against any and all liability, loss and
expense, including attorneys' fees and costs, arising from injury or death to
persons or damage to property or violations of any laws or regulations related
to performance of the Services, except to the extent such loss, injury, death or
damage or violations of any laws or regulations related to the performance of
the Services is attributable to the gross negligence or acts and omissions of
WIC in the performance of such Services.
13. INSURANCE. WCG shall maintain or WIC shall carry, at the expense of WCG,
the following insurance for the International Companies: (a) Workers'
Compensation insurance (b) Comprehensive General Liability insurance (c)
Comprehensive Automobile Liability insurance (d) Excess or Umbrella Liability
coverage
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<PAGE> 4
14. TERM AND TERMINATION. This Agreement shall become effective as of the
date hereof and shall continue in effect until terminated by the agreement of
the parties or by notice in writing by either party to the other party.
15. MISCELLANEOUS.
15.1. NOTICES.
(a) All notices, requests and other communications under this Agreement
shall be in writing and delivered in person, sent by certified or registered
mail, postage prepaid, or sent by facsimile or express courier to the respective
addresses set forth below or such other address as either party may notify the
other party in writing.
IF TO WIC:
ADDRESS:
SUITE 2200
ONE WILLIAMS CENTER
TULSA, OK 74172
ATTN: JOHN BUMGARNER, JR.
FACSIMILE: (919) 573-2167
IF TO WCG:
ADDRESS:
ONE WILLIAMS CENTER
TULSA, OK 74172
ATTN: HOWARD E. JANZEN
15.2. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement between the parties with respect to the services contemplated hereby,
and supersedes all written or oral negotiations, representations, warranties,
commitments, offers and other understandings prior to the date hereof. This
Agreement may be amended or varied only by a written instrument executed by the
parties hereto.
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<PAGE> 5
15.3. SEVERABILITY. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof.
15.4. ASSIGNABILITY. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto; provided,
however, that except as otherwise provided herein, neither this Agreement nor
any right or obligation hereunder shall be assignable by either party without
the prior written consent of the other party.
15.5. CAPTIONS. The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference, and shall not be
deemed to modify, explain, enlarge or restrict any provision of this Agreement
or affect the construction hereof.
15.6. REMEDIES CUMULATIVE. Except as otherwise expressly limited herein, the
rights, powers and remedies given to any party by this Agreement shall be in
addition to all rights, powers and remedies given to that party by any statute
or rule of law. Any forbearance or failure or delay in exercising any right,
power or remedy hereunder shall not be deemed to be a waiver of such right,
power or remedy, and any single or partial exercise of any right power or remedy
shall not preclude the further exercise thereof or be deemed to be a waiver of
any other right, power or remedy.
15.7 CONSEQUENTIAL DAMAGES. In no event shall WIC be liable to WCG whether
by way of indemnity or in contract or in tort (including negligence) for any
indirect, special, or consequential loss or damages or loss of profit, loss of
use, loss of production or loss of contract or for any financial or economic
loss whatever and howsoever caused.
15.8. GOVERNING LAW. The validity, interpretation and effect of this
Agreement shall be governed exclusively by the laws of Oklahoma, without giving
effect to the conflict of law provisions thereof. The parties shall comply with
all applicable laws and regulations, including, but not limited to, the Foreign
Corrupt Practices Act.
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IN WITNESS WHEREOF, the parties hereto have executed this Technical,
Management and Administrative Services Agreement as of the day and year first
above written.
WILLIAMS INTERNATIONAL
COMPANY
BY: /s/ JOHN BUMGARNER
-----------------------------------------
NAME: John Bumgarner
---------------------------------------
TITLE: Senior Vice-President, International
--------------------------------------
WILLIAMS COMMUNICATIONS
GROUP, INC.
BY: /s/ G.L. BEST
-----------------------------------------
NAME: G.L. Best
---------------------------------------
TITLE: Vice-President
--------------------------------------
6
6
<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE [WILLIAMS LOGO]
NYSE:WCG NYSE:WMB
================================================================================
<TABLE>
<S> <C> <C>
Date: October 1, 1999
Contact: Lynne Butterworth, APR Megan Ochampaugh
Media Relations, Williams Communications Media Relations, Burson-Marsteller
(918) 573-3692 (212) 614-4615
[email protected] mailto: [email protected]
David Cordeiro Rick Rodekohr
Investor Relations, Williams Communications Investor Relations, Williams
(918) 573-3142 (918) 573-2087
[email protected] [email protected]
</TABLE>
WILLIAMS COMMUNICATIONS SHARES BEGIN TRADING ON NYSE
TULSA, Okla. - Williams Communications Group, Inc. (NYSE:WCG), a
subsidiary of Williams (NYSE:WMB), today announced an initial public offering of
29,600,000 shares of common stock at a price of $23 per share. The company
anticipates the stock to begin trading today on the New York Stock Exchange
under the symbol WCG.
Salomon Smith Barney Inc., Lehman Brothers Inc. and Merrill Lynch & Co.
are managing Williams Communications' initial public offering. Williams
Communications has granted the underwriters a 30-day option to purchase up to
4,440,000 additional shares of common stock to cover over-allotments, if any.
Williams is retaining approximately 86 percent ownership of its
communications business. The initial public offering represents approximately
seven percent of WCG common stock. An additional seven percent is being sold
through private placements to SBC Communications, Intel Corporation and
Telefonos de Mexico, S.A. de C.V. (TELMEX).
"Today represents a significant step in the evolution of Williams
Communications. Becoming a publicly traded entity will give us access to new
capital and will give telecom-focused investors and analysts the opportunity to
better value Williams Communications," said Howard E. Janzen, Williams
Communications president and chief executive officer.
In addition, Williams Communications plans to issue $2 billion in
senior notes consisting of $500 million in eight-year, 10.70 percent notes due
in 2007 and $1.5 billion in 10-year, 10.875 percent notes due in 2009. Merrill
Lynch & Co., Lehman Brothers Inc. and Salomon Smith Barney Inc. are managing the
debt offering.
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<PAGE> 2
PAGE 2 OF 3/ WILLIAMS COMMUNICATIONS SHARES BEGIN TRADING ON NYSE
"These initial equity and debt offerings, together with strategic
investments, are expected to generate net proceeds of approximately $3.3
billion. Together with Williams Communications' recently completed $1.05 billion
bank financing, these offerings represent one of the largest inaugural
financings in the history of the United States telecom industry," continued
Janzen. "We intend to use the proceeds to complete our broadband network
build-out."
Williams Communications' nationwide fiber-optic network has 19,500
route miles in service, 22,400 miles of fiber in the ground and is scheduled to
reach more than 33,000 route miles linking 125 cities by the end of 2000.
New York Stock Exchange officials expressed their support and
appreciation for being selected as the exchange of choice. "Williams
Communications embodies the caliber of high-tech company that we are proud to
list on the NYSE," said Richard A. Grasso, chairman and chief executive officer
of the New York Stock Exchange. "We have observed the steady evolution of its
parent, Williams, over the years, and now welcome the addition of one of the
largest and most advanced fiber-optic networks to the public market."
STRATEGIC ALLIANCES
Williams Communications' recent alliances and agreements with other
prominent players in the industry have underscored its carrier network position
in the telecom marketplace. The company has signed significant agreements with
SBC Communications, Intel Corporation and TELMEX:
o Concurrent with the closing of its stock offering, SBC Communications is
expected to acquire approximately four percent of WCG common stock for an
initial investment of approximately $425 million. With this alliance,
initially announced in February, Williams Communications will become SBC's
preferred provider of nationwide long-distance voice and data services. The
alliance is expected to generate revenue for Williams Communications
extending over the 20-year span of the contracts.
o As announced May 25, 1999, Intel has agreed to make a $200 million
investment in WCG stock that is expected to close soon after the IPO is
completed. Williams Communications will provide network transport for
Web-hosting service centers in the United States operated by Intel's new
Intel Online Services subsidiary.
o TELMEX, a leading telecommunications company in Mexico, and Williams
Communications announced an alliance in May to interconnect their long
distance fiber-optic networks to jointly develop seamless voice, data and
video transport services to serve their respective markets. In connection
with this agreement, TELMEX is expected to acquire up to $100 million of
WCG common stock.
MORE
<PAGE> 3
PAGE 3 OF 3/ WILLIAMS COMMUNICATIONS SHARES BEGIN TRADING ON NYSE
ABOUT WILLIAMS COMMUNICATIONS GROUP, INC. (NYSE:WCG)
Williams Communications provides communications infrastructure and services.
Based in Tulsa, Okla., the company has more than 9,000 employees worldwide and
interests in South America and Australia. Williams Communications offers
wholesale voice, data, video and Internet services and rights of use in dark
fiber on an efficient, high-capacity domestic long-distance network scheduled to
span 33,000 route miles and connect 125 cities when complete by the end of 2000.
Williams Communications' solutions unit distributes and integrates the data,
voice and multimedia networks of businesses of all sizes in North America, with
2,400 technicians in 110 locations serving more than 100,000 customer sites.
Under the Vyvx(R) brand, Williams Communications provides broadcast-quality
video, data and Internet services for media companies via fiber, satellite and
teleports. Approximately 86 percent of Williams Communications is owned by The
Williams Companies, Inc. (NYSE:WMB) which, through its subsidiaries, provides a
full range of communications and energy services.
###
All trademarks are the property of their respective owners. Portions of this
document may constitute "forward-looking statements" as defined by federal law.
Although the company believes any such statements are based on reasonable
assumptions, there is no assurance that actual outcomes will not be materially
different. Any such statements are made in reliance on the "safe harbor"
protections provided under the Private Securities Reform Act of 1995. Additional
information about issues that could lead to material changes in performance is
contained in the company's annual reports filed with the Securities and Exchange
Commission. This news release is not an offer to sell, nor the solicitation of
an offer to buy, any securities. Any offer will be made only by means of a
prospectus that would be registered with the Securities and Exchange Commission.
A copy of the final prospectus relating to the offering may be obtained by
calling 1 800-600-3781.
