Electric Lightwave, Inc. Form 10-Q
Quarterly Report Pursuant To Section 13 or 15(d)
of The Securities Exchange Act of 1934
For The Quarterly Period Ended June 30, 1999
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-23393
ELECTRIC LIGHTWAVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-1035711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 NE 77th Avenue
Vancouver, Washington 98662
(Address, zip code of principal executive offices)
Registrant's telephone number, including area code (360) 816-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes |X| No |_|
The number of shares outstanding of the registrant's class of common stock as of
July 29, 1999 were:
Common Stock Class A 8,751,063
Common Stock Class B 41,165,000
<PAGE>
================================================================================
Electric Lightwave, Inc.
<TABLE>
<CAPTION>
Index
<S> <C>
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at June 30, 1999 and December 31, 1998 (unaudited).....2
Statements of Operations for the Three Months Ended
June 30, 1999 and 1998 (unaudited)..................................3
Statements of Operations for the Six Months Ended
June 30, 1999 and 1998 (unaudited)..................................4
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 1998 (unaudited)..................................5
Notes to Financial Statements.........................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................11
Item 3. Quantitative and Qualitative Disclosures About Market Risk...19
Part II. Other Information
Signature .............................................................23
</TABLE>
1
<PAGE>
Electric Lightwave, Inc.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Assets
June 30, 1999 December 31, 1998
--------------- ------------------
<S> <C> <C>
Current assets:
Cash .......................................... $ 18,189 $ 13,120
Trade receivables, net ........................ 25,722 20,320
Other receivables ............................. 1,434 2,671
Other current assets .......................... 1,821 1,953
--------- ---------
Total current assets ........................ 47,166 38,064
--------- ---------
Property, plant and equipment .................... 693,449 528,582
Less accumulated depreciation and amortization ... (55,723) (40,912)
--------- ---------
Property, plant and equipment, net ............ 637,726 487,670
--------- ---------
Other assets ..................................... 8,602 6,575
--------- ---------
Total assets ................................ $ 693,494 $ 532,309
========= =========
Liabilities And Equity
Current liabilities:
Accounts payable and accrued liabilities ...... $ 63,307 $ 61,760
Current portion of long-term debt ............. 15,380 351
Due to Citizens Utilities Company ............. 10,138 5,254
Other accrued taxes ........................... 7,793 5,577
Other current liabilities ..................... 7,590 5,024
--------- ---------
Total current liabilities ................... 104,208 77,966
Deferred credits and other ....................... 1,649 1,834
Deferred income taxes payable .................... 2,492 1,760
Long-term debt ................................... 503,250 302,256
--------- ---------
Total liabilities ........................... 611,599 383,816
--------- ---------
Shareholders' equity:
Common stock issued, $.01 par value
Class A ..................................... 87 86
Class B ..................................... 412 412
Additional paid-in-capital .................... 323,484 321,926
Deficit ....................................... (242,088) (173,931)
--------- ---------
Total shareholders' equity .................. 81,895 148,493
--------- ---------
Total liabilities and shareholders' equity .. $ 693,494 $ 532,309
========= =========
</TABLE>
See accompanying notes.
2
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
(In thousands, except per-share amounts)
(Unaudited) For the three months ended June 30,
1999 1998
--------- ---------
<S> <C> <C>
Revenues ....................................... $ 46,095 $ 21,443
--------- ---------
Operating expenses:
Network access .............................. 23,702 9,860
Operations .................................. 9,633 6,528
Selling, general and administrative ......... 29,447 17,588
Depreciation and amortization ............... 8,150 3,780
--------- ---------
Total operating expenses .................. 70,932 37,756
--------- ---------
Loss from operations ........................ (24,837) (16,313)
Interest expense and other ..................... 8,068 1,467
--------- ---------
Net loss before income taxes ................ (32,905) (17,780)
Income tax expense (benefit) ................... 300 (3,022)
--------- ---------
Net loss .................................... $ (33,205) $ (14,758)
========= =========
Net loss per common share:
Basic ..................................... $ (.67) $ (.30)
Diluted ................................... $ (.67) $ (.30)
Weighted average shares outstanding ............ 49,822 49,694
</TABLE>
See accompanying notes.
3
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
(In thousands, except per-share amounts)
(Unaudited) For the six months ended June 30,
1999 1998
--------- ---------
<S> <C> <C>
Revenues ......................................... $ 84,311 $ 41,500
--------- ---------
Operating expenses:
Network access ................................ 48,926 19,072
Operations .................................... 18,667 11,774
Selling, general and administrative ........... 56,214 32,963
Depreciation and amortization ................. 15,144 7,664
--------- ---------
Total operating expenses .................... 138,951 71,473
--------- ---------
Loss from operations .......................... (54,640) (29,973)
Interest expense and other ....................... 12,847 2,211
--------- ---------
Net loss before income taxes and cumulative
effect of change in accounting principle .... (67,487) (32,184)
Income tax expense (benefit) ..................... 670 (5,471)
--------- ---------
Net loss before cumulative effect of change in
accounting principle ........................ (68,157) (26,713)
Cumulative effect of change in accounting principle
(net of $577 income tax benefit) .............. -- 2,817
--------- ---------
Net loss ...................................... $ (68,157) $ (29,530)
========= =========
Net loss per share before cumulative effect of
change in accounting principle:
Basic ....................................... $ (1.37) $ (.54)
Diluted ..................................... $ (1.37) $ (.54)
Net loss per common share:
Basic ....................................... $ (1.37) $ (.59)
Diluted ..................................... $ (1.37) $ (.59)
Weighted average shares outstanding .............. 49,812 49,690
</TABLE>
See accompanying notes.
4
<PAGE>
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands)
(Unaudited) For the six months ended June 30,
1999 1998
--------- ---------
<S> <C> <C>
Net cash used for operating activities ........... $ (55,455) $ (13,022)
--------- ---------
Cash flows used for investing activities:
Capital expenditures .......................... (108,458) (74,971)
--------- ---------
Cash flows from financing activities:
Net revolving bank credit facility proceeds
(repayments) ............................. (154,000) 74,000
Note issuance ................................. 325,000 --
Other, net .................................... (2,018) 100
--------- ---------
Net cash provided by financing activities ... 168,982 74,100
--------- ---------
Net increase (decrease) in cash .................. 5,069 (13,893)
Cash at January 1, ............................... 13,120 26,531
--------- ---------
Cash at June 30, ................................. $ 18,189 $ 12,638
========= =========
Supplemental cash flow information:
Cash paid for interest, net of capitalized
portion .................................. $ 11,210 $ 1,836
Non-cash increase in capital lease asset and
obligation ............................... 45,195 2,174
</TABLE>
See accompanying notes.
5
<PAGE>
Electric Lightwave, Inc.
Notes to Financial Statements
1. Summary of Significant Accounting Policies
a. Basis of Presentation and Use of Estimates
Electric Lightwave, Inc. is referred to as "we", "us" or "our" in
this report. We have prepared these unaudited financial statements in
accordance with generally accepted accounting principles (GAAP) for
interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, we have condensed or
omitted certain information and footnote disclosures. In our opinion,
these financial statements include all adjustments and recurring
accruals necessary to present fairly the results for the interim
periods shown.
Preparing financial statements in conformity with GAAP requires us to
make estimates and assumptions which affect the amounts of assets,
liabilities, revenues and expenses we have reported and our
disclosure of contingent assets and liabilities at the date of the
financial statements. The results of the interim periods are not
necessarily indicative of the results for the full year. We have made
certain reclassifications of balances previously reported to conform
to the current financial statement presentation. You should read
these financial statements in conjunction with the audited financial
statements and the related notes included in our Annual Report on
Form 10-K for the year ended December 31, 1998.
b. Capitalized Interest
Property, plant and equipment includes interest costs capitalized
during the installation and expansion of our communications networks.
Approximately $2,949,000 and $2,050,000 of interest costs were
capitalized in the three months ended June 30, 1999 and 1998,
respectively, with approximately $6,167,000 and $3,838,000
capitalized in the six months ended June 30, 1999 and 1998,
respectively.
c. Reciprocal Compensation
We have various interconnection agreements with U S West
Communications, Inc. (US West) and GTE Corporation (GTE), the
Incumbent Local Exchange Carriers (ILECs) in the states in which we
operate. These agreements govern reciprocal compensation relating to
the transport and termination of traffic between the ILEC's networks
and our network. We recognize reciprocal compensation revenues as
earned, based on the terms of the interconnection agreements. We
recognized total net reciprocal compensation revenues for the three
and six months ended June 30, 1999 of $8.1 million and $14.7 million,
respectively. Net trade accounts receivable relating to reciprocal
compensation at June 30, 1999 totaled $11.0 million, compared to
$10.4 million at December 31, 1998.
We have filed complaints with the Public Utility Commissions (PUCs)
in Washington, Utah, Oregon, Arizona and Idaho requesting that US
West pay us for reciprocal compensation charges relating to the
termination of calls to Internet Service Providers (ISPs), as
required by the interconnection agreements. The Washington and Utah
PUCs ruled in our favor and accordingly, US West is now paying us for
reciprocal compensation charges in these states. The Oregon PUC ruled
in our favor in April 1999. However, US West is disputing the
termination rate included in the Oregon PUC approved interconnection
agreement. The complaints in Arizona and Idaho are pending.
6
<PAGE>
Electric Lightwave, Inc.
Notes to Financial Statements - (Continued)
On February 25, 1999, the FCC issued a Declaratory Ruling and Notice
of Proposed Rulemaking that categorized calls terminated to ISPs as
"largely" interstate in nature, which could have the effect of
precluding these calls from reciprocal compensation charges. However,
the ruling stated that ILECs are bound by the existing
interconnection agreements and the state decisions that have defined
them. The FCC gave the states authority to interpret existing
interconnection agreements. Since the FCC order, thirteen states,
including Oregon and Washington, have ruled that calls terminated to
ISPs should be included in the calculation to determine reciprocal
compensation.
The reciprocal compensation rates defined in our interconnection
agreements are subject to change both by state PUC cost proceedings
and by renegotiation. The Oregon PUC has established a lower rate
than is reflected in our existing interconnection agreements. The new
rate is approximately 70% less than the rate in the existing
agreement. We expect that the new rate will become effective as of
some point in the first half of 1999. Both the Washington and Utah
PUCs have begun proceedings to set new reciprocal compensation rates.
We estimate that the current rates in Washington and Utah may be
reduced by 50% or more in the second half of 1999. These three states
comprise a substantial portion of our reciprocal compensation
revenues. Also, if we cannot renegotiate new interconnection
agreements upon expiration of our current agreements, our reciprocal
compensation revenues could decrease from current levels.
d. Net Loss Per Share
We follow the provisions of Statement of Financial Accounting
Standards (SFAS) 128, "Earnings Per Share" which requires
presentation of both basic and diluted earnings per share (EPS) on
the face of the statement of operations. Basic EPS is computed using
the weighted average number of common shares outstanding during the
period. The diluted EPS calculation assumes that all stock options or
contracts to issue common stock were exercised or converted into
common stock at the beginning of the period. We have excluded certain
common stock equivalents from our diluted EPS calculation during the
quarters ended June 30, 1999 and 1998 because the effect would have
reduced our net loss per share.
2. Change in Accounting Principle
On April 3, 1998, the Accounting Standards Executive Committee of the
AICPA released Statement of Position (SOP) 98-5, "Reporting on the
Costs of Start-Up Activities". The SOP requires that at the beginning
of the fiscal year of adoption, any remaining deferred start-up costs
be expensed and reported as a change in accounting principle. Future
costs of start-up activities should then be expensed as incurred.
We adopted SOP 98-5 effective January 1, 1998. Previous to January 1,
1998, we had capitalized certain third party direct costs incurred in
connection with negotiating and securing initial rights-of-way and
developing network design for new markets or locations. These amounts
were being amortized over five years. We have reported the remaining
net book value of these deferred amounts of $3,394,000 as a
cumulative effect of a change in accounting principle in the
statement of operations for the six months ended June 30, 1998, net
of income tax benefit of $577,000.
7
<PAGE>
Electric Lightwave, Inc.
Notes to Financial Statements - (Continued)
3. Commitments and Contingencies
Our license agreements for the exclusive use of long-haul facilities
connecting our Portland to Seattle, Portland to Spokane and Portland
to Eugene long-haul transport networks and for the exclusive use of
the Phoenix network contain annual minimum usage requirements. If our
traffic on any of these networks falls below the minimums, the
licensor will obtain the right to share usage of a specific number of
fibers with us. We have entered arbitration to resolve a dispute
regarding the exclusive use of our long-haul facilities connecting
Portland to Seattle and Portland to Spokane.
In March 1999, we entered into a 20-year fiber-swap agreement, in
which we will exchange unused fiber on our network for unused fiber
on another carrier's network. This exchange will provide us with
fiber from Salt Lake City to Denver, continuing on to Dallas. We will
provide the other carrier with unused fiber on our long-haul network
that connects Spokane and Seattle, Washington, Portland and the Bay
Area in California. We anticipate incorporating the other carrier's
fiber into our network during 2000. We will pay the other carrier
approximately $101 million over 20 years beginning in 2000. The other
carrier will pay us approximately $77 million over the same time
period.
In June 1999, we entered into a 20-year capital lease for capacity on
a third party's network. The lease calls for total payments of $9
million over the next four years. As of June 30, 1999, we reported a
capital lease asset and related obligation of approximately $7.5
million in our balance sheet, of which $2.5 million is presented in
current portion of long-term debt. We were previously leasing this
capacity through a private-line services agreement with this third
party. The private-line services agreement allows us to utilize the
third party's national fiber optic network through 2007, and had an
initial take-or-pay commitment of $122 million. We amended the
private-line services agreement in June 1999 to reflect that we are
now leasing certain capacity under the new capital lease that had
previously been leased under the private-line services agreement. As
a result of this amendment, our total minimum commitment under the
private-line services agreement was reduced to $90 million for the
remaining period of July 1, 1999 through December 31, 2007.
4. Related Party Transactions
Citizens Utilities Company (Citizens) owns approximately 82% of our
common stock. During 1998, Citizens announced its intent to separate
its telecommunications businesses and its public service businesses
into two stand-alone, publicly traded companies. Through May 1999,
Citizens had been pursuing its separation plans. Subsequently,
Citizens announced that it had entered into two access line purchase
agreements. Entering into these purchase agreements led Citizens to
discontinue its separation plans. Permanent funding for Citizens'
acquisitions will come from the sale of the public service
properties. Citizens is continuing to investigate and review
opportunities for the acquisition of new telecommunications
properties.
8
<PAGE>
Electric Lightwave, Inc.
Notes to Financial Statements - (Continued)
This table summarizes the activity in the liability account Due to
Citizens for the six months ended June 30, 1999:
<TABLE>
<CAPTION>
($ in thousands)
<S> <C>
Balance, December 31, 1998............................. $ 5,254
Guarantee fees......................................... 8,087
Administrative services:
Services provided by Citizens..................... 4,555
ELI expenses paid by Citizens..................... 3,742
Payments to Citizens................................... (11,500)
---------
Balance, June 30, 1999................................. $ 10,138
=========
</TABLE>
5. Significant Customer
During the three and six months ended June 30, 1999, US West
accounted for 18% of our total revenues.
6. Income Taxes
Citizens includes us in their consolidated federal income tax return
which uses a calendar year reporting period. We record income taxes
as if we were a stand-alone company. We recorded income tax expense
of $300,000 and $670,000 in the three and six months ended June 30,
1999, respectively. This expense represents the deferred tax effect
of the increase in temporary differences between our GAAP financial
statements and our tax return that may not be fully offset with the
use of tax loss carryforwards when the timing differences reverse in
future periods.
The income taxes payable by Citizens' consolidated group have been
reduced as a consequence of our losses for tax purposes in past
years. We would be able to carry-forward our tax losses to future
periods to offset net income for tax purposes in these future periods
had we been stand-alone for tax purposes. Citizens has agreed to
reimburse us, in a tax-sharing agreement, for the taxes we will have
to pay as a result of not being able to use our tax loss
carryforwards in future periods.
7. Long-term Debt
The components of our long-term debt is as follows:
<TABLE>
<CAPTION>
($ in thousands) June 30, 1999 December 31, 1998
---------------- --------------------
<S> <C> <C>
Senior unsecured notes............... $ 325,000 $ --
Revolving bank credit facility....... 130,000 284,000
Capital leases....................... 48,250 18,256
---------- ----------
$ 503,250 $ 302,256
========== ==========
</TABLE>
We issued $325 million of five-year senior unsecured notes in April
1999. The notes have an interest rate of 6.05% and will mature on May
15, 2004. Citizens has initially guaranteed the notes for an annual
fee of 4.0% of the outstanding balance. See "Item 2, Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources".
9
<PAGE>
Electric Lightwave, Inc.
Notes to Financial Statements - (Continued)
We incurred $2.5 million of costs related to issuing the senior
unsecured notes. We have recorded these amounts in other assets on
our June 30, 1999 balance sheet, and are amortizing them to interest
expense using the effective interest method over the term of the
notes.
We also recorded $30,180,000 of long-term capital lease obligations
during the six months ended June 30, 1999. The obligations primarily
relate to constructed portions of our western long-haul networks.
10
<PAGE>
Electric Lightwave, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
We caution you that this quarterly report on Form 10-Q contains
forward-looking statements within the meaning of the Securities and
Exchange Act of 1934. Forward-looking statements (including oral
representations) are only predictions or statements of our current
plans, which we review on a continual basis, and are based on our
beliefs, expectations and assumptions and on information currently
available to us. The words "may", "should", "expect", "anticipate",
"intend", "plan", "continue", "believe", "estimate" or similar
expressions used in this report are intended to identify
forward-looking statements.
The forward-looking statements in this quarterly report on Form 10-Q
involve certain risks, uncertainties and assumptions. They are not
guarantees of future performance. Factors that may cause actual
results to differ materially from those expressed or implied in any
forward-looking statements include, but are not limited to, any of
the following possibilities:
* if the local and overall economic conditions of our markets are
less favorable than we expected;
* if there are changes in the nature and pace of technological
advances in our industry;
* if competitive pressure in the telecommunications industry
increases in any of our markets because of the entrance of new
competitors, the combination of existing competitors and/or the
more effective provision of products and services from our
competitors, including ILECs, or other public utilities;
* if our business strategy or its execution, including financial
performance goals, is not as successful as we anticipate;
* if we are not able to maintain exclusive use of fiber on our
performance based leases;
* if state or federal regulatory changes are implemented that
assist our competitors, impair our competitive position,
threaten our costs or impact our rate structures, including the
ability to bill reciprocal compensation for calls terminated to
ISPs;
* if we do not receive the services and support which we require
from the regional ILECs or cannot maintain our current
relationships with ILECs;
* if we are not able to effectively manage rapid growth, including
integrating any businesses acquired;
* if we are not able to correctly identify future markets,
successfully expand existing ones, or successfully expand
through acquisitions;
* if the mix of products and services we are able to offer in our
target markets is not appropriate to the demands of our
customers; or
* if our stock price is volatile.
You should consider these important factors in evaluating any
statement contained in this report and/or made by us or on our
behalf. We have no obligation to update or revise forward-looking
statements.
- --------------------------------------------------------------------------------
11
<PAGE>
Electric Lightwave, Inc.
The following information has not been audited. You should read this
information in conjunction with the condensed financial statements
and related notes to financial statements included in this report. In
addition, please see our Management Discussion and Analysis of
Financial Condition and Results of Operations, audited financial
statements and related notes included in our Annual Report on Form
10-K for the year ended December 31, 1998.
Overview
We have built an extensive fiber-optic network in the western United
States, which we use to provide products and services to customers in
seven major cities and their surrounding areas. In addition, we
provide data services in certain strategic markets across the nation.
Our product offerings include:
* Network services - includes dedicated service between two points
for a customer's exclusive use. We offer this in both local and
long-haul applications.
* Local telephone services - consists of the delivery of local
dial tone and related services, including reciprocal
compensation.
* Long distance services - includes retail and wholesale long
distance phone services, including our prepaid phone card
business.
* Data services - includes a wide range of products to deliver
large quantities of data from one location to another through
Asynchronous Transfer Mode (ATM), Frame Relay and Internet
Protocol packet technologies. These technologies group data
(voice, video, images and character-based data) into small
packets of information and transmit the packets over a network.
We are investing in our network in the west and are developing
long-haul networks that will connect all of our seven major cities
and several of our data-only cities with high-capacity fiber-optic
cable and electronics. Certain segments of our long-haul networks are
currently operational, and we expect to complete the remainder of
this network in the second half of 1999. During March 1999, we
entered into a fiber-swap agreement, which exchanges unused fiber on
our network for unused fiber on another carrier's network. This
exchange will provide us with fiber from Salt Lake City, Utah to
Denver, Colorado and continue on to Dallas, Texas. We anticipate
incorporating the other carrier's fiber into our network during 2000.
In addition to our expansion plans in the west, we are expanding our
reach into key cities across the nation by offering high-speed data
and Internet services. We added Atlanta, Dallas, San Diego and
Washington, D.C. during the first quarter of 1999 and Cleveland and
Philadelphia in April 1999. We plan to connect Austin and Houston by
the end of 1999. Our current data cities include Atlanta, Chicago,
Cleveland, Dallas, Las Vegas, Los Angeles, New York, Philadelphia,
San Diego, San Francisco and Washington D.C.
Citizens Utilities Company (Citizens) owns approximately 82% of our
common stock. During 1998, Citizens announced its intent to separate
its telecommunications businesses and its public service businesses
into two stand-alone, publicly traded companies. Through May 1999,
Citizens had been pursuing its separation plans. Subsequently,
Citizens announced that it had entered into two access line purchase
agreements. Entering into these purchase agreements led Citizens to
discontinue its separation plans. Permanent funding for Citizens'
acquisitions will come from the sale of the public service
properties. Citizens is continuing to investigate and review
opportunities for the acquisition of new telecommunications
properties.
12
<PAGE>
Electric Lightwave, Inc.
a. Liquidity and Capital Resources
We used net debt borrowings of $171 million to fund operating and
capital expenditures in the first half of 1999. The source of these
borrowings was our revolving bank credit facility and $325 million of
notes we issued during April 1999 in a private placement. The notes
are five-year senior unsecured notes, have an interest rate of 6.05%
and will mature on May 15, 2004. We used the majority of the net
proceeds from the issuance to repay outstanding borrowings under our
revolving bank credit facility. As a result, we have $270 million
remaining available through November 2002 under the revolving bank
credit facility to fund future operating and capital expenditures.
Citizens has guaranteed both the revolving bank credit facility and
the notes for a fee of 3.25% and 4.0%, respectively, assessed on the
respective outstanding balances.
We expect that the $270 million remaining on our revolving bank
credit facility will be adequate to fund operating and capital
expenditures through the first quarter 2000. At that point, we will
need to obtain additional debt or equity financing. We cannot provide
assurance that we will be able to obtain such financing, or that we
will be able to obtain it on reasonable terms.
We continue to invest in the installation, development and expansion
of our new and existing communications networks. A significant
portion of these expenditures is incurred before any revenues are
realized. Our capital additions were approximately $165 million in
the first half of 1999, including $45 million in non-cash capital
lease additions. These expenditures, combined with our operating
expenses, have resulted in operating losses and negative cash flows.
We expect to continue incurring operating losses and negative cash
flows until we can establish an adequate customer base and revenue
stream to support our network. We cannot provide assurance that we
will achieve or sustain profitability or generate sufficient positive
cash flow to fund our operating and capital requirements or service
debt.
We continue to evaluate opportunities to generate revenue growth
through making substantial investments in the continued development
of our existing networks, new long-haul routes and entry into new
markets. These opportunities may include acquisitions and/or joint
ventures that are consistent with our business plan of generating
revenue growth through expansion of our network and customer base.
Any such acquisitions, investments and/or strategic arrangements, if
available, could require additional financial resources and/or
reallocation of our financial resources.
In June 1999, we entered into a 20-year capital lease for capacity on
a third party's network. The lease calls for total payments of $9
million over the next four years. As of June 30, 1999, we reported a
capital lease asset and related obligation of approximately $7.5
million in our balance sheet, of which $2.5 million is presented in
current portion of long-term debt. We were previously leasing this
capacity through a private-line services agreement with this third
party. The private-line services agreement allows us to utilize the
third party's national fiber optic network through 2007, and had an
initial take-or-pay commitment of $122 million. We amended the
private-line services agreement in June 1999 to reflect that we are
now leasing certain capacity under the new capital lease that had
previously been leased under the private-line services agreement. As
a result of this amendment, our total minimum commitment under the
private-line services agreement was reduced to $90 million for the
remaining period of July 1, 1999 through December 31, 2007.
We also added short and long-term capital lease obligations to our
June 30, 1999 balance sheet of approximately $12.6 million and $25.1
million, respectively. These obligations were the result of a
constructed portion of our western long-haul networks. Payments for
this capital lease are due over the next two years.
13
<PAGE>
Electric Lightwave, Inc.
Other Matters
Year 2000
The Year 2000 (Y2K) issue stems from the fact that many computer
programs worldwide use two digits, rather than four, to define the
applicable year. For instance, many computers on January 1, 2000 may
assume that 01/01/00 is the first day of the year 1900 rather than
2000. Massive system failures may occur globally if this issue is not
properly addressed. We have developed a Y2K Initiative (the
Initiative) to mitigate the impact of the Y2K issue for our internal
systems and the systems that we rely on indirectly from third
parties.
Under the Initiative, we have formed a cross-functional Y2K project
team that reports to the Chief Information Officer (CIO). The CIO has
authority to establish methodologies, approve expenditures, and
marshal additional resources as necessary. A full-time consultant
project manager, who reports regularly to the CIO, manages the
Initiative and oversees the project team. The CIO is responsible for
researching, planning, executing, implementing and completing the
Initiative.
The three functional categories evaluated in the Initiative include:
* Communications Network - software and electronics that process
voice and data information relating to our communications
operations, including transmission equipment,
* Information Technology (IT) - consists of all internal hardware
and software used to support our financial and administrative
operations, and
* Facilities - consists of all systems necessary to run an office
including security systems, fire suppression, generators,
rectifiers, batteries and components with embedded technology at
our headquarters and leased facilities.
The Initiative is composed of three primary phases that we are
applying to each of the three functional categories.
* Phase I - Inventory and assessment
Inventory and assessment is the process of identifying all
relevant systems and information sources company-wide,
performing a risk-based analysis of each, categorizing each risk
according to its impact on our mission, and making a preliminary
determination of Y2K compliance. Phase I is substantially
complete for all functional categories.
* Phase II - Remediation
Remediation is the process of making changes to the hardware,
software or services in order to become Y2K compliant. Phase II
is substantially complete for all functional categories.
14
<PAGE>
Electric Lightwave, Inc.
* Phase III - Testing, contingency planning and certification
Testing is the process of verifying that systems and processes
will continue to operate properly in the Year 2000 and beyond.
Testing is required for all mission-critical systems and
information sources. We have performed steps to test hardware
and software and reviewed testing documentation prepared by
vendors or service providers. Testing is substantially complete
for all functional categories except Facilities, which we
anticipate to be completed by September 30, 1999.
Contingency planning is required for all mission-critical
systems and information sources. The contingency plan will
include an evaluation of the system or information source
business risk, vulnerabilities, contingency steps and
containment measures. Contingency Planning is underway and is
expected to be complete by September 30, 1999.
Year 2000 certification is achieved when all year 2000
milestones have been successfully completed and approved by the
project manager. We expect certification to be complete by
October 30, 1999.
We anticipate the cost to address the Y2K issue to be approximately
$2 million. This cost estimate is based on current information, and
there are no guarantees that costs will not be higher than we
anticipate. As of June 30, 1999, we had incurred $.9 million of Y2K
costs.
Within the Communications Network, we depend on the ILEC and other
carriers to provide systems that are Y2K compliant to allow us to
connect with some of our customers. Within IT, we depend on
appropriately skilled internal and external experts to develop
software. Within Facilities, we depend on utility suppliers to
provide services to allow our network to continue to operate. If we
do not comply with Y2K, the worst case scenario would be a disruption
of service or the inability to bill or collect revenues from our
customers, which could have a material adverse effect on our
business. However, we believe this is unlikely and that we will
succeed in mitigating Y2K issues. As an added precaution, we have
formed a Y2K Rapid Response Team composed of experts from key
operational departments that will be able to quickly respond in the
event of Y2K failures.
Reciprocal Compensation
We have various interconnection agreements with US West and GTE, the
ILECs in the states in which we operate. These agreements govern
reciprocal compensation relating to the transport and termination of
traffic between the ILEC's networks and our network. We recognize
reciprocal compensation revenues as earned, based on the terms of the
interconnection agreements. We recognized total net reciprocal
compensation revenues for the three and six months ended June 30,
1999 of $8.1 million and $14.7 million, respectively. Net trade
accounts receivable relating to reciprocal compensation at June 30,
1999 totaled $11.0 million, compared to $10.4 million at December 31,
1998.
We have filed complaints with the Public Utility Commissions (PUCs)
in Washington, Utah, Oregon, Arizona and Idaho requesting that US
West pay us for reciprocal compensation charges relating to the
termination of calls to Internet Service Providers (ISPs), as
required by the interconnection agreements. The Washington and Utah
PUCs ruled in our favor and accordingly, US West is now paying us for
reciprocal compensation charges in these states. The Oregon PUC ruled
in our favor in April 1999. However, US West is disputing the
termination rate included in the Oregon PUC approved interconnection
agreement. The complaints in Arizona and Idaho are pending.
15
<PAGE>
Electric Lightwave, Inc.
On February 25, 1999, the FCC issued a Declaratory Ruling and Notice
of Proposed Rulemaking that categorized calls terminated to ISPs as
"largely" interstate in nature, which could have the effect of
precluding these calls from reciprocal compensation charges. However,
the ruling stated that ILECs are bound by the existing
interconnection agreements and the state decisions that have defined
them. The FCC gave the states authority to interpret existing
interconnection agreements. Since the FCC order, thirteen states,
including Oregon and Washington, have ruled that calls terminated to
ISPs should be included in the calculation to determine reciprocal
compensation.
The reciprocal compensation rates defined in our interconnection
agreements are subject to change both by state PUC cost proceedings
and by renegotiation. The Oregon PUC has established a lower rate
than is reflected in our existing interconnection agreements. The new
rate is approximately 70% less than the rate in the existing
agreement. We expect that the new rate will become effective as of
some point in the first half of 1999. Both the Washington and Utah
PUCs have begun proceedings to set new reciprocal compensation rates.
We estimate that the current rates in Washington and Utah may be
reduced by 50% or more in the second half of 1999. These three states
comprise a substantial portion of our reciprocal compensation
revenues. Also, if we cannot renegotiate new interconnection
agreements upon expiration of our current agreements, our reciprocal
compensation revenues could decrease from current levels.
b. Results of Operations
Revenues
Revenues increased in the three and six months ended June 30, 1999
over the respective periods in 1998 due to the expansion of our
network and customer base. Since June 30, 1998, we completed our
fiber network in Spokane, Washington, where we are providing our full
suite of services. Also, since June 30, 1998, we have begun providing
high-speed data and Internet services in various cities across the
nation, including Atlanta, Chicago, Cleveland, Dallas, Las Vegas, Los
Angeles, New York, Philadelphia, San Diego, San Francisco and
Washington, D.C. We also added 631 customers and 113 building
connections, 47% and 17% increases, respectively, since June 30,
1998.
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
-------------------------------- ---------------------------------
% %
($ in thousands) 1999 1998 Incr. 1999 1998 Incr.
--------- -------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Network services............ $ 12,983 $ 8,371 55% $ 23,407 $ 17,478 34%
Local telephone services.... 18,600 7,769 139% 32,908 13,793 139%
Long distance services...... 9,245 1,899 387% 17,775 3,721 378%
Data services............... 5,267 3,404 55% 10,221 6,508 57%
---------- --------- ------ ---------- --------- ------
Total $ 46,095 $ 21,443 115% $ 84,311 $ 41,500 103%
========== ========= ========== =========
</TABLE>
16
<PAGE>
Electric Lightwave, Inc.
Network Services
Network services revenues increased in both the three and six months
ended June 30, 1999 over the respective periods in 1998 primarily due
to sale of additional circuits to new and existing customers. The
increased revenues in the six months ended June 30, 1999 were
partially offset by a decrease in revenue of $1.2 million from a
significant customer primarily due to the expiration of a short-term
contract in the first quarter 1998.
Local Telephone Services
Local telephone services revenues increased in both the three and six
months ended June 30, 1999 over the respective periods in 1998.
Included in this category were reciprocal compensation revenues,
which increased $4.9 million, or 152%, and $8.8 million, or 148%, in
the three and six months ended June 30, 1999, respectively, over the
same periods in 1998. Our ISDN PRI product revenues increased $3.3
million, or 154%, and $5.7 million, or 162%, in the three and six
months ended June 30, 1999, respectively, over the same periods in
1998. Over the same periods, local dial tone services increased $2.6
million, or 110%, and $4.7 million, or 108%, respectively.
The increases were the result of an increase in access line
equivalents installed of 67,026 or 123%, from June 30, 1998 to June
30, 1999. Also, in the second quarter of 1999, we began recognizing
reciprocal compensation revenues from US West in Idaho and GTE in
Washington. The ISDN PRI growth has largely come from sales to
Internet Service Providers.
Long Distance Services
Long distance services revenues increased in both the three and six
months ended June 30, 1999 over the respective periods in 1998
primarily due to increased revenues from prepaid services, which
increased $5.3 million, or 2,041%, and $11.4 million, or 2,697%,
respectively. The increases were due to large increases in the
minutes processed as a result of adding large volume customers. In
the second quarter 1999, we modified the terms of some of our prepaid
programs, and discontinued others. As a result, we anticipate
significantly less revenue from prepaid services in the remaining
quarters of 1999 compared to current levels. Retail and wholesale
long distance revenues accounted for the remainder of the increase in
each period, driven by increased minutes processed.
Data Services
Data services revenues increased in both the three and six months
ended June 30, 1999 over the respective periods in 1998 primarily due
to strong customer demand for these products. Revenues from our
Internet services product increased $1.6 million, or 151%, and $2.7
million, or 132%, respectively. Additionally, our frame relay product
revenues increased by $.5 million, or 43%, and $1.3 million, or 57%,
respectively.
17
<PAGE>
Electric Lightwave,Inc.
Operating Expenses
Operating expenses increased in both the three and six months ended
June 30, 1999 over the respective periods in 1998. This increase was
due to our growth in network and customer base as reflected in
revenues as well as increased long distance network access costs,
expansion of our sales force and the costs incurred to support our
national data expansion.
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
-------------------------------- ---------------------------------
% %
<S> <C> <C> <C> <C>
($ in thousands) 1999 1998 Incr. 1999 1998 Incr.
--------- -------- ------ --------- --------- -------
Network access...... $ 23,702 $ 9,860 140% % 48,926 $ 19,072 157%
Operations.......... 9,633 6,528 48% 18,667 11,774 59%
Selling, general and
administrative.... 29,447 17,588 67% 56,214 32,963 71%
Depreciation and
amortization...... 8,150 3,780 116% 15,144 7,664 98%
------- --------- -------- --------
Total.......... $ 70,932 $ 37,756 88% $138,951 $ 71,473 94%
========= ========= ======== ========
</TABLE>
Network Access
Network access expenses include resold product expenses. The primary
components are usage-based charges for carrying and terminating
traffic on another carrier's network.
Network access expenses increased in both the three and six months
ended June 30, 1999 over the respective periods in 1998 due to
overall revenue growth and an increase in long distance costs related
to our prepaid services programs. We have also incurred expenses
relating to our national data expansion before we have been able to
realize significant related revenues.
Operations
Operations expenses consist of costs related to providing facilities
based network and enhanced communications services other than network
access costs. The primary components of these expenses are
right-of-way and telecommunications equipment leases as well as
operations and engineering personnel costs.
Operations expenses increased in both the three and six months ended
June 30, 1999 over the respective periods in 1998 due to increases in
payroll and related expenses to support the expanded delivery of
services, and an expanded customer service organization.
Selling, General and Administrative
Selling, general and administrative expenses include all direct and
indirect sales channel expenses and commissions, as well as all
general and administrative expenses.
Selling, general and administrative increased in both the three and
six months ended June 30, 1999 over the respective periods in 1998
due to increases in payroll and related expenses to support the
delivery of services in existing and new markets including the
national data expansion. We increased our sales force to 178
employees, a 58% increase over June 30, 1998.
Depreciation and Amortization
Depreciation and amortization expenses include depreciation of
communications network assets including fiber-optic cable, network
electronics, network switching and network data equipment.
18
<PAGE>
Electric Lightwave, Inc.
Depreciation and amortization expense increased in both the three and
six months ended June 30, 1999 over the respective periods in 1998
due to higher plant in service balances for newly completed
communications network facilities and electronics.
Interest Expense and Other
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
----------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
% %
($ in thousands) 1999 1998 Incr. 1999 1998 Incr.
------- ------- ------- ------- ------ ------
Interest expense and
other................. $ 8,068 $ 1,467 450% $ 12,847 $ 2,211 481%
</TABLE>
Interest expense increased in both the three and six months ended
June 30, 1999 over the respective periods in 1998 primarily due to
higher levels of long-term debt outstanding. At June 30, 1999, $503
million of long-term debt was outstanding, compared to $147 million
at June 30, 1998.
Income Tax Expense (Benefit)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
----------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
% %
($ in thousands) 1999 1998 Incr. 1999 1998 Incr.
------- ------- ------- ------- ------ ------
Income tax expense
(benefit)............. $ 300 $ (3,022) N/A $ 670 $(6,048) N/A
</TABLE>
In 1998, we were able to recognize a tax benefit for our tax loss
carryforwards to a limited extent of our deferred tax liabilities. In
1999, the benefit of our tax loss carryforwards is not able to fully
offset the deferred tax expense associated with current year timing
differences.
Cumulative Effect of Change in Accounting Principle
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
----------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
% %
($ in thousands) 1999 1998 Incr. 1999 1998 Incr.
------- ------- ------- ------- ------ ------
Cumulative effect of
change in accounting
principle............. $ -- $ -- N/A $ -- $ 3,394 N/A
</TABLE>
Cumulative effect of change in accounting principle represented a
write-off of the unamortized portion of deferred start-up costs due
to our adoption of AICPA Statement of Position 98-5, "Reporting on
the costs of Start-Up Activities" in 1998.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We reduced our interest rate risk by issuing $325 million, five-year
senior unsecured notes in April 1999 that are guaranteed by Citizens.
The notes have a fixed interest rate of 6.05% and a guarantee fee of
4.0%. We used the net proceeds from the issuance to repay outstanding
borrowings under our floating rate bank credit facility.
19
<PAGE>
Electric Lightwave, Inc.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Subsequent to June 30, 1999, we resolved the legal proceedings and
related arbitration against US West as described in Item 3 of our
1998 Form 10-K. US West has agreed to enter into a purchase of
incremental telecommunications services from us over an 18-month
period.
In accordance with the terms of our contract with Bonneville Power
Administration, we requested arbitration to resolve a dispute
regarding the exclusive use of our long-haul facilities connecting
Portland to Seattle and Seattle to Spokane. We filed our Notice of
Claim or Demand for Arbitration on April 19, 1999. It is pending
before an arbitrator of the American Arbitration Association.
We are party to routine litigation arising in the normal course of
business. We do not expect these matters, individually or in the
aggregate, to have a material adverse effect on our financial
position, results of operations or cash flows. We are also party
to various proceedings before state PUCs. These proceedings
typically relate to authority to operate in a state and regulatory
arbitration proceedings concerning our interconnection agreements.
See "Part I., Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources - Other Matters - Reciprocal Compensation".
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
We held our 1999 Annual Meeting of the Stockholders on May 20,
1999 to elect directors and consider proposals (i) to approve an
amendment of the 1997 Equity Incentive Plan and (ii) to approve an
amendment of the 1998 Employee Stock Purchase Plan, as discussed
in the Company's proxy statement filed on April 9, 1999.
The following persons were elected directors to hold office until
the next annual meeting and until their successors have been
elected and qualified:
<TABLE>
<CAPTION>
Votes
-----------------------------------------
For (*) Abstained
----------------- ----------------
<S> <C> <C>
Daryl A. Ferguson 417,772,742 448,396
Guenther Greiner 417,700,942 520,196
Stanley Harfenist 417,777,242 443,896
David B. Sharkey 417,777,142 443,996
Robert A. Stanger 417,777,142 443,996
Leonard Tow 417,768,743 452,395
Maggie Wilderotter 417,777,142 443,996
</TABLE>
20
<PAGE>
Electric Lightwave, Inc.
The stockholders approved the amendment of the 1997 Equity
Incentive Plan by a vote of 413,611,310 (*) votes For to 1,197,077
votes Against; 12,448 votes Abstained and there were 3,400,303
Broker Non-Votes.
The stockholders also approved the amendment of the Employee Stock
Purchase Plan by a vote of 413,880,174 (*) Votes For to 821,157
votes Against; 10,035 votes Abstained and there were 3,509,772
Broker Non-Votes.
(*) Includes votes from the 41,165,000 shares of Class B common
stock. Citizens owns all Class B Common Stock and each share is
entitled to 10 votes on each matter to be voted upon by holders of
the Common Stock.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) The exhibits below are filed as part of this report:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
10.13 1997 Equity Incentive Plan, as amended (incorporated by
reference to Appendix A of our Proxy Statement for our 1999
Annual Meeting of Stockholders).
10.21.1* First Amendment to the Private Line Services Agreement
between Electric Lightwave, Inc. and Qwest dated as of June
29, 1999.
10.22 1998 Employee Stock Purchase Plan, as amended (incorporated
by reference to Appendix B of our Proxy Statement for our
1999 Annual Meeting of Stockholders).
10.24.1 Indenture from Electric Lightwave, Inc. to Citibank, N.A.,
dated April 15, 1999, with respect to the 6.05% Senior
Unsecured Notes due 2004.
10.24.2 First Supplemental Indenture from Electric Lightwave, Inc.,
Citizens Utilities Company and Citizens Newco Company to
Citibank, N.A. dated April 15, 1999, with respect to the
6.05% Senior Unsecured Notes due 2004.
10.24.3 Form of Electric Lightwave, Inc. 6.05% Senior Unsecured
Notes due 2004.
10.24.4 Letter of Representations to the Depository Trust Company
dated April 28,1999, with respect to the 6.05% Senior
Unsecured Notes due 2004.
27.1 Financial Data Schedule for the six months ended June 30,
1999.
27.2 Restated Financial Data Schedule for the six months ended
June 30, 1998.
</TABLE>
21
<PAGE>
* Material has been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission.
b) Reports on Form 8-K
On May 4, 1999, we filed a Current Report on Form 8-K, under Item
5, "Other Events" containing first quarter 1999 financial
information.
22
<PAGE>
Signature
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 thereunto duly authorized.
ELECTRIC LIGHTWAVE, INC.
(Registrant)
By: /s/ Kerry D. Rea
Kerry D. Rea
Vice President and Controller
August 2, 1999
23
EXHIBIT 10.21.1
Qwest Communications Corporation
Confidential & Proprietary
FIRST AMENDMENT TO THE PRIVATE LINE SERVICES AGREEMENT
This First Amendment to the Private Line Services Agreement No. PL
0000337-9806-01-01 (the "First Amendment") is made and entered into as of this
29th day of June, 1999 (the "First Amendment's Effective Date"), by and between
Qwest Communications Corporation ("Qwest") and Electric Lightwave, Inc. ("ELI").
WHEREAS, Qwest and ELI previously entered into a Private Line Services Agreement
No. PL 0000337-9806-01-01 (the "Agreement");
WHEREAS, Qwest and ELI now wish to amend the Agreement to revise certain pricing
and other terms and conditions described therein, including but not limited to
termination of certain leased circuits currently being provisioned under the
Agreement in consideration of ELI's purchase of certain IRU rights from Qwest in
those circuits, all as more particularly set forth below; and
WHEREAS, this First Amendment is also intended to resolve certain bona fide
disputes existing between the Parties under the Agreement;
NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Qwest and ELI agree as follows:
1. For all new Service Orders provisioned after the First Amendment's
Effective Date and any existing Service Orders installed currently, the
following Base IXC Rates described in Table 1 shall be applicable in
determining ELI's applicable Monthly Recurring Charges for said
Facilities. The Table 1 Rates are in lieu of the rates and charges set
forth in Section 3(a)-(c) of Exhibit A to the Agreement. All other
charges authorized by the Agreement, including but not limited to those
charges set forth in Section 3.1 (d) ("Other Charges"), shall continue
to apply. Any failure on the part of Qwest to invoice these revised Base
IXC Rates as of the First Amendment's Effective Date shall be remedied
by a lump sum credit amount on ELI's subsequent invoices.
Table 1 Base IXC Rates (Per DS-0 V&H Mile)
DS-1 $*
DS-3 $*
OC-3 $*
OC-12 $*
* Material has been omitted pursuant to a request for confidential treatment.
<PAGE>
2. Notwithstanding Section 1 above and in consideration of the release
provided for in Section 7 below, Customer shall be eligible to receive
certain promotional pricing as set forth in Table 2 below for new
Facilities ordered after the First Amendment's Effective Date only. The
Table 2 Promotional Base IXC Rates are in lieu of the rates and charges
set forth in Sections 3(a)-(c) of Exhibit A to the Agreement and Section
1 of this First Amendment. The Table 2 Promotional Base IXC Rates shall
be in effect for a period not to exceed six (6) months from the Start of
Service Date applicable to each such new Facility. As of the expiration
of this six (6) month period, the monthly recurring rates applicable to
each such new Facility shall revert to the Base IXC Rates set forth in
Table 1 above. In order to receive the Table 2 Promotional Base IXC
Rates, Customer agrees to a Facility Minimum Service Term of no less
than eighteen (18) months from the applicable Start of Service Date for
each such new Facility installed by Qwest pursuant to the Agreement.
Table 2 Promotional Base IXC Rates (Per DS-0 V&H
Mile)
DS-3 $*
OC-3 $*
OC-12 $*
In addition, upon ELI's notice to Qwest given no later than December 15,
1999, ELI shall be eligible to receive a one-time credit equal to one
(1) months' monthly recurring charges associated with private line
services invoiced under the Agreement, exclusive of all applicable
taxes, surcharges, and interconnection fees (access). Pursuant to this
paragraph, ELI shall be entitled to select the month for the basis of
this credit, provided, however, that the applicable months from which it
may choose its one free month must be limited to those months remaining
in calendar year 1999 following the First Amendment's Effective Date.
3. For the six (6) month period following the First Amendment's Effective
Date, the parties hereby agree that Qwest's obligations relating to
installation intervals for new Facilities, and all associated Customer
remedies relating to same, including without limitation, the specific
obligations set forth in Section 8.1(B) of the Agreement, Section 1.2 of
Exhibit A to the Agreement, and Schedule A-2 of Exhibit A to the
Agreement (the "Interim Provisioning Period") shall not apply. During
the Interim Provisioning Period and upon acceptance of a Service Order,
Qwest shall notify ELI of its target date for the delivery of each such
new Facility (the "Estimated Availability Date"). Any Estimated
Availability Date given by Qwest to ELI shall be subject to Qwest's then
current standard intervals. Qwest shall use reasonable efforts to
install each such new Facility on or before the Estimated Availability
Date. During the Interim Provisioning Period, however, Qwest's inability
to deliver a new Facility by the Estimated Availability Date shall not
be deemed Default under the Agreement. Following the Interim
Provisioning Period, the parties hereby agree that the suspension of the
provisioning obligations set forth in Section 8.1(B) of the Agreement,
Section 1.2 of Exhibit A to the Agreement, and Schedule A-2 of Exhibit A
to the Agreement shall cease and thereafter be in full force and effect;
provided, however, that any remedy associated with same shall not apply
to Facilities installed as of the expiration of the Interim Provisioning
Period.
* Material has been omitted pursuant to a request for confidential treatment.
<PAGE>
4. During the Interim Provisioning Period, the parties hereby agree that
ELI's obligations relating to minimum revenue requirements reflected in
Table A-1 of Exhibit A to the Agreement shall be suspended. Following
the Interim Provisioning Period, the parties hereby agree that the
suspension of ELI's obligations set forth in Table A-1 of Exhibit A to
the Agreement (as amended by Section 9 herein) shall cease and
thereafter be in full force and effect.
5. Section 4.6 of Exhibit A to the Agreement and all references thereto, if
any, are hereby deleted in their entirety. Other than the one-time
pricing revisions set forth in Sections 1 and 2 above, Qwest is under no
further obligation to revise in the future the rates and other charges
applicable to the Facilities installed hereunder in the absence of a
mutually agreed upon written amendment to the Agreement modifying said
rates and other charges.
6. Following the First Amendment's Effective Date, in the event ELI
receives a Competitive Offer from an Alternative Carrier that contains
an Aggregate Price below the Facility rates and other charges described
herein applicable to a new Facility requested by ELI hereunder, then
Qwest may elect, within its discretion, to: (i) match the Competitive
Offer; (ii) provision the requested Facility at an alternative mutually
agreeable price; or (iii) declines to accept ELI's requested Service
Order. If Qwest declines to accept the requested Service Order pursuant
to this Section 6(iii) above, then ELI shall be entitled to a reduction
of its applicable Quarterly Revenue Commitment and total Revenue
Commitment in the event ELI purchases said requested Facility from the
Alternative Carrier. The applicable Quarterly Revenue Commitment shall
be reduced by the monthly Aggregate Price for said Facility, and the
applicable total Revenue Commitment shall be reduced by the product of
the monthly Aggregate Price multiplied by the number of months in the
minimum service term for the requested Facility, all conditioned upon
ELI providing Qwest with valid invoices reflecting the ordering of said
services from the Alternative Carrier.
In order for ELI to exercise its rights under this Section 6, ELI must
provide Qwest with a written copy of the original Competitive Offer
within sixty (60) days of its receipt by ELI (or, in the case where such
an offer is subject to confidentiality, a sworn officer's certificate,
in a form reasonably satisfactory to Qwest, certifying the terms of the
Competitive Offer). As used in this Section 6, "Competitive Offer" is
defined as a binding offer that: (i) is from a licensed interexchange
carrier ("Alternative Carrier"); (ii) contains an "Aggregate Price" that
is at least five percent (5%) lower than the total price that would be
charged by Qwest to provision the Facility under the terms of the
Agreement; (iii) provides for a Facility of the type that would be
provisioned by Qwest hereunder; and (iv) contains terms and conditions
that do not materially differ from those of this Agreement, except that
with respect to a minimum monthly recurring charge requirement and term,
such terms and conditions must be identical to those of this Agreement.
As used herein, "Aggregate Price" shall be defined as the total price
(including pass-through access/egress (or related) charges imposed by
third parties (such as LECs), any monthly recurring charges,
non-recurring charges, taxes, surcharges and any and all other
applicable charges) that would be charged to ELI by an Alternative
Carrier for the requested Facility.
<PAGE>
7. *
8. Upon the First Amendment's Effective Date, Qwest shall cease
provisioning the following currently installed OC-3 Facilities
(hereinafter the "Terminated Leased Facilities"). Upon said termination,
ELI shall be without further obligation for payment of all Rates and
Charges applicable to the Terminated Leased Facilities; provided,
however, that ELI shall be responsible for all Rates and Charges
applicable to the Terminated Leased Facilities that have accrued prior
to the First Amendment's Effective Date:
Chicago to Washington DC ID# EIP000005NDN
Chicago to Salt Lake City ID# EIP000003NDN
9. Upon the First Amendment's Effective Date, ELI's Revenue Commitment and
Quarterly Revenue Commitment, as reflected in Table A-1 of Exhibit A to
the Agreement, shall be revised downward as follows:
Take-or-Pay Commitment
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Effective Date Quarterly Number of
Commitment Quarters Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
07/01/99 to 12/31/07 2,647,058.82 34 $90,000,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Revenue Commitment $90,000,000.00
- --------------------------------------------------------------------------------
</TABLE>
10.As a condition precedent to the reduction of the Quarterly Revenue
Commitment and the Revenue Commitment described in this First Amendment,
ELI agrees to execute a separate Qwest IRU agreement ("IRU Agreement"),
which shall provide for ELI's purchase of an IRU from Qwest in the
Terminated Leased Facilities. The parties hereby agree that the terms
and conditions of this Agreement shall no longer apply to the Terminated
Leased Facilities as of the First Amendment's Effective Date, and
further, the terms and conditions of the IRU Agreement only shall govern
with respect to Qwest's provisioning of the Terminated Leased Facilities
thereafter. The applicable IRU fee associated with said IRU Agreement
shall not contribute to either the Quarterly Commitment or the total
Revenue Commitment provided for in the Agreement.
11.This First Amendment may be executed in counterparts and by different
parties hereto in separate counterparts, each of which, when so executed
and delivered, shall be deemed to be an original and all of which, when
taken together, shall constitute one and the same instrument.
12.Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Agreement. Further, each reference in
the Agreement to "Agreement", "hereof", "hereunder" or words of like
import, and all references to the Agreement in any and all agreements,
instruments, documents, notes, certificates and other writings of every
kind and nature, shall be deemed to mean the Agreement as modified and
amended by this First Amendment.
13.The Agreement, as expressly amended by this First Amendment, constitutes
the entire agreement of the parties hereto. All terms and conditions of
the Agreement not expressly amended or modified herein shall continue to
be in full force and effect and are hereby confirmed and ratified. In
the event the terms of this First Amendment conflict with the terms of
the Agreement, the terms of this First Amendment shall control.
* Material has been omitted pursuant to a request for confidential treatment.
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this First Amendment
to be duly executed as of the date first written above.
QWEST COMMUNICATIONS CORPORATION
By: /s/ Greg Casey
Name: Greg Casey
Title: Sr. V.P. - Wholesale Markets
ELECTRIC LIGHTWAVE, Inc.
By: /s/ David B. Sharkey
Name: David B. Sharkey
Title: President and C.O.O.
EXHIBIT 10.24.1
================================================================================
ELECTRIC LIGHTWAVE, INC.,
To
CITIBANK N.A.,
Trustee
-----------------------
INDENTURE
Dated as of April 15, 1999
-----------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Other Provisions of General Application
Section 101. Definitions..................................................1
Section 102. Compliance Certificates and Opinions.........................6
Section 103. Form of Documents Delivered to Trustee.......................7
Section 104. Acts of Holders..............................................7
Section 105. Notices, Etc., to Trustee or Company.........................8
Section 106. Notice to Holders; Waiver....................................8
Section 107. Conflict with Trust Indenture Act............................9
Section 108. Effect of Headings and Table of Contents.....................9
Section 109. Successors and Assigns.......................................9
Section 110. Separability Clause..........................................9
Section 111. Benefits of Indenture........................................9
Section 112. Governing Law................................................9
Section 113. Legal Holidays...............................................9
ARTICLE II
Security Forms
Section 201. Forms Generally.............................................10
Section 202. Form of Face of Security....................................10
Section 203. Form of Reverse of Security.................................12
Section 204. Form of Trustee's Certificate of Authentication.............14
ARTICLE III
The Securities
Section 301. Amount Unlimited; Issuable in Series........................15
Section 302. Denominations...............................................17
Section 303. Execution, Authentication, Delivery and Dating..............17
Section 304. Temporary Securities........................................19
Section 305. Registration, Registration of Transfer and Exchange.........19
Section 306. Mutilated, Destroyed, Lost and Stolen Securities............20
Section 307. Payment of Interest; Interest Rights Preserved..............21
Section 308. Persons Deemed Owners.......................................22
Section 309. Cancellation................................................22
Section 310. Computation of Interest.....................................23
Section 311. Book-Entry Securities.......................................23
<PAGE>
ARTICLE IV
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.....................24
Section 402. Application of Trust Money..................................25
ARTICLE V
Remedies
Section 501. Events of Default...........................................26
Section 502. Acceleration of Maturity; Rescission and Annulment..........27
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee................................................28
Section 504. Trustee May File Proofs of Claim............................29
Section 505. Trustee May Enforce Claims Without Possession of Securities.29
Section 506. Application of Money Collected..............................30
Section 507. Limitation on Suits.........................................30
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest......................................30
Section 509. Restoration of Rights and Remedies..........................31
Section 510. Rights and Remedies Cumulative..............................31
Section 511. Delay or Omission Not Waiver................................31
Section 512. Control by Holders..........................................31
Section 513. Waiver of Past Defaults.....................................31
Section 514. Undertaking for Costs.......................................32
Section 515. Waiver of Stay or Extension Laws............................32
ARTICLE VI
The Trustee
Section 601. Certain Duties and Responsibilities.........................32
Section 602. Notice of Defaults..........................................33
Section 603. Certain Rights of Trustee...................................33
Section 604. Not Responsible for Recitals or Issuance of Securities......34
Section 605. May Hold Securities.........................................34
Section 606. Money Held in Trust.........................................34
Section 607. Compensation and Reimbursement..............................34
Section 608. Disqualification; Conflicting Interests.....................35
Section 609. Corporate Trustee Required; Eligibility.....................35
Section 610. Resignation and Removal; Appointment of Successor...........35
Section 611. Acceptance of Appointment by Successor......................36
Section 612. Merger, Conversion, Consolidation or Succession to Business.37
Section 613. Preferential Collection of Claim Against Company............38
Section 614. Appointment of Authenticating Agent.........................38
-ii-
ARTICLE VII
Holders'Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders...39
Section 702. Preservation of Information; Communications to Holders......39
Section 703. Reports by Trustee..........................................40
Section 704. Reports by Company..........................................40
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc, Only on Certain Terms.........40
Section 802. Successor Substituted.......................................41
ARTICLE IX
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders..........42
Section 902. Supplemental Indentures with Consent of Holders.............43
Section 903. Execution of Supplemental Indentures........................44
Section 904. Effect of Supplemental Indentures...........................44
Section 905. Conformity with Trust Indenture Act.........................44
Section 906. Reference in Securities to Supplemental Indentures..........44
ARTICLE X
Covenants
Section 1001. Payment of Principal, Premium and Interest..................45
Section 1002. Maintenance of Office or Agency.............................45
Section 1003. Money for Securities Payments to Be Held in Trust...........45
Section 1004. Corporate Existence.........................................46
Section 1005. Waiver of Certain Covenants.................................46
Section 1006. Certificate to Trustee......................................47
ARTICLE XI
Redemption of Securities
Section 1101. Applicability of Article....................................47
Section 1102. Election to Redeem; Notice to Trustee.......................47
Section 1103. Selection by Trustee of Securities to Be Redeemed...........47
Section 1104. Notice of Redemption........................................48
Section 1105. Deposit of Redemption Price.................................49
Section 1106. Securities Payable on Redemption Date.......................49
Section 1107. Securities Redeemed in Part.................................49
-iii-
<PAGE>
ARTICLE XII
Sinking Funds
Section 1201. Applicability of Article....................................49
Section 1202. Satisfaction of Sinking Fund Payments with Securities.......50
Section 1203. Redemption of Securities for Sinking Fund...................50
ARTICLE XIII
Defeasance and Covenant Defeasance
Section 1301. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance.................50
Section 1302. Defeasance Within One Year of Payment.......................50
Section 1303. Defeasance..................................................51
Section 1304. Covenant Defeasance.........................................52
Section 1305. Application of Trust Money..................................53
Section 1306. Repayment to Company........................................54
ARTICLE XIV
Immunity of Incorporators, Shareholders, Officers and Directors
Section 1401. Indenture and Securities Solely Corporate Obligations.......54
-iv-
<PAGE>
ELECTRIC LIGHTWAVE, INC.
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of August 15, 1991.
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C> <C>
ss. 310(a)(1)................................................................609
(a)(2)..................................................................609
(a)(3).......................................................Not applicable
(a)(4).......................................................Not Applicable
(a)(5)..................................................................609
(b) ................................................................608,610
ss. 311(a)...................................................................613
(b).....................................................................613
ss. 312(a)............................................................701,702(a)
(b) .................................................................702(b)
(c) .................................................................702(c)
ss. 313(a)................................................................703(a)
(b) .................................................................703(a)
(c) .................................................................703(a)
(d) .................................................................703(b)
ss. 314(a)...................................................................704
(b) .........................................................Not Applicable
(c)(1)..................................................................102
(c)(2)..................................................................102
(c)(3).......................................................Not applicable
(d)..........................................................Not applicable
(e).....................................................................102
ss. 315(a)...................................................................601
(b)..............................................................602,703(a)
(c).....................................................................601
(d)(1)..................................................................601
(e).....................................................................514
ss. 316(a)...................................................................101
(a)(1)(A)...........................................................502,512
(a)(1)(B)...........................................................502,513
(a)(2).......................................................Not Applicable
(b).....................................................................508
(c) .................................................................104(c)
ss. 317(a)(1)................................................................503
(a)(2)..................................................................504
(b)....................................................................1003
ss. 318(a)...................................................................107
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
</TABLE>
-v-
<PAGE>
INDENTURE, dated as of April 15, 1999, from ELECTRIC LIGHTWAVE, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal administrative offices at
4400 NE 77th Avenue, Vancouver, WA 98662, to CITIBANK N.A., a New York banking
corporation, as Trustee (herein called the "Trustee"), having its principal
corporate trust office at 111 Wall Street, 5th Floor, Zone 2, New York, New
York, 10005.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured notes
or other evidences of indebtedness (herein called the "Securities"), to be
issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
<PAGE>
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
"Board of Directors", when used with reference to the Company, means either
the board of directors, or any duly authorized committee of the board of
directors, of the Company, as the case requires.
"Board Resolution", when used with reference to the Company, means a copy
of a resolution certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Book-Entry Security" means any Security registered in the name of CEDE &
Co., as nominee of DTC, or any successor to CEDE and Co. and/or DTC.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
which is not a day on which banking institutions in the principal places of
business of the Company and the Trustee are authorized or obligated by law or
executive order to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" or "Company Order" means a written request or order, as
the case may be, signed in the name of the Company, by its Chairman of the
Board, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office, as at the date of this Indenture, is located at 111 Wall Street,
5th Floor, Zone 2, New York, New York, 10005.
The term "corporation" includes corporations, associations, companies and
business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
-2-
<PAGE>
The terms "defeasance" and "covenant defeasance" bear the meanings assigned
to such terms, by Sections 1302, 1303 and 1304.
"DTC" means the securities depository, The Depository Trust Company, New
York, New York, and any successor.
"Event of Default" has the meaning specified in Section 501.
"Fiscal Year" means with respect to the Company, the fiscal year ending
December 31 of each year or such other date as the Company may hereafter elect,
and with respect to any other Person, the calendar year or other annual
accounting period of the Person in question.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Letter of Representation", with respect to the Securities of any series,
means that certain agreement by and among the Company, the Trustee and DTC
setting forth the rights and duties of DTC and its nominee to act as depository
and registered owner, with respect to such Securities.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
-3-
<PAGE>
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment or redemption money (or in the case
of payment by defeasance under Section 1302, 1303 and 1304, money, U.S.
Government obligations or both) in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made and provided further, in
the case of payment by defeasance under Section 1302, 1303 and 1304, that
all conditions precedent to the application of such Sections shall have
been satisfied; and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in a foreign currency or currencies shall be the U.S. dollar
equivalent, determined on the date of original issuance of such Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the date of original issuance of such Security of the
amount determined as provided in (i) above) of such Security, and (iii)
Securities owned by the Company, or any other obligor upon the Securities or any
Affiliate of the Company, or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledge establishes to the
satisfaction of the Trustee the pledge's independent right so to act with
respect to such Securities and that the pledgee is not the Company, or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
-4-
<PAGE>
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as
contemplated by Section 301 or, if not so specified, the City of New York, New
York.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the Outstanding Voting
Stock of which is owned, directly or indirectly, by the Company, or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended, except as provided in Section 905 or
Section 1006.
-5-
<PAGE>
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of an agency or instrumentality
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
"Voting Stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency, but shall not
include securities convertible into such Voting Stock.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
-6-
<PAGE>
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of any officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
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<PAGE>
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by
Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of
any such vote, prior to such vote, the record date for any such action or
vote shall be the 30th day (or, if later, the date of the most recent list
of Holders required to be provided pursuant to Section 701) prior to such
first solicitation or vote, as the case may be. With regard to any record
date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE OR COMPANY. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its office specified in the first
paragraph of this instrument or at any other address previously furnished
in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for
notice to Holders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
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In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act that
is required under such Act to be a part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Indenture as so modified
or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 110. SEPARABILITY CLAUSE. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW. This Indenture, and the Securities, shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment Date,
Redemption Date or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and premium,
if any) need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
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ARTICLE II
SECURITY FORMS
SECTION 201. FORMS GENERALLY. The Securities of each series shall be in
substantially the form set forth in this Article, or in such other form as shall
be established by or pursuant to a Board Resolution or, to the extent authorized
by a Board Resolution, an Officers' Certificate, or in one or more indentures
supplemental hereto, in each case substantially in the form annexed to such
Board Resolution, Officers' Certificate or supplemental indenture, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of such Securities. If the form of Securities of
any series of such Securities is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
303 for the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. FORM OF FACE OF SECURITY. [Insert any legend required by the
Internal Revenue Code and the regulations thereunder.]
ELECTRIC LIGHTWAVE, INC.
No.
ELECTRIC LIGHTWAVE, INC., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________, or registered assigns, the
principal sum of ______ Dollars on _______ (If the Security is to bear interest
prior to Maturity, insert -- , and to pay interest thereon from __________or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on _________and ________in each year,
commencing ___________, at the rate of ___% per annum, until the principal
hereof is paid or made available for payment [If applicable, insert --, and (to
the extent that the payment of such interest shall be legally enforceable) at
the rate of ___% per annum on any overdue principal and premium and on any
overdue installment of interest]. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the ___ or ___(whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture].
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[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of___% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of ___% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.)]
Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in _____, [if applicable
insert -- in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts) [if
applicable, insert --; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or, at
the option of the Holder hereof, to such other place in the United States of
America as the Holder hereof shall designate to the Trustee in writing at least
three Business Days prior to the Interest Payment Date or, at the option of the
Holder hereof, by wire transfer in immediately available funds if such Holder
owns Securities of the same series as this Security issued pursuant to the
Indenture which pay interest on the same Interest Payment Date and which are in
an aggregate principal amount of $10,000,000 or more, provided that the Holder
shall bear any and all expenses of any such wire transfer] and provided further
that proper wiring instructions shall have been received by the Trustee at least
three Business Days prior to the Interest Payment Date. [if applicable, insert
any foreign currency related provisions.]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
ELECTRIC LIGHTWAVE, INC.
By ______________________________________
Attest:
- --------------------------------------
SECTION 203. FORM OF REVERSE OF SECURITY. This Security is one of a duly
authorized issue of securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture, dated as of
__________, 1991 (herein called the "Indenture"), from the Company to Citibank
N.A., as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the securities of the series designated on the face hereof [, limited in
aggregate principal amount to $__].
[If applicable insert -- The Securities of this series are subject to
redemption upon not less than 30 days' nor more than 60 days' notice by mail,
(1) on _____in any year commencing with the year ____ and ending with the year
____ through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) [set forth in the table below] [at a
Redemption Price equal to %__ of the principal amount], and (2) at any time [on
or after ________], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below: If redeemed during the 12-month period beginning _______of the
years indicated,
Redemption Price For Redemption Price For
Redemption Through Operation of Redemption Other Than Through
Year the Sinking Fund Operation of the Sinking Fund
- ------------ ------------------------------- -----------------------------
and thereafter at a Redemption Price equal to __% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
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[Notwithstanding the foregoing, the Company may not, prior to _____, redeem
any Securities of this series as contemplated by [Clause (2) of] the preceding
paragraph as a part of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an interest cost
to the Company (calculated in accordance with generally accepted financial
practice) of less than ___% per annum].
[The sinking fund for this series provides for the redemption on
_____________in each year beginning with the year ____ and ending with the year
____of [(not less than)] $ ___ [("mandatory sinking fund")] and not more than
$___ ] aggregate principal amount of Securities of this series. [Securities of
this series acquired or redeemed by the Company otherwise than through
[mandatory] sinking fund payments may be credited against subsequent [mandatory
sinking fund payments otherwise required to be made -- in the inverse order in
which they become due.]
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
[The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness on this Security and (b) certain covenants and certain
Events of Default upon compliance by the Company with certain conditions set
forth therein, which provisions apply to this Security]
[If the Security is not an Original Issue Discount Security -- If an Event
of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security -- If an Event of
Default with respect to Securities of this series shall occur and be continuing,
an amount of principal of the Securities of this series may be declared due and
payable in the manner and with the effect provided in the Indenture. Such amount
shall be equal to -insert formula for determining the amount. Upon payment (i)
of the amount of principal so declared due and payable and (ii) of interest on
any overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of all series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
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No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of [$]___ and any integral multiple of [$]___ As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company or the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
Certain terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Security shall be governed by and construed in accordance with the
laws of the State of New York.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one
of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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CITIBANK, N.A., as Trustee
By
------------------------
Authorized Signatory
ARTICLE III
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution or, to the extent authorized by
a Board Resolution, an Officers' Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of the
series to be issued,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of the
series is payable;
(5) the annual interest rate or rates (or method for establishing such
rate or rates) at which the Securities of the series shall bear interest,
if any, the date or dates from which such interest shall accrue, the manner
of adjusting such rates, the Interest Payment Dates on which such interest
shall be payable and the Regular Record Date for the interest payable on
any Interest Payment Date (or method for establishing such date or dates);
(6) the place or places where the principal of (and premium, if any)
and interest on Securities of the series shall be payable;
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<PAGE>
(7) if applicable, the period or periods within which, the price or
prices at which and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof as specified therein, or
upon the happening of an event or condition and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall or must be redeemed or purchased,
in whole or in part, pursuant to such obligation; and the option or
election, if any, of the Company to redeem or purchase Securities of the
series as specified therein or upon the happening of an event or condition,
and the period or periods within which, the price or prices at which and
the terms and conditions upon which the Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such option or
election;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) if other than the full principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(11) if other than such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public or
private debts, the currency or currencies (including composite currencies)
in which payment of the principal of (and premium, if any) and/or interest
on the Securities of such series shall be payable;
(12) if the principal of (and premium, if any) and/or interest on the
Securities of the series are to be payable, at the election of the Company
or any Holder, in a currency or currencies (including composite currencies)
other than that in which the Securities are stated to be payable, the
period or periods within which, and the terms and conditions upon which,
such election may be made;
(13) if the amounts of payments of principal of (and premium, if any)
and/or interest on the Securities of the series may be determined with
reference to an index, the manner in which such amounts shall be
determined;
(14) in the case of Securities of a series the terms of which are not
established pursuant to subsection (11), (12,) or (13) above, the
application, if any, of Section 1302, 1303 and/or Section 1304 to the
Securities of such series; or, in the case of Securities the terms of which
are established pursuant to subsection (11), (12) or (13) above, the
adoption and applicability to such Securities of any terms and conditions
similar to those contained in Section 1302, 1303 and/or Section 1304;
(15) if applicable, the issuance of a temporary global security
representing all of the Securities of such series and exchange of such
temporary global Security for definitive Securities of such series, or the
issuance of global securities of any other nature;
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<PAGE>
(16) any addition to, deletion or modification of any Event of Default
applicable to such series;
(17) any provisions providing for or governing one or more series of
global Securities, bearer Securities or Securities proposed to be listed or
quoted on or in any exchange or market, within or without the United States
of America, including provisions which establish the form and terms of such
Securities, including interest coupons, and govern the manner of payment of
principal and interest, registration and exchange of Securities, notice to
Holders, Acts of Holders, waivers and any and all other aspects thereof,
provided that such provisions shall not conflict with any provisions of
this Indenture which are applicable to such series (as such provisions may
have been duly supplemented, amended or modified as permitted hereunder
with respect to their application to such series);
(18) any provisions authorizing one or more guarantees of the
Securities of the series or providing for one or more guarantors or other
Person or Persons becoming a party to the Indenture or any indentures
supplemental hereto governing the Securities of the series; and
(19) any other terms of the series (which terms shall not be in
conflict with the provisions of this Indenture which apply to such series).
All Securities of any one series shall be substantially identical except as
to interest rates, method for determining interest rates, Interest Payment
Dates, Regular Record Dates, redemption terms, Stated Maturity, denomination,
date of authentication, currency, any index for determining amounts payable, and
except as may otherwise be provided in or pursuant to such Board Resolution and
set forth or determined as provided in such Officers' Certificate or in any such
indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. DENOMINATIONS. The Securities of each series shall be issuable
in registered form without coupons in such denominations as shall be specified
as contemplated by Section 301. In the absence of any such provisions with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Securities
shall be executed on behalf of the Company by its Chairman of the Board, its
President, one of its Vice Presidents or its Treasurer, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
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At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions, Officers' Certificates or
supplemental indentures as permitted by Sections 201 and 301, in authenticating
such Securities, and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating,
(a) if the form of any of such Securities has been established by or
pursuant to Board Resolution, Officers' Certificate or supplemental
indenture as permitted by Section 201, that such form has been established
in conformity with the provisions of this Indenture;
(b) if the terms of any of such Securities have been established by or
pursuant to Board Resolution, Officers' Certificate or supplemental
indenture as permitted by Section 301, that such terms have been
established in conformity with the provisions of this Indenture; and
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.
If the Company shall establish pursuant to Section 301 that the Securities
of a series are to be issued in the form of one or more registered global
securities, then the Company shall execute and the Trustee shall, in accordance
with this Section and the Company Order with respect to such series,
authenticate and deliver one or more registered global securities that (a)(i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued and not yet
cancelled, (ii) shall be registered in the name of DTC or a nominee of DTC,
(iii) shall be delivered by the Trustee to DTC or pursuant to DTC's
instructions, and (iv) shall bear a legend substantially to the following
effect: "Unless and until it is exchanged in whole or in part for Securities in
definitive registered form, this Security may not be transferred except as a
whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any such nominee to a successor to DTC or a nominee
of such successor" or such other legend as shall be acceptable to DTC; or (b)
shall comply with such other terms or procedures as may be set forth in a
Company Order with respect to such series. Notwithstanding that such form or
terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant to this
Indenture would adversely affect the Trustee's own rights, duties or immunities
under the Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.
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Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the time of authentication upon original issuance of
the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309, together with an Officers' Certificate
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and sold by
the Company, for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. Pending the preparation of definitive
Securities of any series, the Company may execute, and upon Company Order from
the Company, the Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive securities in lieu of which they are issued, with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series and of like tenor, of authorized
denominations. Until so exchanged, the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office being herein sometimes referred
to as the "Security Register") in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.
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Upon surrender for registration of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal amount
and tenor.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series of any authorized denominations and of a
like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any
mutilated Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount, and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of any of them harmless then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of the same series and of like tenor and principal amount, and bearing
a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series, issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Unless
otherwise provided as contemplated by Section 301 with respect to any series of
Securities, interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
entitled to such interest by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a special record date (the "Special Record Date") for the payment
of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
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(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed or any book-entry security system which may be applicable to the
Debentures, and upon such notice as may be required by such exchange or
system, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture, upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a Security
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 307) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION. All Securities surrendered for payment,
redemption, registration of transfer or exchange or for credit against any
sinking fund payment shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order from the Company or
in the absence of such Company Order, in accordance with the Trustee's standard
procedures.
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SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified as
contemplated by Section 301 for Securities of any series, interest on the
Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
SECTION 311. BOOK-ENTRY SECURITIES. (a) Except as provided in subsection
(c) of this Section 311, the registered owner of all Securities of any series of
Securities which is designated as a Book-Entry Security series in the Board
Resolution, Officers' Certificate or indenture supplemental hereto establishing
such series shall be CEDE & Co., as nominee of DTC. Payment of interest for any
Securities registered as of each Record Date in the name of CEDE & Co. shall be
made by wire transfer to the account of CEDE & Co. on the Interest Payment Date
for such Securities at the address indicated on the Record Date for CEDE & Co.
in the registration books of the Company kept by Trustee, as Security Registrar.
(b) With respect to any Book-Entry Securities, the Securities shall
initially be issued in the form of one or more fully registered global
securities in the principal amount of each separate series of the
Securities. Upon initial issuance, the ownership of such Securities shall
be registered in the registration books of the Company kept by the Trustee
in the name of CEDE & Co., as nominee of DTC. The Trustee and the Company
may treat DTC (or its nominee) as the sole and exclusive owner of the
Securities registered in its name for the purposes of payment of the
principal of, premium, if any, or interest on such Securities, giving any
notice permitted or required to be given to Holders under this Indenture,
registering the transfer of such Securities, obtaining any consent or other
action to be taken by Holders and for all other purposes whatsoever; and
neither the Trustee nor the Company shall be affected by any notice to the
contrary. Neither the Trustee nor the Company shall have any responsibility
or obligation to any DTC participant, any Person claiming a beneficial
ownership interest in Securities registered in the name of CEDE & Co. under
or through DTC or any DTC participant, or any other Person which is not
shown on the registration books of the Company kept by the Trustee as being
a Holder with respect to the accuracy of any records maintained by DTC,
CEDE & Co. or any DTC participant; the payment by DTC or any DTC
participant to any beneficial owner of any amount in respect of the
principal of, premium, if any, or interest on the Securities registered in
the name of CEDE & Co.; the delivery to any DTC participant or any
beneficial owner of any notice which is permitted or required to be given
to Holders under this Indenture; the selection by DTC or any DTC
participant of any Person to receive payment in the event of a partial
payment of any Securities registered in the name of CEDE & Co.; or any
consent given or other action taken by DTC as Holder. The Paying Agent
shall pay all principal of, premium, if any, and interest on any Securities
registered in the name of CEDE & Co., only to or upon the order of CEDE &
Co., as nominee of DTC, and all such payments shall be valid and effective
to fully satisfy and discharge the Company's obligations with respect to
the principal of, premium, if any, and interest on such Securities to the
extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of
written notice to the effect that DTC had determined to substitute a new
nominee in place of CEDE & Co., and subject to the provisions herein with
respect to record dates, the words "CEDE & Co." in this Indenture shall
refer to such new nominee of DTC.
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(c) With respect to any series of Securities registered in the name of
CEDE & Co., in the event that (i) DTC gives notice that it will discontinue
its services as securities depository for such series of Securities; or
(ii) DTC ceases to be a clearing house registered under the Securities
Exchange Act of 1934; or (iii) the Company in its sole discretion
determines that the beneficial owners of such Securities will be entitled
to obtain definitive certificates; or (iv) an Event of Default with respect
to such series has occurred and is continuing, the Company shall, if the
event is triggered by either (i) or (ii) above, attempt to locate another
qualified securities depository. If Company fails to locate such a
replacement or if the event is triggered by either (iii) or (iv) above,
then it shall notify DTC and the Trustee, requesting DTC to notify its
participants, of the availability through DTC of definitive certificates.
In any such event, the Trustee shall issue, register the transfer of and
exchange definitive certificates as requested by DTC and any other Holders
in appropriate amounts. The Company and the Trustee shall be obligated to
deliver definitive certificates as described in this Indenture. In the
event definitive certificates are issued to Holders other than DTC, the
provisions of this Indenture shall apply to, among other things, the
registration transfer of and exchange of such certificates and the method
of payment of principal of, premium, if any, and interest on such
certificates. Whenever DTC requests the Company and the Trustee to do so,
the Trustee and the Company will cooperate with DTC in taking appropriate
action after reasonable notice (i) to make available one or more separate
certificates evidencing the Securities registered in the name of CEDE &
Co., to any DTC participant having Securities credited to its DTC account
or (ii) to arrange for another securities depository to maintain custody of
certificates evidencing such Securities.
(d) Notwithstanding any other provision of this Indenture to the
contrary, so long as any Securities are registered in the name of CEDE &
Co., as nominee of DTC, all payments with respect to the principal of,
premium, if any, and interest on such Securities and all notices, with
respect to such Securities shall be made and given to DTC as provided in
the applicable Letter of Representation.
(e) In connection with any notice or other communication to be
provided to Holders pursuant to this Indenture by the Company or the
Trustee with respect to any consent or other action to be taken by Holders
so long as any Securities of a series are registered in the name of CEDE &
Co., as nominee of DTC, the Company or the Trustee, as the case may be,
shall establish a record date for such consent or other action and give DTC
notice of such record date not less than 15 calendar days in advance of
such record date to the extent possible.
(f) The notice requirements set forth in the Letter of Representation
relating to the Securities of any series with respect to redemptions,
conversions and mandatory tenders shall be effective whenever such
Securities are Book-Entry Securities, notwithstanding any other provisions
of this Indenture, to the extent such other provisions are incompatible
with the notice requirements set forth in the Letter of Representation.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall
upon Company Request from the Company cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, on the demand of and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
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(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by, the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such
deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company, has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY. Subject to provisions of the last
paragraph of Section 1003, all money deposited with the Trustee pursuant to
Section 401, all money and U.S. Government Obligations deposited with the
Trustee pursuant to Section 1302, Section 1303 or Section 1304 and all money
received by the Trustee in respect of U.S. Government Obligations deposited with
the Trustee pursuant to Section 1302, Section 1303 or Section 1304, shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee as contemplated by Section 401, Section 1302, Section
1303 or Section 1304.
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ARTICLE V
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default", wherever used herein
with respect to Securities of any series, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 60 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) a material default in the performance, or material breach, of any
other covenant or obligation of the Company in this Indenture (other than a
covenant or obligation a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with or which has expressly
been included in this Indenture solely for the benefit of a series of
Securities other than that series), and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of a majority in principal amount of the Outstanding
Securities of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"notice of default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
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(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its property, or the
making by either of them of an assignment for the benefit of creditors, or
the admission by either of them in writing of its inability to pay its
debts generally as they become due, or the talking of corporate action by
the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities of
that series;
it being understood that in each case (other than those described in paragraphs
(1) through (3) above) the Trustee shall not be deemed to have knowledge of an
Event of Default hereunder unless a Responsible Officer has received written
notice thereof.
Nothing contained in this Section 501 shall limit the rights of the Company
to add, delete or modify any Event of Default or other similar event with
respect to one or more series of Securities at the time of establishment of any
such series as provided in Section 301 hereof.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of a majority in principal amount of the Outstanding Securities of
that series may declare the principal amount (or, if any of the Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified in the terms thereof) of
all of the Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount) shall
become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
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(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if
(1) default occurs in the payment of any interest on any Security when such
interest becomes due and payable and such default continues for a period of 60
days;
(2) default occurs in the payment of the principal of (or premium, if any,
on) any Security at the Maturity thereof; or
(3) default occurs in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series;
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
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If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized by the Trust
Indenture Act in order to have claims of the Holders of Securities of any series
and the Trustee allowed in any such proceeding. In particular the Trustee shall
be authorized,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to, have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
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SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively.
SECTION 507. LIMITATION ON SUITS. No Holder of any Security of any series
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than a majority in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 90 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 90-day period by the Holders of not less than 66
2/3% in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
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SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities in the last paragraph of Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Securities to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS. The Holders of a majority in principal
amount of the Outstanding Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee with respect to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and shall not, in the reasonable determination of the
Trustee, be unduly prejudicial to the rights of other holders of the
Securities of such series nor subject the Trustee to a material risk of
personal liability, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default
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(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Security by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, 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, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the outstanding Securities of any series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium if any) or interest on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
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SECTION 602. NOTICE OF DEFAULTS. The Trustee shall give the Holders notice
of any default hereunder as and to the extent provided by the Trust Indenture
Act; provided, however, that in the case of any default of the character
specified in Section 501(4), no such notice to Holders shall be given until at
least 90 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default. Except in the case of a default in
payment of principal of or interest on any Security, the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of Holders of
Securities.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, or as
otherwise expressly provided herein, and any resolution of the Board of
Directors of the Company may be sufficiently evidenced by a Board
Resolution;
(c) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(e) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(f) 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.
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Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The
recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES. The Trustee, any Authenticating Agent,
any Paying Agent, any Security Registrar or any other agent of the Company or of
the Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent in
writing.
SECTION 606. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on money received
by it hereunder except as otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT. The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, 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 or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of, premium, if any, or interest, if any,
on particular Securities.
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SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture. Nothing herein shall prohibit the Trustee from
filing the application described in the penultimate paragraph of Section 310(b)
of the Trust Indenture Act as the same is in effect on the date of this
instrument, or any successor provision or any other application seeking similar
relief.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all
times be a Trustee hereunder which shall be a corporation organized and doing
business under the laws of the United States of America, any state thereof or
the District of Columbia, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $150,000,000 and
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
the instrument of acceptance by a successor Trustee required by Section 611
shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
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then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee or Trustees
with respect to the Securities of that or those series (it being understood
that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section 611.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the
Securities of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in
the manner required by Section 611, any Holder who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf
of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders of Securities of such series as their names and
addresses appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the
appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
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(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee
of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) and (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
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SECTION 613. PREFERENTIAL COLLECTION OF CLAIM AGAINST COMPANY. If and when
the Trustee shall be, or shall become, a creditor, directly or indirectly,
secured or unsecured, of the Company (or any other obligor upon the Securities),
the Trustee shall be subject to the provisions of Section 311 of the Trust
Indenture Act.
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any of
the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $150,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which Authenticating Agent shall be acceptable to the Company and shall
mail written notice of such appointment by first-class mail, postage prepaid, to
all Holders of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this section.
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The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
CITIBANK N.A., as Trustee
By:_________________________________
As Authenticating Agent
By:_________________________________
Authorized Signatory
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS. The
Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than 15 days after each Regular Record
Date (or, if there is no Regular Record Date relating to a series,
semi-annually on dates set forth in the Board Resolution, Officers'
Certificate or supplemental indenture with respect to such series), a list,
in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of such date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. (a)
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list furnished
to the Trustee as provided in Section 701 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 701 upon receipt of a
new list so furnished.
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(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities and
the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE. (a) On or before May 15, 2000 and on or
before May 15 in each year thereafter, so long as any Securities are Outstanding
hereunder, 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 in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each securities exchange upon
which any Securities are listed, with the Commission and with the Company.
The Company will notify the Trustee when any Securities are listed on any
securities exchange.
SECTION 704. REPORTS BY COMPANY. The Company shall file with the Trustee
and the Commission, and transmit to Holders, such information, documents and
other reports, and such summaries thereof, as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant to such
Act; provided that any such information, documents or reports required to be
filed by the Company with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days
after the same is so required to be filed with the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY AND GUARANTOR MAY CONSOLIDATE, ETC, ONLY ON CERTAIN
TERMS. (a) The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company, or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) the resulting, surviving or transferee entity is organized
and existing under the laws of the United States, any state thereof or
the District of Columbia and (if other than the Company) expressly
assumes all of the Company's obligations under the Securities and the
Indenture; and
(2) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be
continuing; and
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(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
(b) A guarantor shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and the guarantor shall not permit any Person
to consolidate with or merge into the guarantor, or convey, transfer or
lease its properties and assets substantially as an entirety to the
guarantor, unless:
(1) the resulting, surviving or transferee entity is organized
and existing under the laws of the United States, any state thereof or
the District of Columbia and (if other than the guarantor) expressly
assumes all of the guarantor's obligations under the Securities and
the Indenture; and
(2) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be
continuing; and
(3) the guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED. (a) Upon any consolidation by the
Company with or merger by the Company into any other Person or any conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety in accordance with Section 801, the successor Person formed by such
consolidation, or into which the Company is merged or to which such conveyance,
transfer or lease is made, shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
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SECTION 802 SUCCESSOR SUBSTITUTED. (a) Upon any consolidation by the
guarantor with or merger by the guarantor into any other Person or any
conveyance, transfer or lease of the properties and assets of the guarantor
substantially as an entirety in accordance with Section 801, the successor
Person formed by such consolidation, or into which the guarantor is merged or to
which such conveyance, transfer or lease is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the guarantor under
this Indenture with the same effect as if such successor Person had been named
as the guarantor herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without
the consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes with respect to one or more series of Securities:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series); to add one or more guarantors and to permit such guarantors to
become parties to the Indenture; or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form, provided that the
uncertificated Securities are issued in the registered form for the
purposes of Section 163(f) of the Internal Revenue Code of 1986 or in the
manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of such code, or to permit or facilitate compliance with the
procedures or requirements of any securities exchange or market within or
without the United States of America on or in which such series may be
proposed for listing or quotation; or
(5) to provide for modifications of the DTC book-entry system or
adoption of additional or alternative systems of book-entry systems; or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series or to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611(b); or
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(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of all series affected by the proposed indenture or
indentures supplemental hereto referred to below by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 611(b) and 901(7).
(4) make any Security payable in money other than that stated in the
Security or applicable Board Resolution, Officers' Certificate or indenture
supplemental hereto.
(5) modify any guarantee of the Securities in any manner adverse to
the Holders of the Securities.
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A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
After an amendment under this Section becomes effective, the Company shall
mail to Holders of Securities a notice briefly describing such amendment. The
failure to give such notice to all Holders of Securities, or any defect therein,
shall not impair or affect the validity of an amendment under this Section.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties,
immunities or liabilities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities of any
series so modified as to conform, in the opinion of the Trustee and the Company,
to any such supplemental indenture may be prepared and executed by the Company
and such Securities may be authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
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ARTICLE X
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay the principal of (and premium, if any) and interest on
the Securities of that series in accordance with the terms of the Securities and
this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in
each Place of Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If the
Company shall at any time act as its own Paying Agent with respect to any series
of Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest on any of the Securities of that series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
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(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company in the
making of any payment of principal (and premium, if any) or interest on the
Securities of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for one year
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company, on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE. Subject to Article Eight, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.
SECTION 1005. WAIVER OF CERTAIN COVENANTS. A Board Resolution or Officers'
Certificate or indenture supplemental hereto which establishes the terms of a
series of Securities may provide that specified terms, provisions and conditions
are subject to this Section. In such event the Company may omit in any
particular instance to comply with any such term, provision or condition with
respect to the Securities of such series if before the time for such compliance
the Holders of a majority in principal amount of the Outstanding Securities of
such series shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or condition.
No such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect.
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SECTION 1006. CERTIFICATE TO TRUSTEE. So long as the same shall be required
by the Trust Indenture Act, the Company will deliver to the Trustee, within 120
days of the end of each fiscal year (or such other time or times as may be
required by the Trust Indenture Act as then in effect) a certificate signed by
its principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of the Company's compliance with
all conditions and covenants under this Indenture (such compliance to be
determined without regard to any period of grace or requirement of notice
provided in this Indenture) or in such other form and with such other
signatories as may be required by the Trust Indenture Act as then in effect.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any series which are
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the
Company to redeem any Securities shall be evidenced by a Board Resolution. In
the case of any redemption at the election of the Company of all the Securities
of any series, the Company shall, at least 35 days prior to the Redemption Date
fixed by the Company (unless a shorter period shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date. In case of any redemption
at the election of the Company of less than all the Securities of any series,
the Company shall, at least 40 days prior to the Redemption Date fixed by the
Company (unless a shorter period shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed. In the case of any redemption of securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction. The Company may rescind its election to redeem Securities by notice
to the Trustee at any time on or before 20 days prior to the Redemption Date
(unless a shorter period shall be satisfactory to the Trustee). To the extent
the foregoing rescission provisions and the rescission provisions of Section
1104 are inconsistent with applicable book-entry procedures of DTC, or any other
record owner of registered global securities, such rescission provisions shall
be modified to the extent necessary to permit coordination or conformity with
such procedures, but the minimum time limitations of the rescission provisions
shall not be reduced.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less
than all the Securities of like tenor of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 35 days
prior to the Redemption Date (unless a shorter period shall be satisfactory to
the Trustee and the Company) by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of such Securities of a denomination larger than the minimum authorized
denomination for such Securities.
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The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed at least 15 days but not more than 60
days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the
case, and
(7) if the Company intends to retain its right to rescind the
redemption, the last date by which notice of rescission of a
redemption of Securities may be given.
Notice of redemption of Securities to be redeemed at the election of
the Company, and any notice of the rescission of any such redemption, 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. Any notice of rescission of any
redemption shall be given on or before 12 days prior to the applicable
Redemption Date.
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SECTION 1105. DEPOSIT OF REDEMPTION PRICE. On or before any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in section 1003) an amount of money sufficient to pay on the Redemption
Date the Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date) accrued interest on, all the Securities which are to be
redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption
having been given as aforesaid (and not rescinded within the time limitations
referred to above), the Securities so to be redeemed shall, on the Redemption
Date, become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the payment of the
Redemption Price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. SECURITIES REDEEMED IN PART. Any Security which is to be
redeemed only in part shall be surrendered at a Place of Payment therefor (with,
if the Company or the Trustee so requires, due endorsement by or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
the same series and of like tenor, of an authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE XII
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
securities of any series as provided for by the terms of Securities of such
series.
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SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES. The
Company (1) may deliver Outstanding Securities of a series (other than any
previously called for redemption) and (2) may apply as a credit Securities of a
series which have been redeemed either at the election of the Company pursuant
to the terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Securities of such series required to be made pursuant to the terms of such
Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less than 60
days prior to each sinking fund payment date for any series of Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be satisfied by
payment of cash and the portion thereof, if any, which is to be satisfied by
delivering and crediting Securities of that series pursuant to Section 1202 and
will also deliver to the Trustee any Securities to be so delivered. Not less
than 30 days before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
1106 and 1107.
ARTICLE XIII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. If pursuant to this Article XIII or an
indenture supplemental hereto, provision is made for either or all of (a)
defeasance of the Securities of a series under Section 1302, (b) defeasance of
the Securities of a series under Section 1303 or (c) covenant defeasance of the
Securities of a series under Section 1304, then the provisions of such Section
or Sections, as the case may be, together with the other provisions of this
Article Thirteen, shall be applicable to the Securities of such series, and the
Company may at its option by or pursuant to a Board Resolution, at any time,
with respect to the Securities of such series, elect to have either Section
1302, 1303 or Section 1304 (if applicable) be applied to the Outstanding
Securities of such series upon compliance with the conditions set forth below in
this Article Thirteen.
SECTION 1302. DEFEASANCE WITHIN ONE YEAR OF PAYMENT. Except as otherwise
provided in this Section 1302, the Company may terminate its obligations under
the Securities of any series and this Indenture with respect to Securities of
such series if:
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(a) all Securities of such series previously authenticated and delivered
(other than destroyed, lost or wrongfully taken Securities of such series that
have been replaced or Securities of such series that are paid pursuant to
Section 1001 or Securities of such series for whose payment money or securities
have theretofore been held in trust and thereafter repaid to the Company, as
provided in Section 1306) have been delivered to the Trustee for cancellation
and the Company has paid all sums payable by it hereunder; or
(b) (i) the Securities of such series mature within one year or all of them
are to be called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption, (ii) the Company irrevocably
deposits in trust with the Trustee, as trust funds solely for the benefit of the
Holders of such Securities for that purpose, money or U.S. Government
Obligations or a combination thereof sufficient (unless such funds consist
solely of money), in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, without consideration of any reinvestment, to pay Principal of and
interest on the Securities of such series to maturity or redemption, as the case
may be, and to pay all other sums payable by it hereunder, and (iii) the Company
delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, in
each case stating that all conditions precedent provided for herein relating to
the satisfaction and discharge of this Indenture with respect to the Securities
of such series have been complied with.
With respect to the foregoing clause (a), only the Company's obligations
under Sections 607, 1305 and 1306 in respect of the Securities of such series
shall survive the date of the Maturity of such series or earlier payment of such
Securities. With respect to the foregoing clause (b), only the Company's
obligations in Article 305, 306, 311, 607, 610, 1002, 1305 and 1306 in respect
of the Securities of such series shall survive the date of satisfaction of such
clause (b) (and such sections shall survive until the earlier of the date of the
Maturity of such series or payment of such series.) Thereafter, only the
Company's obligations and entitlements in Sections 607, 1305 and 1306 in respect
of the Securities of such series shall survive the date of the Maturity of such
series. After any such irrevocable deposit, the Trustee shall acknowledge in
writing the discharge of the Company's obligations under the Securities of such
series and this Indenture with respect to the Securities of such series except
for those surviving obligations specified above. The obligations of any then
current guarantor or guarantors shall terminate except for its guarantee of the
Company's obligations under Section 607.
SECTION 1303. DEFEASANCE. Except as provided below, the Company will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Securities of any series and the provisions of this Indenture
will no longer be in effect with respect to the Securities of such series (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same); provided that the following conditions shall have been
satisfied:
(a) the Company has irrevocably deposited in trust with the Trustee as
trust funds solely for the benefit of the Holders of the Securities of such
series, for payment of the Principal of and interest on the Securities of
such series, money or U.S. Government Obligations or a combination thereof
sufficient (unless such funds consist solely of money), in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee without
consideration of any reinvestment and after payment of all federal, state
and local taxes or other charges and assessments in respect thereof payable
by the Trustee, to pay and discharge the Principal of and accrued interest
on the Outstanding Securities of such series to maturity or earlier
redemption (irrevocably provided for under arrangements satisfactory to the
Trustee), as the case may be;
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(b) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement
or instrument to which the Company is a party or by which it is bound;
(c) no Default with respect to the Securities of such series shall
have occurred and be continuing on the date of such deposit or, insofar as
a default described in clauses (5) or (6) of Section 501 is concerned, at
any time during the period ending on the 123rd day after the date of such
deposit (it being understood that this condition shall not be satisfied
until the expiration of such period);
(d) the Company shall have delivered to the Trustee (1) either (x) a
ruling directed to the Trustee received from the United States Internal
Revenue Service to the effect that the Holders of the Securities of such
series 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
Section 1303 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, or (y) an Opinion of Counsel
to the same effect as the ruling described in clause (x) above and based
upon a change in law, and (2) an Opinion of Counsel to the effect that the
Holders of the Securities of such series have a valid security interest in
the trust funds subject to no prior liens under the UCC; and
(e) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 1303 of the Securities of such series have been complied with.
Only the Company's obligations and entitlements in Article 305, 306, 311,
607, 610, 1002, 1305 and 1306 with respect to the Securities of such series
shall survive after such defeasance and until the later of the date of the
Maturity of such series or payment of such series. Thereafter, only the
Company's obligations in Sections 607, 1305 and 1306 shall survive. The
obligations of any then current guarantor or guarantors shall terminate except
for its guarantee of the Company's obligations under Section 607.
SECTION 1304. COVENANT DEFEASANCE. The Company may (i) omit to comply with
any one or more terms, provisions or conditions set forth in Articles IV and V,
Article VI (except Sections 607 and 610), Articles VII, VIII, IX, X (except
Section 1001 and 1002), Article XI, Article XII and Article XIII (except Section
1305 and 1306), (provided that the Company may elect to comply with a term,
provision or condition or a portion thereof or may elect conditional compliance
therewith by specifying its election in an Officers' Certificate delivered to
the Trustee) and (ii) omit to comply with any specific covenant relating to a
series established in a Board Resolution or supplemental indenture, or Officer's
Certificate pursuant to such Board Resolution or such supplemental indenture,
that may be defeased pursuant to this Section 1304; and such omission shall be
deemed not to be an Event of Default under clauses (4) or (7) of Section 501,
with respect to Securities of one or more series if:
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(a) the Company has irrevocably deposited in trust with the Trustee as
trust funds solely for the benefit of the Holders of the Securities of such
series, for payment of the Principal of and interest, if any, on the
Securities of such series, money or U.S. Government Obligations or a
combination thereof in an amount sufficient (unless such funds consist
solely of money), in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee without consideration of any reinvestment and
after payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, to pay and discharge
the Principal of and accrued interest on the outstanding Securities of such
series to maturity or earlier redemption (irrevocably provided for under
arrangements satisfactory to the Trustee), as the case may be;
(b) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement
or instrument to which the Company is a party or by which it is bound;
(c) no Default with respect to the Securities of such series shall
have occurred and be continuing on the date of such deposit or, insofar as
a default described in clauses (5) or (6) of Section 501 are concerned, at
any time during the period ending on the 123rd day after the date of such
deposit (it being understood that this condition shall not be satisfied
until the expiration of such period);
(d) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the Securities of such series have a valid
security interest in the trust funds subject to no prior liens under the
UCC; and
(e) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the covenant defeasance
contemplated by this Section 1304 of the Securities of such series have
been complied with.
Notwithstanding the foregoing provisions of Section 1304, only the
Company's obligations and entitlements in Article III, 607, 610, 1001, 1002 and
1306 with respect to the Securities of such series shall survive such defeasance
and until the later of the date of the Maturity of such series or payment of
such series. Thereafter, only the Company's obligations and entitlements in
Sections 607, 1305 and 1306 shall survive. The obligations of any then current
guarantor or guarantors shall terminate except for its guarantee of the
Company's obligations under Section 607.
SECTION 1305. APPLICATION OF TRUST MONEY. Subject to Section 1306, the
Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 1302, 1303 or 1304, as the case may be, in
respect of the Securities of any series and shall apply the deposited money and
the proceeds from deposited U.S. Government Obligations in accordance with the
Securities of such series and this Indenture to the payment of Principal of and
interest on the Securities of such series; but such money need not be segregated
from other funds except to the extent required by law. The Company shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
1302, 1303 or 1304, as the case may be, or the Principal and interest received
in respect thereof, other than any such tax, fee or other charge that by law is
for the account of the Holders.
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SECTION 1306. REPAYMENT TO COMPANY. Subject to Sections 607, 1302, 1303 and
1304, the Trustee and the Paying Agent shall promptly pay to the Company upon
request set forth in an Officers' Certificate any money held by them at any time
and not required to make payments hereunder and thereupon shall be relieved from
all liability with respect to such money. The Trustee and the Paying Agent shall
pay to the Company upon written request any money held by them and required to
make payments hereunder under this Indenture that remains unclaimed for two
years; provided that the Trustee or such Paying Agent before being required to
make any payment may cause to be published at the expense of the Company once in
an Authorized Newspaper in The City of New York or with respect to any Security
the interest on which is based on the offered quotations in the interbank
Eurodollar market for dollar deposits in an Authorized Newspaper in London or
mail to each Holder entitled to such money at such Holder's address (as set
forth in the Security Register) notice that such money remains unclaimed and
that after a date specified therein (which shall be at least 30 days from the
date of such publication or mailing) any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company, Holders
entitled to such money must look to the Company for payment as general creditors
unless an applicable law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
SECTION 1401. INDENTURE AND SECURITIES SOLELY CORPORATE OBLIGATIONS. No
recourse under or upon any obligation, covenant or agreement of this Indenture,
any supplemental indenture or of any Security, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or of any successor Person either directly or through the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders, officers or
directors, as such, of the Company or of any successor Person, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom, are hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issue of
such Securities.
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* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed, all
as of the day and year first above written.
ELECTRIC LIGHTWAVE, INC.
By:__________________________________
Title:
Name:
Attest:
- --------------------------
Secretary
CITIBANK N.A., as Trustee
By:__________________________________
Title:
Name:
Attest:
- --------------------------
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County of Fairfield )
) ss.:
State of Connecticut )
On the 27th day of April, 1999, before me personally came Robert J.
DeSantis to me known, who, being by me duly sworn, did depose and say that he is
Chief Financial Officer, Vice President and Treasurer of ELECTRIC LIGHTWAVE,
INC., one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.
-------------------------------------
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County of New York )
) ss.:
State of New York )
On this 27th day of April in the year of 1999 before me personally came
Florence Mills to me personally known, who being by me duly sworn did depose and
say that she is a Senior Trust Officer of Citibank N.A., one of the corporations
described in and which executed the foregoing Indenture; that she knows the seal
of said corporation; that the seal affixed to said instrument opposite the
execution thereof on behalf of said corporation is the corporate seal of said
corporation; that said instrument was signed and said corporate seal was so
affixed on behalf of said corporation by authority and order of its board of
directors; that she signed her name thereto by like authority; and she
acknowledged said instrument to be her free act and deed and the free act and
deed of said Citibank N.A.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal, at New York in said State of New York, the day and year first above
written.
------------------------------------
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EXHIBIT 10.24.2
================================================================================
ELECTRIC LIGHTWAVE, INC.,
CITIZENS UTILITIES COMPANY,
AND
CITIZENS NEWCO COMPANY
TO
CITIBANK, N.A.
(Trustee)
- --------------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of April 15, 1999
- --------------------------------------------------------------------------------
Supplemental to the Indenture
Dated as of April 15, 1999
================================================================================
i
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Definitions....................................................................................2
Section 2. Forms of the Notes.............................................................................3
Section 3. Terms of the Notes.............................................................................3
Section 4. Repurchase at the Option of the Holder.........................................................5
Section 5. Redemption at the Option of the Company........................................................7
Section 6. The Citizens Guarantee.........................................................................8
Section 7. The Citizens Newco Guarantee..................................................................10
Section 8. Adjustment of the Applicable Annual Interest Rate.............................................11
Section 9. Amendment to Indenture for Purposes of Notes due May 2004.....................................13
Section 10. Incorporation of Indenture....................................................................15
Section 11. Acceptance of Trust...........................................................................15
Section 12. Conflict with Trust Indenture Act.............................................................15
Section 13. Governing Law.................................................................................15
Section 14. Recitals......................................................................................15
Section 15. Amendments....................................................................................15
Section 16. Counterparts..................................................................................15
</TABLE>
FIRST SUPPLEMENTAL INDENTURE, dated as of April 15, 1999, made by
ELECTRIC LIGHTWAVE, INC., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), having its
principal administrative offices at 4400 NE 77th Avenue, Vancouver, WA 98662,
CITIZENS UTILITIES COMPANY (herein called "Citizens" or "Citizens Guarantor")
and CITIZENS NEWCO COMPANY (herein called "Citizens Newco" or "Citizens Newco
Guarantor"), each a corporation duly organized and existing under the laws of
the State of Delaware and each having its principal administrative offices at
High Ridge Park, Stamford, CT 06905, to CITIBANK, N.A., a national banking
association duly organized and existing under the laws of the United States, as
Trustee (herein called the "Trustee"), having its principal corporate trust
office at 111 Wall Street, 5th Floor, Zone 2, New York, NY 10005 (the "First
Supplemental Indenture").
RECITALS
WHEREAS, the Company has entered into an Indenture dated as of April
15, 1999 (the "Indenture"), with the Trustee to provide for the issuance from
time to time of the Company's notes or other evidences of indebtedness (herein
called the "Securities"), to be issued in one or more series; and
WHEREAS, Section 901 of the Indenture provides, among other things,
that the Company and any Guarantor and the Trustee may enter into indentures
supplemental to the Indenture for, among other things, the purpose of
establishing the form and terms of the Securities of any series as permitted in
Sections 201 and 301 of the Indenture and adding to the covenants of the Company
for the benefit of the Holders of any series of Securities and providing for a
guarantee of any series of Securities; and
WHEREAS, the Company by corporate action duly taken has authorized the
issuance of a first series of Securities designated as the Notes Due May 15,
2004 (hereinafter sometimes called the "Notes"), which series is limited in
aggregate principal amount to $450,000,000, such Notes to contain such
provisions as have been caused to be determined by or at the direction of, the
Board of Directors of the Company and as are set forth in this First
Supplemental Indenture to the Indenture; and
WHEREAS, Citizens Guarantor by corporate action duly taken has
authorized the guarantee of a first series of Securities designated as the Notes
Due May 15, 2004, which series is limited in aggregate principal amount to
$450,000,000, such Citizens Guarantee to contain such provisions as have been
caused to be determined by or at the direction of, the Board of Directors of the
Company and as are set forth in this First Supplemental Indenture to the
Indenture (the First Supplemental Indenture together with the Indenture,
hereinafter referred to as the Indenture unless the context otherwise requires);
and
WHEREAS, Citizens Newco Guarantor by corporate action duly taken has
authorized the Guarantee of a first series of Securities designated as the Notes
Due May 15, 2004, which series is limited in aggregate principal amount to
$450,000,000, such Citizens Newco Guarantee to contain such provisions as have
been caused to be determined by or at the direction of, the Board of Directors
of the Company and as are set forth in this First Supplemental Indenture to the
Indenture; and
WHEREAS, Citizens Guarantor owns as of the date hereof, and if the
Separation occurs, Citizens Newco will own, beneficially and of record, 100% of
the Class B stock of the Company; the Company, Citizens Guarantor and Citizens
Newco Guarantor are members of the same consolidated group of companies and are
engaged in related businesses, Citizens Guarantor, and if the Separation occurs,
Citizens Newco Guarantor, will derive direct and indirect economic benefit from
the issuance of the Notes, accordingly Citizens Guarantor and NewTelecom
Guarantor have duly authorized the execution and delivery of this Supplemental
Indenture; and
WHEREAS, all conditions have been complied with, all actions have been
taken and all things have been done which are necessary to make the Notes, when
executed by the Company and authenticated by or on behalf of the Trustee and
when delivered as herein and in the Indenture provided, the valid obligations of
the Company, and to make this First Supplemental Indenture a valid and binding
supplemental indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all holders of the Notes, as follows:
Section 1. Definitions. For all purposes of this First Supplemental
Indenture, except as otherwise herein expressly provided or unless the context
otherwise requires:
(a)terms used herein in capitalized form and defined in the Indenture
shall have the meanings specified in the Indenture;
(b)the words "herein", "hereof" and "hereto" and other words of similar
import used in this First Supplemental Indenture refer to this First
Supplemental Indenture as a whole and not to any particular Section
or other subdivision of this First Supplemental Indenture;
(c)the provisions of this First Supplemental Indenture shall be read in
conjunction with the provisions of the Indenture only with respect
to the Notes and the provisions of the Indenture shall not be
modified by this First Supplemental Indenture with respect to any
series of the Securities outstanding or to be outstanding under the
Indenture, other than the Notes; and
(d)terms defined in this First Supplemental Indenture shall apply only
to this First Supplemental Indenture and the Notes hereunder, and
such definitions shall not apply to any supplemental indenture other
than this First Supplemental Indenture or to any Securities
outstanding or to be outstanding under the Indenture other than the
Notes.
(e)"Citizens Guarantor" means Citizens Utilities Company, a Delaware
corporation.
(f)"Citizens Newco Guarantor" means "Citizens Newco Company," a
Delaware corporation.
(g)The "Citizens Guarantee" means the guarantee of Citizens Guarantor
pursuant to Section 6 of this First Supplemental Indenture.
(h)The "Citizens Newco Guarantee" means the guarantee of Citizens Newco
Guarantor pursuant to Section 7 of this First Supplemental
Indenture.
(i)"Guarantor" as of any time means whichever of Citizens Guarantor and
Citizens Newco Guarantor is the then Guarantor of the Company's
obligations hereunder, or, if both the Citizens Guarantee and the
Citizens Newco Guarantee are then in effect, "Guarantor" shall
include Citizens Guarantor and Citizens Newco Guarantor.
(j)"Rating Agencies" means Standard & Poor's Corporation ("S&P") and
Moody's Investors Services, Inc. ("Moody's") unless one of them has
been replaced by a Substitute Rating Agency in which case Rating
Agencies shall mean the Substitute Rating Agency and whichever of
S&P or Moody's has not been replaced.
(k)"Substitute Rating Agency" means a nationally recognized statistical
rating organization (as the term is used in the rules and
regulations of the Commission under the Securities Exchange Act).
(l)"Separation" means the distribution of the common stock of Citizens
Newco Guarantor to the stockholders of Citizens' Guarantor, Citizens
Guarantor having previously contributed telecommunications assets to
Citizens Newco Guarantor.
(m)"Separation Date" means the date that the distribution of the common
stock of Citizens Newco Guarantor to the stockholders of Citizens
Guarantor is effective.
Except as otherwise expressly provided or unless the context otherwise
requires, "First Supplemental Indenture" means this instrument as originally
executed or, if amended or supplemented pursuant to the applicable provisions of
the Indenture, as amended or supplemented.
Section 2. Forms of the Notes. The Notes shall be in substantially the
form set forth in Exhibit A to this First Supplemental Indenture, as such form
may be completed pursuant to Section 3 hereof, the terms of which Exhibit A are
herein incorporated by reference and made a part of this First Supplemental
Indenture.
Section 3. Terms of the Notes. The terms of the Notes shall be as
follows:
(a)the Securities to be issued under the Indenture and this First
Supplemental Indenture shall be the Notes and shall be designated as
the " Notes Due May 15, 2004";
(b)the Notes shall constitute a single series of the Securities under
the Indenture, which series is limited in aggregate principal amount
to $450,000,000, of which Notes in the aggregate principal amount of
$325,000,000 are being issued pursuant to this First Supplemental
Indenture. Notwithstanding any other provision hereof, this First
Supplemental Indenture may be amended or supplemented without the
consent of the Holders for the purpose of issuing additional
securities up to such maximum aggregate principal amount of
$450,000,000.
(c)interest on each of the Notes shall be payable (i), until the
adjustment (specified in Section 8), if any, at the rate per annum
specified in the Notes and (ii) from and after the date of the
adjustment (specified in Section 8), if any, at the Applicable
Annual Interest Rate. Such interest will be payable from and after
the date of issuance of the Notes, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for,
semi-annually, on May 15 and November 15 in each year, commencing on
November 15, 1999 and as provided for in Section 8 hereof. The
interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the Person in whose name
such Note (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest,
which shall be the May 1 or November 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.
Any interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record
Date by virtue of having been such a Holder and shall be paid by the
Company as provided in Section 307 of the Indenture;
(d)the Notes shall be subject to an interest rate adjustment as
provided in Section 8 hereof;
(e)principal on the notes shall be payable on May 15, 2004 ("Maturity")
unless earlier redeemed, repurchased or accelerated;
(f)the Notes shall be guaranteed by Citizens Guarantor and/or Citizens
Newco Guarantor, as applicable, as provided in Sections 6 and 7
hereof;
(g)some or all of the Notes shall be repurchased by the Company at the
option of the holder as provided in Section 4 hereof;
(h)some or all of the Notes may be redeemed by the Company as provided
in Section 5 hereof;
(i)as provided in Sections 1301, 1302, 1303 and 1304 of the Indenture,
the Company may terminate its obligations under the Notes, the
Indenture and this First Supplemental Indenture with respect to the
Notes and may omit to comply with any term, provision or condition
or any obligation of the Company contemplated by this First
Supplemental Indenture. Upon the Company's exercise of the option to
effect defeasance under Sections 1302, 1303 and 1304 of the
Indenture and the effectiveness of such defeasance in accordance
with and subject to the applicable terms of Sections 1302, 1303 and
1304 of the Indenture, the Company and the then current Guarantor or
Guarantors shall each be released from all of its obligations with
respect to the Notes, the Indenture and the First Supplemental
Indenture as provided in Section 1302, 1303 or 1304, as the case may
be, except for those provisions identified in Article XIII of the
Indenture as not subject to covenant defeasance and those provisions
which the Company elects to comply with and not to make the subject
of a covenant defeasance in an Officer's Certificate delivered to
the Trustee;
(j)unless otherwise provided with respect to a Book- Entry Security or
pursuant to any successor book-entry security system or similar
system, payments of interest will be made by check mailed to the
Holder of each Note at the address shown in the Security Register
or, at the option of the Holder, to such other place in the United
States of America as the Holder shall designate to the Trustee in
writing. The principal amount of the Notes will be paid at Maturity
by check against presentation of the Notes at the office or agency
of Citibank, N.A., as Trustee, in New York, New York, or such other
address in New York, New York, as the Trustee shall designate by
written notice to the Holders of the Notes;
(k)the Notes shall be issued in registered form only and in
denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000;
(l)principal of (and premium, if any) and interest on the Notes shall
be payable in the coin or currency of the United States of America,
which, at the time of payment, is legal tender for public and
private debts;
(m)so long as any Notes are registered in the name of Cede & Co., or
any other nominee of The Depository Trust Company ("DTC"), and are
intended to be Book-Entry Securities, the provisions of Section 311
of the Indenture shall apply to such Notes. Thereafter the Notes may
be subjected to the requirements of a successor book-entry
securities system that may be adopted by the Company in accordance
with the provisions of the Indenture and this First Supplemental
Indenture;
Section 4. Repurchase at the Option of the Holder.
(a)If, on or before the Separation Date, the long-term unsubordinated
unsecured debt of Citizens Newco, or Citizens Newco if no such debt
exists, has received a below investment grade credit rating from one
of the Rating Agencies, which rating shall be confirmed on the
Separation Date, each Holder shall have the right, at such Holder's
option, exercisable no later than 30 days after the Company has
issued a notice to Holders as specified in Section 4(b) hereof of
such below investment grade credit rating (which notice shall be
given no later than 5 days after the Separation Date) to require the
Company to repurchase, and upon the exercise of such right the
Company shall repurchase (in $1,000 or any integral multiple thereof
in principal amount), all or any part of such Holder's Notes (such
notes elected to be repurchased, the "Put Notes"), on a date to be
established by the Company that shall be no later than 70 days after
the Separation Date (the "Repurchase Date") at a repurchase price in
cash equal to 100% of the principal amount of such Notes (the
"Repurchase Price"), together with accrued and unpaid interest to
the Repurchase Date.
(b)In the event that on or before the Separation Date, the long-term
unsubordinated unsecured debt of Citizens Newco, or Citizens Newco
if no such debt exists, has received a below investment grade credit
rating from one of the Rating Agencies, which rating shall be
confirmed on the Separation Date, the Company shall give notice to
the Holders of the Notes within five days after the Separation Date
(the "Company's Notice") informing them (i) of the Separation Date,
(ii) that the Citizens Newco Guarantee is effective, (iii) that
Citizens Newco has received a below investment grade credit rating,
(iv) that each Holder of the Notes may elect to have some or all of
its Notes repurchased by the Company by giving notice of such
election in writing to the Company as specified in Section 4(c)
hereof no later than 30 days after the date of the Company's Notice,
and (v) of such other information regarding such other procedures to
be followed as the Company may deem appropriate.
(c)To exercise a repurchase right, a Holder of Notes shall deliver (i)
to the Company and to the Trustee, irrevocable written notice of the
Holder's election to exercise such right (the "Holder's Notice"),
which shall set forth the name of the Holder, the amount of Notes to
be repurchased and a statement that an election to exercise the
repurchase right is being made thereby and (ii) to the Trustee, the
Notes with respect to which the repurchase right is being exercised,
duly endorsed for transfer to the Company if required by the Trustee
or the Company. Put Notes held by a securities depositary may be
delivered in such other manner as may be agreed to by such
securities depositary and the Company and the Trustee. The Holder's
Notice shall be irrevocable. So long as the Put Notes are
represented by a global security, only Cede & Co., as the sole
registered holder of the Notes, may give notice of intention to
exercise the election to have such Put Notes repurchased. The Put
Notes surrendered for repurchase shall, on the Repurchase Date,
become due and payable at the Repurchase Price, and from and after
such date (unless the Company shall default in the payment of the
Repurchase Price and accrued interest, if any) such Put Notes shall
cease to bear interest. Upon surrender of any such Put Notes for
repurchase in accordance with the Holder's Notice, such Put Notes
shall be paid by the Company at the Repurchase Price plus accrued
and unpaid interest to the Repurchase Date.
(d)On or before the Repurchase Date, the Company shall deposit with the
Trustee an amount of money sufficient to pay the Repurchase Price
of, and (except if the Repurchase Date shall be an Interest Payment
Date) accrued interest on, all the Put Notes which are to be
repurchased on that date.
(e)If any Put Note surrendered for redemption shall not be so paid on
the Repurchase Date, such Put Note shall, until paid, continue to
bear interest to the extent permitted by applicable law from the
Repurchase Date at the same rate as the rate borne theretofore by
such Put Note. The Company shall pay the Holder of such Put Note the
additional amount of interest arising from this subsection at the
same time that it pays the Repurchase Price.
(f)Any Note which is to be repurchased only in part shall be
surrendered at the Place of Payment (with, if the Company or the
Trustee for such Note so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the
Security Registrar for such Note duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company
shall execute and such Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note, of any
authorized denomination as requested by such Holder, of the same
series and having the same terms and provisions and in an aggregate
principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Note so surrendered.
Upon such payment to the Trustee by the Company, the Company shall have
no further obligation for payment of principal and interest on the Put Notes,
which shall be deemed to be no longer outstanding, and, subject to Section 6(f)
Citizens Guarantor shall be discharged from all of its obligations as guarantor
of any Notes.
Section 5. Redemption at the Option of the Company.
(a)Subject to the provisions of Article XI of the Indenture, in the
event of a Change of Control, other than a Change of Control that
would arise because of the Separation, the Company, at its option,
may redeem all or any portion of the Notes at a redemption price,
plus accrued and unpaid interest to the date of redemption, equal to
the greater of (i) 100% of their principal amount or (ii) the sum of
the present values of the remaining scheduled payments of principal
and interest (exclusive of interest accrued to the date of
redemption) discounted to the Redemption Date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30 day months) at the
applicable Treasury Yield plus 25 basis points. If the Company
elects to exercise its option to redeem all or any portion of the
Notes, it will notify the Trustee within 15 days of the change of
control of its exercise, in full or in part, of such option, which
shall be irrevocable, and of the Redemption Date. The date selected
for the Redemption Date shall be at least 35 days after the date of
the notification of the Trustee in the case of a redemption of all
of the Notes, or at least 40 days after the date of the notification
of the Trustee in the case of a partial redemption (unless shorter
periods shall be satisfactory to the Trustee or unless longer
periods are required by applicable book entry procedures of DTC),
all as otherwise permitted or required by Article XI of the
Indenture and by this First Supplemental Indenture.
(b)For purposes of Section 5 of this First Supplemental Indenture, a
"Change of Control" shall be deemed to have occurred if (a) any
Person or group (within the meaning of Rule 13d-5 of the Securities
and Exchange Commission as in effect on the date hereof) other than
Citizens or Citizens Newco shall own directly or indirectly,
beneficially or of record, shares representing 50% or more of the
aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Company; or (b) a majority of the
seats (other than vacant seats) on the Board of Directors of the
Company shall at any time have been occupied by Persons who were
neither (i) nominated by the management of the Company nor (ii)
appointed by Directors so nominated, or (c) any Person or group
other than Citizens or Citizens Newco shall otherwise directly or
indirectly control the Company. The Separation shall not constitute
a Change of Control.
"Treasury Yield" means, with respect to any Redemption Date applicable
to the Notes, the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
applicable Comparable Treasury price for such Redemption Date.
"Comparable Treasury Issue" means, with respect to the Notes, the
United States Treasury security selected by an Independent Investment Banker as
having a maturity comparable to the remaining term of the Notes that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining terms of the Notes.
"Independent Investment Banker" means, with respect to the Notes
offered hereby, Bear Stearns & Co. Inc., or, if such firm is unwilling or unable
to select the applicable Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date
applicable to the Notes, (i) the average of the applicable Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such applicable Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer" means, with respect to the Notes offered
hereby, Bear Stearns & Co. Inc.; provided, however, that if the foregoing shall
cease to be a primary United States Government securities dealer in New York
City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Notes. On average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury issue for the Notes (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such redemption date.
(c)Holders of the Notes to be redeemed will receive notice thereof by
first-class mail at least 15 and not more than 60 days prior to the
date fixed for redemption.
Section 6. The Citizens Guarantee.
(a)For good and valuable consideration, the receipt of and sufficiency
of which is hereby acknowledged, Citizens Guarantor, a party to the
Indenture and this First Supplemental Indenture, hereby fully and
unconditionally guarantees as a primary obligor not as a surety only
on an unsecured basis to each Holder of a Note authenticated and
delivered by the Trustee, and to the Trustee and its successors and
assigns on behalf of such Holder, the full and punctual payment of
the principal (and premium, if any) and interest on such Note when
and as the same shall become due and payable, whether at Maturity,
by acceleration, call for redemption, offer to purchase or
otherwise, in accordance with the terms of such Note, the Indenture
and of this First Supplemental Indenture. In case of the failure of
the Company punctually to make any such payment, Citizens Guarantor
hereby agrees to cause such payment to be made punctually when and
as the same shall become due and payable, whether at Maturity or by
acceleration, call for redemption, offer to purchase or otherwise,
and as if such payment were made by the Company.
(b)Citizens Guarantor agrees that its obligations hereunder shall be
absolute and unconditional, irrespective of, and shall be unaffected
by, the validity, regularity or enforceability of such Note, the
Indenture or this First Supplemental Indenture, the absence of any
action to enforce the same or any release, amendment, waiver or
indulgence granted to the Company or guarantor or any consent to
departure from any requirement of any other guarantee of all or any
of the Notes or any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor. Citizens Guarantor hereby waives the benefits of
diligence, presentment, demand for payment, any requirement that the
Trustee or any of the Holders protect, secure, perfect or insure any
security interest in or other Lien on any property subject thereto
or exhaust any right or take any action against the Company or any
other person or any collateral, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest or notice
with respect to such Note or the indebtedness evidenced thereby and
all demands whatsoever, and covenants that Citizens Guarantor will
not be discharged in respect of such Note except by complete
performance of the obligations contained in such Note and in the
Citizens Guarantee.
(c)Citizens Guarantor agrees that if, after the occurrence and during
the continuance of an Event of Default, the Trustee or any of the
Holders are prevented by applicable law from exercising their
respective rights to accelerate the maturity of the Notes, to
collect interest on the Notes, or to enforce or exercise any other
right or remedy with respect to the Notes, Citizens Guarantor agrees
to pay to the Trustee for the account of the Holders, upon demand
therefor, the amount that would otherwise have been due and payable
had such rights and remedies been permitted to be exercised by the
Trustee or any of the Holders.
(d)Citizens Guarantor shall be subrogated to all rights of the Holders
of the Notes in respect of any amounts paid by Citizens Guarantor on
account of such Notes pursuant to the provisions of its Citizens
Guarantee or the Indenture; provided, however, that Citizens
Guarantor shall not be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation
until the principal of (and premium, if any) and interest on all
Notes issued hereunder shall have been paid in full.
(e)If Citizens Guarantor makes or is required to make any payment in
respect of its Citizens Guarantee it shall be entitled to seek
contribution from any other guarantors to the extent permitted by
applicable law, provided, however, that Citizens Guarantor shall not
be entitled to enforce or receive any payments arising out of, or
based upon, such right of contribution until the principal of
(premium, if any) and interest on all Notes issued hereunder shall
have been paid in full.
(f)The Citizens Guarantee shall remain in full force and effect and
continue to be effective until the earliest of the Separation
(provided that the long-term unsubordinated unsecured debt of
Citizens Newco, or Citizens Newco, if no such debt exists, receives
investment grade credit ratings from the Rating Agencies),
repurchase by the Company of all of the Put Notes as set forth in
Section 4 hereof, the payment in full (or provision for payment in
full) of all Notes issued hereunder or the defeasance of all Notes
issued hereunder pursuant to Article XIII of the Indenture. Upon
such receipt by Citizens Newco at the Separation of investment grade
credit ratings from the Rating Agencies, repurchase, payment in full
or defeasance, Citizens Guarantee shall terminate and all of
Citizens Guarantee Obligations hereunder shall cease provided, that,
the Citizens Guarantee shall remain in effect with respect to any
obligation of the Company to the Trustee under Section 607 of the
Indenture until such obligations have been satisfied, and further
provided, that, (i) if the Separation occurs and Citizens Newco has
not received a below investment grade credit rating and any of the
following events ("Company Insolvency Events") occurs prior to the
Separation or (ii) if the Separation occurs and Citizens Newco
receives a below investment grade credit rating and any Company
Insolvency Event occurs prior to the repurchase of all of Put Notes,
(A) any petition should be filed by or against the Company for
liquidation or reorganization, (B) should the Company become
insolvent or make an assignment for the benefit of creditors or (C)
should a receiver or trustee be appointed for all or any part of the
Company's assets, the Citizens Guarantee shall, to the fullest
extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the
Notes, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any Holder of
the Notes, whether as a "voidable preference," "fraudulent
transfer," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Notes
shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
Section 7. The Citizens Newco Guarantee.
(a)The Citizens Newco Guarantee set forth immediately below shall
become effective upon the Separation. For good and valuable
consideration, the receipt of and sufficiency of which is hereby
acknowledged, Citizens Newco Guarantor a party to the Indenture and
this First Supplemental Indenture, hereby fully and unconditionally
guarantees as a primary obligor not as a surety only on an unsecured
basis to each Holder of a Note authenticated and delivered by the
Trustee, and to the Trustee and its successors and assigns on behalf
of such Holder, the full and punctual payment of the principal (and
premium, if any) and interest on such Note when and as the same
shall become due and payable, whether at Maturity, by acceleration,
call for redemption, offer to purchase or otherwise, in accordance
with the terms of such Note, the Indenture and of this First
Supplemental Indenture. In case of the failure of the Company
punctually to make any such payment, Citizens Newco Guarantor hereby
agrees to cause such payment to be made punctually when and as the
same shall become due and payable, whether at Maturity or by
acceleration, call for redemption, offer to purchase or otherwise,
and as if such payment were made by the Company.
(b)Citizens Newco Guarantor agrees that its obligations hereunder shall
be absolute and unconditional, irrespective of, and shall be
unaffected by, the validity, regularity or enforceability of such
Note, the Indenture or this First Supplemental Indenture, the
absence of any action to enforce the same or any release, amendment,
waiver or indulgence granted to the Company or guarantor or any
consent to departure from any requirement of any other guarantee of
all or any of the Notes or any other circumstances which might
otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Citizens Newco Guarantor hereby waives the
benefits of diligence, presentment, demand for payment, any
requirement that the Trustee or any of the Holders protect, secure,
perfect or insure any security interest in or other Lien on any
property subject thereto or exhaust any right or take any action
against the Company or any other person or any collateral, filing of
claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the
Company, protest or notice with respect to such Note or the
indebtedness evidenced thereby and all demands whatsoever, and
covenants that Citizens Newco Guarantor will not be discharged in
respect of such Note except by complete performance of the
obligations contained in such Note and in the Guarantee.
(c)Citizens Newco Guarantor agrees that if, after the occurrence and
during the continuance of an Event of Default, the Trustee or any of
the Holders are prevented by applicable law from exercising their
respective rights to accelerate the maturity of the Notes, to
collect interest on the Notes, or to enforce or exercise any other
right or remedy with respect to the Notes, Citizens Newco Guarantor
agrees to pay to the Trustee for the account of the Holders, upon
demand therefor, the amount that would otherwise have been due and
payable had such rights and remedies been permitted to be exercised
by the Trustee or any of the Holders.
(d)Citizens Newco Guarantor shall be subrogated to all rights of the
Holders of the Notes in respect of any amounts paid by Citizens
Newco Guarantor on account of such Note pursuant to the provisions
of its Citizens Newco Guarantee or the Indenture; provided, however,
that Citizens Newco Guarantor shall not be entitled to enforce or to
receive any payments arising out of, or based upon, such right of
subrogation until the principal of (and premium, if any) and
interest on all Notes issued hereunder shall have been paid in full.
(e)If Citizens Newco Guarantor makes or is required to make any payment
in respect of its Citizens Newco Guarantee it shall be entitled to
seek contribution from any other guarantors to the extent permitted
by applicable law, provided, however, that Citizens Newco Guarantor
shall not be entitled to enforce or receive any payments arising out
of, or based upon, such right of contribution until the principal of
(premium, if any) and interest on all Notes issued hereunder shall
have been paid in full.
(f)The Citizens Newco Guarantee shall remain in full force and effect
and continue to be effective should any petition be filed by or
against the Company for liquidation or reorganization, should the
Company become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or
any part of the Company's assets, and shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Notes,
is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any Holder of the Notes,
whether as a "voidable preference," "fraudulent transfer," or
otherwise, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or
returned. The Citizens Newco Guarantee shall terminate when all the
Notes issued hereunder are paid in full or shall have been
effectively defeased pursuant to Article XIII of The Indenture
provided that it shall remain in effect with respect to any
obligations of the Company to the Trustee under Section 607 of the
Indenture until such obligations have been satisfied.
Section 8. Adjustment of the Applicable Annual Interest Rate.
(a)Effective with the substitution of the Citizens Newco Guarantee for
the Citizens' Guarantee, the interest rate payable on the Notes will
be adjusted in accordance with the following table. The credit
ratings referred to in the table will be the credit ratings
announced on or before the Separation and confirmed by the Rating
Agencies on the Separation Date for the long-term unsubordinated
unsecured debt of Citizens Newco or Citizens Newco, if no such debt
exists, after the Separation.
<TABLE>
<CAPTION>
S&P Rating Moody's Rating Applicable Annual Interest Rate
<S> <C> <C>
BBB+ or above Baa1 or above 6.05%
BBB Baa2 6.20%
BBB- Baa3 6.45%
</TABLE>
(b)If the Applicable Annual Interest Rate indicated in the above table
for the S&P credit rating and for the Moody's credit rating are not
identical, the Applicable Annual Interest Rate payable on the Notes
from and after the effectiveness of the Citizens Newco Guarantee
shall be the arithmetical mean of (i) the Applicable Annual Interest
Rate indicated by the table for the S&P credit rating and (ii) the
Applicable Annual Interest Rate indicated by the table for the
Moody's credit rating.
(c)"Investment grade credit rating" means a rating of the long-term
unsubordinated unsecured debt of Citizens Newco of at least BBB- (or
the equivalent thereof), in the case of a rating by S&P, and a
rating of such debt of at least Baa3 (or the equivalent thereof), in
the case of a rating by Moody's.
(d)If an interest rate adjustment occurs during any interest payment
period, interest will be payable on the Notes for such interest
payment period at the rate equal to the weighted average of the
applicable rates in effect during such period, which shall be
calculated by multiplying each applicable rate by the number of days
such applicable rate is in effect during such interest payment
period, determining the sum of such products and dividing such sum
by the number of days in such interest payment period. Interest on
the Notes shall be computed on the basis of a 360-day year of twelve
30 day months. The applicable rate payable on the Notes will in no
event be higher than the maximum interest rate permitted by the New
York State law as the same may be modified by United States law of
general application.
(e)Unless (i) the Separation has occurred or (ii) the Company certifies
to the Trustee that the Separation has been abandoned and will not
occur, for so long as any of the Notes are outstanding, the Company,
Citizens and Citizens Newco shall provide such information, and take
all other reasonable and customary action as shall be necessary or
appropriate to enable each of S&P and Moody's to provide a credit
rating for Citizens Newco.
(f)If the credit rating of either S&P or Moody's is not available at
the time of Separation notwithstanding the providing of the
information by the Company and Citizens Newco to a Rating Agency
which it has requested and the taking of all other reasonable and
customary action as may be necessary or appropriate to secure a
credit rating, a Substitute Rating Agency shall be designated in an
instrument delivered to the Trustee providing for the replacement of
S&P or Moody's, as the case may be, and the Company, Citizens and
Citizens Newco shall provide such information, and take all other
reasonable and customary action as shall be necessary or appropriate
to enable the Substitute Rating Agency to provide a credit rating.
Upon delivery of such instrument, for purposes of the foregoing
table Moody's or S&P will be deemed to have been replaced and the
credit ratings to be used in the foregoing table shall be the
equivalents of the S&P or Moody's credit ratings in the specified
table.
Section 9. Amendment to Indenture for Purposes of Notes due May 2004.
For all purposes of the Notes and for no other purposes, subsection (4)
of Section 501 shall read as follows:
"(4) material default in the performance, or material breach, of any
covenant or obligation of the Company or of the Guarantor in this Indenture
(other than a covenant or obligation a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of a series of
Securities other than that series), and continuance of such default or breach
for a period of 90 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities of
that series a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default" hereunder;"
For all purposes of the Notes and for no other purposes, subsection (5)
of Section 501 shall read as follows:
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or of the Guarantor in an
involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or of the Guarantor under any
applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of the Guarantor or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance any
such decree or order for relief or any such other decree or order unstayed and
in effect for a period of 60 consecutive days; or
For all purposes of the Notes and for no other purposes, subsection (6)
of Section 501 shall read as follows:
(6) the commencement by the Company or the Guarantor of a voluntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company or of the Guarantor in an
involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Company
or of the Guarantor or of any substantial part of its property, or the making by
either of them of an assignment for the benefit of creditors, or the admission
by either of them in writing of its inability to pay its debts generally as they
become due, or the talking of corporate action by the Company or the Guarantor
in furtherance of any such action; or
For all purposes of the Notes and for no other purposes, with respect
to Section 501, the word "or", the last word of subsection (6), shall be
deleted; the existing subsection (7) shall be renumbered as subsection (8); and
a new subsection (7) shall read as follows:
"(7) if at any time prior to the Separation or the repurchase of the
Put Notes, as applicable, the Citizens Guarantee ceases to be in full force and
effect or Citizens denies or disaffirms its obligations under its Guarantee, or,
if at any time after the Separation, the Citizens Newco Guarantee ceases to be
in full force and effect or Citizens Newco denies or disaffirms its obligations
under its Guarantee; or"
For all purposes of the Notes and for no other purposes, the first
paragraph of Section 502 shall read:
"If an Event of Default with respect to the Securities of any series
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of at least 25% in principal amount of the Outstanding Securities of
that series may declare the principal amount (or, if any of the Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified in the terms thereof) of
all of the Securities of that series to be due and payable immediately, by a
notice in writing to the company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount) shall
become immediately due and payable."
For all purposes of the Notes and for no other purposes, subsection (2)
of Section 507 shall read as follows:
"(2) the Holders of at least 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;"
For all purposes of the Notes and for no other purposes, subsection (5)
of Section 507 shall read as follows:
"(5) no direction inconsistent with such written request has been given
to the Trustee during such 90-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;"
Section 10. Incorporation of Indenture. From and after the date hereof,
the Indenture, as supplemented by this First Supplemental Indenture, shall be
read, taken and construed as one and the same instrument with respect to the
Notes.
Section 11. Acceptance of Trust. The Trustee accepts the trusts created
by the Indenture, as supplemented by the First Supplemental Indenture, and
agrees to perform the same upon the terms and conditions in the Indenture, as so
supplemented.
Section 12. Conflict with Trust Indenture Act. If any provision of the
Indenture or this First Supplemental indenture limits, qualifies or conflicts
with a provision which would be required to be included in the Indenture and in
the First Supplemental Indenture if the Indenture and the First Supplemental
Indenture were to be qualified under the Trust Indenture Act, such required
provision of the Act shall control. If any provision of the Indenture or the
First Supplemental Indenture purports to modify or exclude any provision of the
Trust Indenture Act that may be so modified or excluded, such provision of the
Act shall be deemed to apply to the Indenture or this First Supplemental
Indenture only as so modified or if not so excluded, as the case may be.
Section 13. Governing Law. This First Supplemental Indenture, and the
Notes, shall be governed by and construed in accordance with the laws of the
State of New York.
Section 14. Recitals. The recitals contained in the Indenture, this
First Supplemental Indenture and the Notes, except the Trustee's certificate of
authentication, shall be taken as statements of the Company, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of the Indenture, as
supplemented by this First Supplemental Indenture.
Section 15. Amendments. Notwithstanding any other provisions hereof,
all amendments to the Indenture made hereby shall have effect only with respect
to the Notes, and not with respect to the Securities of any other series created
subsequent to the date hereof.
Section 16. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the date first above written.
ELECTRIC LIGHTWAVE, INC.
By: /s/ Robert J. DeSantis
Vice President, Chief Financial Officer
and Treasurer
Attest:
/s/ Charles J. Weiss
Secretary
CITIZENS UTILITIES COMPANY
By: /s/ Robert J. DeSantis
Vice President, Chief Financial Officer
and Treasurer
Attest:
/s/ Charles J. Weiss
Secretary
CITIZENS NEWCO COMPANY
By: /s/ Robert J. DeSantis
Vice President, Chief Financial Officer
and Treasurer
Attest:
/s/ Charles J. Weiss
Secretary
CITIBANK, N.A.,
as Trustee
By: /s/ Florence Mills
Senior Trust Officer
Attest:
/s/ Jenny Cheng
63135516.07
County of Fairfield )
) ss.:
State of Connecticut )
On the 27th day of April, 1999, before me personally came Robert J.
DeSantis, to me known, who, being by me duly sworn, did depose and say that he
is Chief Financial Officer, Vice President and Treasurer of ELECTRIC LIGHTWAVE,
INC., one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.
/s/ Mildred L. Hudson
Notary Public, State of Connecticut
County of Fairfield )
) ss.:
State of Connecticut )
On the 27th day of April, 1999, before me personally came Robert
J.DeSantis, to me known, who, being by me duly sworn, did depose and say that he
is the Chief Financial Officer, Vice President and Treasurer of CITIZENS
UTILITIES COMPANY, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he signed his
name thereto by like authority.
/s/ Mildred L. Hudson
Notary Public, State of Connecticut
County of Fairfield )
) ss.:
State of Connecticut )
On the 27th day of April, 1999, before me personally came Robert J.
DeSantis, to me known, who, being by me duly sworn, did depose and say that he
is the Chief Financial Officer, Vice President and Treasurer of CITIZENS NEWCO
COMPANY, one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.
/s/ Mildred L. Hudson
Notary Public, State of Connecticut
County of New York )
) ss.:
State of New York )
On this 27th day of April, in the year of 1999 before me personally
came Florence Mills, to me personally known, who being by me duly sworn did
depose and say that she is a Senior Trust Officer of Citibank, N.A., one of the
corporations described in and which executed the foregoing indenture; that she
knows the seal of said corporation; that the seal affixed to said instrument
opposite the execution thereof on behalf of said corporation is the corporate
seal of said corporation; that said instrument was signed and said corporate
seal was so affixed on behalf of said corporation by authority and order of its
board of directors; that she signed her name thereto by like authority; and she
acknowledged said instrument to be her free act and deed and the free act and
deed of said Bank.
IN WITNESS WHEREOF I have hereunder set my hand and affixed my official
seal, at New York in said State of New York, the day and year first above
written.
/s/ Katherine Lee Dominus
Notary Public, State of New York
EXHIBIT 10.24.3
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co., or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
REGISTERED REGISTERED
NUMBER
RB-1 $200,000,000
ELECTRIC LIGHTWAVE, INC.
SEE REVERSE FOR
NOTE DUE 2004 CERTAIN DEFINITIONS
CUSIP 284 895 AA 7
ELECTRIC LIGHTWAVE, INC., a corporation duly organized and existing under the
laws of Delaware (herein called the "Company"), which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to
CEDE & CO.
or registered assigns, the principal sum of TWO HUNDRED MILLION ($200,000,000)
DOLLARS
on May 15, 2004, and to pay interest thereon from April 28, 1999 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on May 15 and November 15 in each year, commencing
November 15, 1999, at the rate of 6.05% per annum, or if the annual interest
rate is adjusted in accordance with the provisions of the Indenture at such
adjusted annual interest rate, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
referred to on the reverse hereof, be paid to the Person in whose name this (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the May 1 or November 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Notes of this series not more than
15 days and not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any Notes exchange on which the Notes of this series may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
said Indenture. Payment of the principal of (and premium, if any) and any such
interest on this Note will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, the City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts); provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: April 28, 1999
CERTIFICATE OF AUTHENTICATION ELECTRIC LIGHTWAVE, INC.
THIS IS ONE OF THE SECURITIES OF THE SERIES
DESIGNATED THEREIN REFERRED TO IN THE WITHIN-MENTIONED
INDENTURE By:
CHIEF FINANCIAL OFFICER,
VICE PRESIDENT AND TREASURER
CITIBANK, N.A.
By: Attest:
AUTHORIZED OFFICER SECRETARY
<PAGE>
This Note is one of a duly authorized issue of Notes of the Company (herein
called the "Notes"), issued and to be issued in one or more series under an
Indenture, dated as of April 15, 1999, from the Company to Citibank, N.A., as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), as supplemented and amended by a First Supplemental
Indenture dated as of April 15, 1999 from the Company, Citizens Utilities
Company, a Delaware Corporation ("Citizens"), and Citizens Newco Company, a
Delaware Corporation ("Citizens Newco") to the Trustee (herein together called
the "Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, Citizens, Citizens
Newco, the Trustee and the Holders of the Notes and of the terms upon which the
Notes are, and are to be, authenticated and delivered. This Note is one of the
Notes of the series designated on the face hereof, limited in aggregate
principal amount to up to $450,000,000.00.
Until termination of the Citizens guarantee (the "Citizens Guarantee") as
provided in the Indenture, the Notes will be guaranteed by Citizens. Pursuant to
the Citizens Guarantee, Citizens has unconditionally and fully guaranteed, as a
primary obligor and not as a surety only, on an unsecured basis, to each Holder
of the Notes and to the Trustee and its successors and assigns the full and
punctual payment of principal, any premium and interest on the Notes. An
unconditional and full guarantee of Citizens Newco of the Company's obligations
under the Notes will become effective at the time of the transfer of the
telecommunication assets of Citizens to Citizens Newco and the distribution of
the common stock of Citizens Newco to the stockholders of Citizens (the
"Separation"). The Citizens Guarantee will continue in full force and effect
until the Separation occurs, or, if Separation does not occur, until payment in
full of all Notes when due whether at maturity or otherwise, or discharge, legal
defeasance or covenant defeasance of all Notes. If Citizens Newco has received a
below investment grade credit rating at the time of Separation, then each Holder
of Notes may elect to have the Company repurchase Notes of such Holder at a
price equal to 100% of the principal amount plus accrued and unpaid interest to
the date of repurchase which will be on or before the 70th day after Separation
all as provided in the Indenture. If the noteholders' option to require
repurchase of the Note by the Company referred to in the preceding sentence
becomes effective, the Citizens Guarantee will terminate upon the purchase of
all Notes elected by the noteholders for such repurchase.
The Company may, at its option, within 15 days of a change of control, but
at no other time, redeem all or any portion of the Notes, at a redemption price,
plus accrued interest to the date of redemption, equal to the greater of (i)
100% of their principal amount or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon (exclusive of
interest accrued to the date of redemption) discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve 30 day
months) at the Applicable Treasury Yield plus 25 basis points all as provided in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness on this Note and (b) certain covenants and certain Events of
Default upon compliance by the Company with certain conditions set forth
therein.
If an Event of Default with respect to Notes of this series shall occur and
be continuing, the principal of the Notes of this series may be declared due and
payable in the manner and with the effect provided in the Indenture. In the
event of redemption of this Note in part only, a new Note or Notes of this
series for the unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the
Notes of each series to be affected under the Indenture at any time by 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 of all series
to be affected. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Notes of each series at the
time Outstanding, on behalf of the Holders of all Notes of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Note.
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
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed. As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registerable in the
Note Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company in any place where the principal of, and
premium, if any, and interest on this Note are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of this
series and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes of this series are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple of $1,000.00. As provided
in the Indenture and subject to certain limitations therein set forth, Notes of
this series are exchangeable for a like aggregate principal amount of Notes of
this series and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same. No service charge shall be made
for any such registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Prior to due presentment of this Note for
registration of transfer, the Company or the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Note be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary. This Note shall be governed by and construed in accordance with
the laws of the State of New York.
Certain terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
ASSIGNMENT FORM
FOR VALUE RECEIVED, as the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY NUMBER OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- --------------------------------------------------------------------------------
Name and address of Assignee,including zip code, must be printed or typewritten)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Debenture, and all rights thereunder, hereby irrevocably,
constituting and appointing
- ------------------------------------------------------------------------Attorney
to transfer the said Debenture on the books of Citizens Utilities Company with
full power of substitution in the premises.
(Dated: _____________) ________________________________________________________
NOTICE:The signature of this assignment must correspond
with the name as it appears upon the face of the
within Debenture in every particular, without
alteration or enlargement or any change whatever.
EXHIBIT 10.24.4
BOOK-ENTRY-ONLY CORPORATE DEBT ISSUES
Letter of Representations
(To be Completed by Issuer and Agent)
Electric Lightwave, Inc.
(Name of Issuer)
Citibank, N.A.
(Name of Agent)
April 28, 1999
(Date)
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
RE: 6.05% Notes Due May 15, 2004 issued by Electric Lightwave, Inc. and
guaranteed by Citizens Utilities Company
---------------------------------------------------------------------------
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain
matters relating to the above-referenced issue (the "Securities"). Agent will
act as trustee, paying agent, fiscal agent, or other agent of Issuer with
respect to the Securities. The Securities will be issued pursuant to a trust
indenture, resolution or other such document authorizing the issuance of the
Securities dated April 15, 1999 (the "Document"). Bear, Stearns & Co., Inc. is
distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its rules with respect to the Securities, Issuer
and Agent make the following representations to DTC:
1. Prior to closing on the Securities on April 28, 1999, there shall be
deposited with DTC one Security certificate registered in the name of DTC's
nominee, Cede & Co., for each stated maturity of the Securities in the face
amounts set forth on Schedule A hereto, the total of which represents 100% of
the principal amount of such Securities. If, however, the aggregate principal
amount of any maturity exceeds $200 million, one certificate will be issued with
respect to each $200 million of principal amount and an additional certificate
will be issued with respect to any remaining principal amount. Each Security
certificate shall bear the following legend: Unless this certificate is
presented by an authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to Issuer or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificate(s) by virtue of submission of such certificate(s) to DTC.
3. In the event of any solicitation of consents from or voting by
holders of the securities, Issuer or Agent shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall send notice of such record date to DTC not less
than 15 calendar days in advance of such record date. Notices to DTC pursuant to
this Paragraph by telecopy shall be sent to DTC's Reorganization Department at
(212) 709-6896 or (212) 709-6897, and receipt of such notices shall be confirmed
by telephoning (212) 709-6870. Notices to DTC pursuant to this Paragraph by mail
or by any other means shall be sent to DTC's Reorganization Department as
indicated in Paragraph 5.
4. In the event of a full or partial redemption, Issuer or Agent shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to Security holders or
published (the "Publication Date"). Such notice shall be sent to DTC by a secure
means (e.g., legible telecopy, registered or certified mail, overnight delivery)
in a timely manner designed to assure that such notice is in DTC's possession no
later than the close of business on the business day before or, if possible, two
business days before the Publication Date. Issuer or Agent shall forward such
notice either in a separate secure transmission for each CUSIP number or in a
secure transmission for multiple CUSIP numbers (if applicable) which includes a
manifest or list of each CUSIP number submitted in that transmission. (The party
sending such notice shall have a method to verify subsequently the use of such
means and the timeliness of such notice.) The Publication Date shall be not less
than 30 days nor more than 60 days prior to the redemption date or, in the case
of an advance refunding, the date that the proceeds are deposited in escrow.
Notices to DTC pursuant to this Paragraph by telecopy shall be sent to DTC's
Call Notification Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming that
the notice has been received, such party shall telephone (516) 227-4070. Notices
to DTC pursuant to this Paragraph by mail or by any other means shall be sent
to: Manager: Call Notification Department The Depository Trust Company 711
Stewart Avenue Garden City, NY 11530-4719
5. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges and capital changes), notice by Issuer or Agent to
Security holders specifying the terms of the tender and the Publication Date of
such notice shall be sent to DTC by a secure means in the manner set forth in
the preceding Paragraph. Notices to DTC pursuant to this Paragraph and notices
of other corporate actions by telecopy shall be sent to DTC's Reorganization
Department at (212) 709-1093 or (212) 709-1094, and receipt of such notices
shall be confirmed by telephoning (212) 709-6884. Notices to DTC pursuant to the
above by mail or by any other means shall be sent to: Manager: Reorganization
Department Reorganization Window The Depository Trust Company 7 Hanover Square;
22nd Floor New York, NY 10004-2695
6. All notices and payment advices sent to DTC shall contain the CUSIP
number of the securities.
7. In the event of a change in the interest rate, Agent shall send
notice of such change to Standard & Poor's Corporation. Such notice, which shall
also include Agent contact's name and telephone number, shall also be sent to
DTC's Dividend Department either by telecopy to (212) 709-1723, or if by mail or
by any other means to: Manager: Announcements Dividend Department The Depository
Trust Company 7 Hanover Square; 22nd Floor New York, NY 10004-2695
8. Issuer or Agent shall provide a written notice of interest payment
information to a standard interest announcement service subscribed to by DTC as
soon as the information is available. In the unlikely event that no such service
exists, Issuer or Agent shall provide such notice directly to DTC
electronically, as previously arranged by Issuer or Agent and DTC, as soon as
the information is available. If electronic transmission has not been arranged,
absent any other arrangements between Issuer or Agent and DTC, such information
should be sent by telecopy to DTC's Dividend Department at (212) 709-1723 or
(212) 709-1686, and receipt of such notices shall be confirmed by telephoning
(212) 709-1270. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to: Manager: Announcements Dividend Department The
Depository Trust Company 7 Hanover Square; 22nd Floor New York, NY 10004-2695
9. Issuer or Agent shall provide CUSIP numbers for each issue for which
payment is being sent, as well as the dollar and cent amount of the payment for
each issue to DTC, no later than noon (Eastern Time) on the payment date.
10. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns, in same-day funds no later than 2:30 p.m.
(Eastern Time) on each payment date. Absent any other arrangements between
Issuer or Agent and DTC, such funds shall be wired as follows: The Chase
Manhattan Bank ABA # 021 000 021 For credit to a/c Cede & Co. c/o The Depository
Trust Company Dividend Deposit Account # 066-026776
11. Maturity and redemption payments allocated with respect to each
CUSIP number shall be received by Cede & Co., as nominee of DTC, or its
registered assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on
the payment date. Absent any other arrangements between Issuer or Agent and DTC,
such funds shall be wired as follows: The Chase Manhattan Bank ABA # 021 000 021
For credit to a/c Cede & Co. c/o The Depository Trust Company Redemption Deposit
Account # 066-027306
12. Principal payments (plus accrued interest, if any) as a result of
optional tenders for purchase effected by means of DTC's Repayment Option
Procedures shall be received by Cede & Co., as nominee of DTC, or its registered
assigns, in same-day funds no later than 2:30 p.m. (Eastern Time) on the first
payment date. Absent any other arrangements between Issuer or Agent and DTC,
such funds shall be wired as follows: The Chase Manhattan Bank ABA # 021 000 021
For credit to a/c Cede & Co. c/o The Depository Trust Company Reorganization
Deposit Account # 066-027608
13. DTC may direct Issuer or Agent to use any other number or address
as the number or address to which notices or payments of interest or principal
may be sent.
14. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or Agent's
Invitation) necessitating a reduction in the aggregate principal amount of
Securities outstanding or an advance refunding of part of the Securities
outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue
and authenticate a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction in principal except in the case of final maturity, in which case the
certificate will be presented to Issuer or Agent prior to payment, if required.
15. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Agent
shall notify DTC of the availability of certificates. In such an event, Issuer
or Agent shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
16. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent (at which time DTC will confirm with Issuer or Agent the aggregate
principal amount of Securities outstanding). Under such circumstances, at DTC's
request Issuer and Agent shall cooperate fully with DTC by taking appropriate
action to make available on or more separate certificates evidencing Securities
to any DTC Participant having Securities credited to its DTC accounts.
17. Nothing herein shall be deemed to require Agent to advance funds on
behalf of Issuer.
18. This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute buy one and the same
instrument.
19. This Letter of Representations is governed by, and shall be
construed in accordance with, the laws of the State of New York without giving
effect to principles of conflicts of law. 20. The following riders, attached
hereto, are hereby incorporated into this Letter of Representations:
Representations for Rule 144A Securities, Securities Held with a Custodian on
behalf of DTC, Securities with a Tender Provision, Securities with a Pro Rata
Reduction of Principal Provision, Amendments to DTC Letter of Representations
- -------------------------- -----------------------------------------------------
Notes: Very truly yours,
- --------------------------------------------- ----------------------------------
- --------------------------------------------- ----------------------------------
A. If there is an Agent (as defined in this
Letter of Representations), Agent, as well
as Issuer, must sign this Letter. If there ELECTRIC LIGHTWAVE, Inc.
is no Agent, in signing this Letter Issuer (Issuer)
itself undertakes to perform all of the By: /s/ Robert J. DeSantis
obligations set forth herein. ----------------------------------
(Authorized Officer's Signature)
ROBERT J. DESANTIS
V.P., C.F.O. AND TREASURER
- --------------------------------------------- ----------------------------------
- --------------------------------------------- ----------------------------------
B. Schedule B contains statements that DTC
believes accurately describe DTC, the CITIBANK, N.A.
method of effecting book-entry transfers of (Agent)
securities distributed through DTC, and BY: /S/ Florence S. MILLS
certain related matters. ----------------------------------
(Authorized Officer's Signature)
- --------------------------------------------- ----------------------------------
- --------------------------------------------- ----------------------------------
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: /s/ Richard B. JESSON
- -----------------------------------------
cc: Underwriter
Underwriter's Counsel
- --------------------------------------------- ----------------------------------
<PAGE>
SCHEDULE A
Electric Lightwave, Inc. 6.05% Notes due May 15, 2004,
guaranteed by Citizens Utilities Company
(Describe Issue)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------------- -------------------------- -------------------------- --------------------------
CUSIP Number Principal Amount Maturity Date Interest Rate
- ---------------------------- -------------------------- -------------------------- --------------------------
- ---------------------------- -------------------------- -------------------------- --------------------------
284895AA7 $325,000,000.00 May 15, 2004 6.05%
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
<PAGE>
SCHEDULE B
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC - bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities will
be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One fully-registered Security certificate will be
issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue will be deposited with DTC. [If, however, the aggregate
principal amount of [any] issue exceeds $200 million, one certificate will be
issued with respect to each $200 million of principal amount and an additional
certificate will be issued with respect to any remaining principal amount of
such issue.]
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interest in Securities,
except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Securities; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Securities are
credited, which may or may not be the Beneficial Owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
6. [Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to
Cede & Co., as nominees of DTC. DTC's practice is to credit Direct Participants'
accounts, upon DTC's receipt of funds and corresponding detail information from
Issuer or Agent, on payable date in accordance with their respective holdings
shown on DTC's records. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as in the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to Cede &
Co. is the responsibility of Issuer or Agent, disbursement of such payments to
Direct Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
9. [A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to
[Tender/Remarketing] Agent, and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant's interest in the
Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for
physical delivery of Securities in connection with an optional tender or a
mandatory purchase will be deemed satisfied when the ownership rights in the
Securities are transferred by Direct Participants on DTC's records and followed
by a book-entry credit of tendered Securities to [Tender/DTC Remarketing]
Agent's account.]
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.
11. Issuer may decide to discontinue the use of the system of
book-entry transfers through DTC (or a successor securities depository). In that
event, Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.
<PAGE>
REPRESENTATIONS FOR RULE 144A SECURITIES -
to be included in DTC Letter of Representation
1. Issuer represents that at the time of initial registration in the
name of DTC's nominee, Cede & Co., the Securities were Legally or Contractually
Restricted Securities1, eligible for transfer under Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"), and identified by a
CUSIP or CINS identification number that was different from any CUSIP or CINS
number assigned to any securities of the same class that were not Legally or
Contractually Restricted Securities. Issuer shall ensure that a CUSIP or CINS
identification number is obtained for all unrestricted securities of the same
class that is different from any CUSIP or CINS identification number assigned to
a Legally or Contractually Restricted Security of such class, and shall notify
DTC promptly in the event that it is unable to do so. Issuer represents that it
has agreed to comply with all applicable information requirements of Rule 144A.
2. Issuer represents that the Securities are [Note: Issuer must
represent one of the following, and may cross out the other]
[an issue of nonconvertible debt securities or nonconvertible preferred
stock which is rated in one of the top four categories by a nationally
recognized statistical rating organization ("Investment-Grade Securities").]
[included within PORTAL, a Self-Regulatory Organization system approved
by the Securities and Exchange Commission for the reporting of quotation and
trade information of Securities eligible for transfer pursuant to Rule 144A (an
"SRO Rule 144A System").]
3. If the Securities are not Investment-Grade Securities, Issuer and
Agent acknowledge that if such Securities cease to be included in an SRO Rule
144A System during any period in which such Securities are Legally or
Contractually Restricted Securities, such Securities shall no longer be eligible
for DTC's services. Furthermore, DTC may discontinue providing its services as
securities depository with respect to the Securities at any time by giving
reasonable notice to Issuer or Agent. Under any of the aforementioned
circumstances, at DTC's request, Issuer and Agent shall cooperate fully with DTC
by taking appropriate action to make available one or more separate certificates
evidencing Securities to any Participant having Securities credited to its DTC
accounts.
- --------------------------------------------------------------------------------
1 A "Legally Restricted Security" is a security that is a restricted security,
as defined in Rule 144(a)(3). A "Contractually Restricted Security" is a
security that upon issuance and continually thereafter can only be sold pursuant
to Regulation 5 under the Securities Act, Rule 144A, Rule 144, or in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4 of the Securities Act and not involving any public
offering; provided, however, that once the security is sold pursuant to the
provisions of Rule 144, including Rule 144(k), it will thereby cease to be a
"Contractually Restricted Security." For purposes of this definition, in order
for a depository receipt to be considered a "Legally or Contractually Restricted
Security", the underlying security must also be a "Legally or Contractually
Restricted Security."
<PAGE>
[1/94]
4. Issuer and Agent acknowledge that so long as Cede & Co. is a record
owner of the Securities, Cede & Co. shall be entitled to all applicable voting
rights and to receive the full amount of all distributions payable with respect
thereto. Issuer and Agent acknowledge that DTC shall treat any DTC Participant
("Participant") having Securities credited to its DTC accounts as entitled to
the full benefits of ownership of such Securities. Without limiting the
generality of the preceding sentence, Issuer and Agent acknowledge that DTC
shall treat any Participants having Securities credited to its DTC accounts as
entitled to receive distributions (and voting rights, if any) in respect of
Securities, and to receive from DTC certificates evidencing Securities. Issuer
and Agent recognize that DTC does not in any way undertake to, and shall not
have any responsibility to, monitor or ascertain the compliance of any
transactions in the Securities with any of the provisions: (a) of Rule 144A; (b)
of other exemptions from registration under the Securities Act or of any other
state or federal securities laws; or (c) of the offering documents.
Representations for Securities Held With a Custodian on Behalf of DTC TO
BE INCLUDED IN DTC LETTER OF REPRESENTATIONS
The Security certificate(s) shall remain in Agent's1 custody as a
"Balance Certificate" subject to the provisions of the Balance Certificate
Agreement between Agent and DTC currently in effect.
On each day on which Agent is open for business and on which it
receives an instruction originated by a Participant through DTC's
Deposit/Withdrawal at Custodian ("DWAC") system to increase the Participant's
account by a specified number of shares, units, or obligations (a "Deposit
Instruction"), Agent shall, before 6:30 p.m. (Eastern Time) that day, either
approve or cancel the Deposit Instruction through the DWAC system.
On each day on which Agent is open for business and on which it
receives an instruction originated by a Participant through the DWAC system to
decrease the Participant's account by a specified number of shares, units, or
obligations (a "Withdrawal Instruction"), Agent shall, at or before 6:30 p.m.
(Eastern Time) that day, either approve or cancel the Withdrawal Instruction
through the DWAC system.
Agent agrees that its approval of a Deposit or Withdrawal Instruction
shall be deemed to be the receipt by DTC of a new reissued or reregistered
certificated security on registration of transfer to the name of Cede & Co. for
the quantity of securities evidenced by the Balance Certificate after the
Deposit or Withdrawal Instruction is effected.
4/1/99
- --------------------------------------------------------------------------------
1 Agent shall be defined as Depositary, Trustee, Trust Company, Issuing Agent
and/or Paying Agent as such definition applies in the DTC Letter of
Representations to which this rider may be attached.
<PAGE>
Representations for Securities With a Tender Provision
(Pursuant to a Change of Control Trigger Event or Other Such Event)
TO BE INCLUDED IN DTC LETTER OF REPRESENTATION
It is understood that if the Security holders shall at any time have
the right to tender the Securities to Issuer and require that Issuer repurchase
such holders' Securities pursuant to the Document and Cede & Co., as nominee of
DTC, or its registered assigns, as the record owner, is entitled to tender the
Securities, such tenders will be effected by means of DTC's Repayment Option
Procedures. Under the Repayment Option Procedures, DTC shall receive, during the
applicable tender period, instructions from its Participants to tender
Securities for purchase. The parties to the LETTER OF REPRESENTATIONS for the
Securities agree that such tender for purchase may be made by DTC by means of a
book-entry credit of such Securities to the account of Agent1, as agent for
Issuer, provided that such credit is made on or before the final day of the
applicable tender period. DTC agrees that promptly after the recording of any
such book-entry credit, it will provide to Agent an Agent Receipt and
Confirmation or the equivalent in accordance with the Repayment Option
Procedures, identifying the Securities and the aggregate principal amount
thereof as to which such tender for purchase has been made.
Agent or Issuer shall send DTC a notice regarding such optional tender
by hand or by a secure means (e.g. legible facsimile transmission, registered or
certified mail, overnight delivery) in a timely manner designed to assure that
such notice is in DTC's possession no later than the close of business two
business days before the Publication Date. The Publication Date shall be not
less than 15 days prior to the expiration date of the applicable tender period.
Such notice shall state whether any partial redemption of the Securities is
scheduled to occur during the applicable optional tender period. If delivered by
hand or sent by mail or overnight delivery, such notice shall be sent to:
Supervisor; Put Bond Unit Reorganization Department The Depository Trust Company
55 Water Street 50th Floor New York, NY 10041-0099
If sent by telecopy, such notice shall be directed to (212) 855-5235.
Agent or Issuer shall confirm DTC's receipt of such telecopy by telephoning
DTC's Put Bond Unit at (212) 855-5230.
- --------------------------------------------------------------------------------
1Agent shall be defined as Depositary, Trustee, Trust Company, Issuing Agent
and/or Paying Agent as such definition applies in the DTC Letter of
Representations to which this rider may be attached.
<PAGE>
Representations for Securities with a Pro Rata Reduction of
Principal Provision
TO BE INCLUDED IN DTC LETTER OF REPRESENTATION
In the event of a pro rata reduction of principal, Agent1 shall send
DTC written notice with respect to the dollar amount per $1,000 original face
value (or other minimum authorized denomination if less than $1,000 face value)
payable on each payment date allocated as to the interest and principal portions
thereof preferably five, but not less than two, business days prior to such
payment date. Such notices, which shall clearly indicate that they relate to a
pro rata reduction of principal and which shall also contain the current pool
factor or ratio and Agent contact's name and telephone number, shall be sent by
telecopy to DTC's Dividend Department at (212) 855-4555, or if by mail or by any
other means to:
Manager, Announcements
Dividend Department
The Depository Trust Company
55 Water Street 25th Floor
New York, NY 10041-0099
4/99
- --------------------------------------------------------------------------------
1Agent shall be defined as Depositary, Trustee, Trust Company, Issuing Agent
and/or Paying Agent as such definition applies in the DTC Letter of
Representations to which this rider may be attached.
<PAGE>
RIDER AMENDING DTC LETTER OF REPRESENTATIONS - BEO CORPORATE DEBT
DTC's Reorganization and Dividend Departments have relocated to 55
Water Street. Following are revisions to the Letter of Representations including
current addresses, telephone numbers, and telecopy numbers.
Paragraph 3 of the Letter of Representations:
Old Telecopier Numbers: Current Telecopier Numbers:
(212) 709-6896 and (212) 709-6897 (212) 855-5181 and (212) 855-5182
The confirmation number (formerly (212) 709-6870) is now (212) 855-5202.
Paragraph 5 of the Letter of Representations:
Old Telecopier Numbers: Current Telecopier Number:
(212) 709-1093 and (212) 709-1094 (212) 855-5278
The confirmation number (formerly (212) 709-6884) is now (212) 855-5280.
The current address is:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
55 Water Street 50th Floor
New York, NY 10041-0099
Paragraph 7 of the Letter of Representations:
Old Telecopier Number: Current Telecopier Number:
(212) 709-1723 (212) 855-4555
The current address is:
Manager; Announcements
Dividend Department
The Depository Trust Company
55 Water Street 25th Floor
New York, NY 10041-0099
Paragraph 8 of the Letter of Representations:
Old Telecopier Numbers: Current Telecopier Numbers:
(212) 709-1723 and (212) 709-1686 (212) 855-4555 and (212) 855-4556
The confirmation number (formerly (212) 709-1270) is now (212) 855-4550.
The current address for Paragraph 8 is the same as that listed above, for
Paragraph 7.
[4/98]
<PAGE>
The following additional text relates to Paragraph 9 of the Letter of
Representations:
Such information shall be conveyed by automated notification. If the
circumstances prevent the funds being paid to Cede & Co., as nominee of DTC, by
2:30 p.m. ET from equaling the dollar amount associated with detail payments by
12:00 noon ET, Issuer or Agent must provide CUSIP-level reconciliation to DTC no
later than 2:30 p.m. ET. Reconciliation may be provided by automated means or in
written format.
The following additional text relates to Paragraph 10 of the Letter of
Representations:
Issuer must remit free funds to Agent by 1:00 p.m. ET on each payment
date, or at such earlier time as required by Agent to guarantee timely credit to
the Dividend Deposit Account of Cede & Co.
The following additional text relates to Paragraph 11 of the Letter of
Representations:
Issuer must remit free funds to Agent by 1:00 p.m. ET on each payment
date, or at such earlier time as required by Agent to guarantee timely credit to
the Redemption Deposit Account of Cede & Co. Issuer or Agent shall deliver
CUSIP-level detail regarding such payments to DTC no later than 2:30 p.m. ET on
each payment date.
The following additional text relates to Paragraph 12 of the Letter of
Representations:
Issuer must remit free funds to Agent by 1:00 p.m. ET on each payment
date, or at such earlier time as required by Agent to guarantee timely credit to
the Reorganization Deposit Account of Cede & Co. Issuer or Agent shall deliver
CUSIP-level detail regarding such payments to DTC no later than 2:30 p.m. ET on
each payment date.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Electric
Lightwave, Inc.'s Financial Statements for the six months ended June 30, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<EXCHANGE-RATE> 1
<CASH> 18,189
<SECURITIES> 0
<RECEIVABLES> 25,722
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,166
<PP&E> 693,449
<DEPRECIATION> 55,723
<TOTAL-ASSETS> 693,494
<CURRENT-LIABILITIES> 104,208
<BONDS> 503,250
0
0
<COMMON> 499
<OTHER-SE> 81,396
<TOTAL-LIABILITY-AND-EQUITY> 693,494
<SALES> 0
<TOTAL-REVENUES> 84,311
<CGS> 0
<TOTAL-COSTS> 48,926
<OTHER-EXPENSES> 18,667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,847
<INCOME-PRETAX> (67,487)
<INCOME-TAX> 670
<INCOME-CONTINUING> (68,157)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (68,157)
<EPS-BASIC> (1.37)
<EPS-DILUTED> (1.37)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Electric
Lightwave, Inc.'s Financial Statements for the six months ended June 30, 1998
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<EXCHANGE-RATE> 1
<CASH> 12,638
<SECURITIES> 0
<RECEIVABLES> 10,207
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,390
<PP&E> 396,080
<DEPRECIATION> 31,887
<TOTAL-ASSETS> 395,003
<CURRENT-LIABILITIES> 49,803
<BONDS> 146,656
0
0
<COMMON> 497
<OTHER-SE> 185,437
<TOTAL-LIABILITY-AND-EQUITY> 395,003
<SALES> 0
<TOTAL-REVENUES> 41,500
<CGS> 0
<TOTAL-COSTS> 19,072
<OTHER-EXPENSES> 11,774
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,211
<INCOME-PRETAX> (32,184)
<INCOME-TAX> (5,471)
<INCOME-CONTINUING> (26,713)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 2,817
<NET-INCOME> (29,530)
<EPS-BASIC> (.59)
<EPS-DILUTED> (.59)
</TABLE>
