SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-----------------------
Date of Report
(Date of earliest
event reported): February 1, 2000
Alliant Energy Corporation
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 1-9894 39-1380265
- --------------- ---------------- ------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
222 West Washington Avenue, Madison, Wisconsin 53703
-------------------------------------------------------------
(Address of principal executive offices, including zip code)
(608) 252-3311
-------------------------------
(Registrant's telephone number)
<PAGE>
Item 5. Other Events.
- ------- ------------
On February 1, 2000, Alliant Energy Corporation issued a press release
pursuant to the Rule 135c under the Securities Act of 1933 announcing that
Alliant Energy Resources, Inc., the parent company of Alliant Energy
Corporation's diversified operations, completed a private placement of 5,940,960
exchangeable senior notes in the aggregate principal amount of $402.5 million in
accordance with Rule 144A under the Securities Act of 1933. A copy of such press
release is filed as Exhibit 99.1 and is incorporated by reference herein.
The material terms of the exchangeable senior notes are set forth in
(i) a Purchase Agreement, dated January 26, 1999, among Alliant Energy
Resources, Inc., Alliant Energy Corporation and Merrill Lynch, Pierce, Fenner &
Smith Incorporated; (ii) an Indenture, dated as of November 4, 1999, among
Alliant Energy Resources, Inc., Alliant Energy Corporation, as Guarantor, and
Firstar Bank, N.A., as Trustee; (iii) a Second Supplemental Indenture, dated as
of February 1, 2000, among Alliant Energy Resources, Inc., Alliant Energy
Corporation, as Guarantor, and Firstar Bank, N.A., as Trustee; and (iv) a
Registration Rights Agreement, dated as of February 1, 2000, among Alliant
Energy Resources, Inc., Alliant Energy Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated. Copies of such documents are filed as Exhibits
99.2., 99.3, 99.4 and 99.5, respectively, and are incorporated by reference
herein.
Item 7. Financial Statements and Exhibits.
- ------ ---------------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibits are being filed herewith:
--------
(99.1) Alliant Energy Corporation Press Release dated February 1,
2000.
(99.2) Purchase Agreement, dated January 26, 1999, among Alliant
Energy Resources, Inc., Alliant Energy Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
(99.3) Indenture, dated as of November 4, 1999, among Alliant
Energy Resources, Inc., Alliant Energy Corporation, as
Guarantor, and Firstar Bank, N.A., as Trustee [Incorporated
by reference to Exhibit (4.1) to the Form S-4 Registration
Statement of Alliant Energy Resources, Inc. and Alliant
Energy Corporation (Reg. No. 333-92859)].
(99.4) Second Supplemental Indenture, dated as of February 1,
2000, among Alliant Energy Resources, Inc., Alliant Energy
Corporation, as Guarantor, and Firstar Bank, N.A., as
Trustee.
(99.5) Registration Rights Agreement, dated as of February 1,
2000, among Alliant Energy Resources, Inc., Alliant Energy
Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
-2-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLIANT ENERGY CORPORATION
Date: February 1, 2000 By: /s/ Edward M. Gleason
----------------------------------
Edward M. Gleason
Vice President-Treasurer and
Corporate Secretary
-3-
<PAGE>
ALLIANT ENERGY CORPORATION
Exhibit Index to Current Report on Form 8-K
Dated February 1, 2000
Exhibit
Number
- ------
(99.1) Alliant Energy Corporation Press Release dated February 1, 2000.
(99.2) Purchase Agreement, dated January 26, 1999, among Alliant Energy
Resources, Inc., Alliant Energy Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
(99.3) Indenture, dated as of November 4, 1999, among Alliant Energy
Resources, Inc., Alliant Energy Corporation, as Guarantor, and Firstar
Bank, N.A., as Trustee [Incorporated by reference to Exhibit (4.1) to
the Form S-4 Registration Statement of Alliant Energy Resources, Inc.
and Alliant Energy Corporation (Reg. No. 333-92859)].
(99.4) Second Supplemental Indenture, dated as of February 1, 2000, among
Alliant Energy Resources, Inc., Alliant Energy Corporation, as
Guarantor, and Firstar Bank, N.A., as Trustee.
(99.5) Registration Rights Agreement, dated as of February 1, 2000, among
Alliant Energy Resources, Inc., Alliant Energy Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
-4-
[GRAPHIC OMITTED]
ALLIANT ENERGY
Alliant Energy
Worldwide Headquarters
222 W. Washington Ave.
P.O. Box 192
Madison, WI 53701-0192
www.alliant-energy.com
News Release
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE Media Contact: David Giroux at (608) 252-3924
Finance Contact: Bob Rusch at (608) 252-3470
ALLIANT ENERGY RESOURCES COMPLETES $402.5 MILLION PRIVATE PLACEMENT OF
EXCHANGEABLE SENIOR NOTES
MADISON, WIS. -- February 1, 2000 -- Alliant Energy Corporation
(NYSE:LNT) today announced that its wholly-owned subsidiary, Alliant Energy
Resources, Inc., completed a private placement of 5,940,960 exchangeable senior
notes in accordance with Rule 144A under the Securities Act of 1933.
The exchangeable senior notes were issued in the original aggregate
principal amount of $402.5 million, and will be due in 2030. The exchangeable
senior notes have an interest rate of 7.25 percent through February 15, 2003 and
2.5 percent thereafter. The exchangeable senior notes are exchangeable for cash
based upon the value of McLeodUSA Incorporated Class A Common Stock. Alliant
Energy Corporation has agreed to fully and unconditionally guarantee the payment
of principal and interest on the exchangeable senior notes.
Alliant Energy Resources expects to use the net proceeds from the sale
of the exchangeable senior notes (1) to repay commercial paper Alliant Energy
Resources issued initially to capitalize its wholly-owned exempt
telecommunications company and indirectly, through an internal transfer of
assets, to fund Alliant Energy Resources recent investment in Brazil and (2) for
general corporate purposes, including to fund potential future investment
opportunities in energy marketing, co-generation, environmental services and
other areas. Alliant Energy Resources may initially invest net proceeds that it
does not immediately require in short-term marketable securities.
The exchangeable senior notes have not been registered under the
Securities Act of 1933 and may not be offered or sold absent registration under
such Act or an applicable exemption from the registration requirements.
# # #
Execution Copy
================================================================================
ALLIANT ENERGY RESOURCES, INC.
(a Wisconsin corporation)
5,166,052 PHONES
EXCHANGEABLE SENIOR NOTES DUE 2030
UNCONDITIONALLY GUARANTEED AS TO PAYMENT
OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
ALLIANT ENERGY CORPORATION
(A Wisconsin Corporation)
PURCHASE AGREEMENT
Dated: January 26, 2000
================================================================================
<PAGE>
Table of Contents
Page
----
SECTION 1. Representations and Warranties by the Company and the Parent.......3
(a) Representations and Warranties.................................3
(i) Offering Memorandum.......................................3
(ii) Incorporated Documents...................................3
(iii) Independent Accountants.................................4
(iv) Financial Statements.....................................4
(v) No Material Adverse Change in Business....................4
(vi) Good Standing of the Company and the Parent...............5
(vii) Good Standing of Designated Subsidiaries................5
(viii) Capitalization.........................................6
(ix) Authorization of Agreement...............................6
(x) Authorization of the Indenture............................6
(xi) Authorization of the Supplemental Indenture..............6
(xii) Authorization of the Registration Rights Agreement.......7
(xiii) Authorization of the Securities........................7
(xiv) Description of the Securities and the Indenture.........7
(xv) Absence of Defaults and Conflicts........................8
(xvi) Absence of Labor Dispute................................9
(xvii) Absence of Proceedings.................................9
(xviii) Absence of Further Requirements.......................9
(xix) Possession of Licenses and Permits......................9
(xx) Title to Property.......................................10
(xxi) Environmental Laws.....................................10
(xxii) Investment Company Act................................11
(xxiii) Similar Offerings....................................11
(xxiv) Rule 144A Eligibility.................................11
(xxv) No General Solicitation................................12
(xxvi) No Registration Required..............................12
(xxvii) Reporting Company....................................12
(b) Officer's Certificates........................................12
SECTION 2. Sale and Delivery to Initial Purchaser; Closing...................12
(a) Initial Securities...........................................12
(b) Option Securities............................................12
(c) Payment......................................................13
i
<PAGE>
Page
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(c) Denominations; Registration..................................13
SECTION 3. Covenants of the Company and the Parent...........................13
(a) Offering Memorandum..........................................13
(b) Notice and Effect of Material Events.........................13
(c) Amendment to Offering Memorandum and Supplements.............14
(d) Qualification of Securities for Offer and Sale...............14
(e) Rating of Securities.........................................14
(f) DTC..........................................................15
(g) Use of Proceeds..............................................15
(h) Restriction on Sale of Securities............................15
(i) Filing of Registration Statement.............................15
SECTION 4. Payment of Expenses...............................................16
(a) Expenses.....................................................16
(b) Termination of Agreement.....................................17
SECTION 5. Conditions of Initial Purchaser's Obligations.....................17
(a) Opinion of Counsel for Company and the Parent................17
(b) Opinion of Counsel for Initial Purchaser.....................17
(c) Officers'Certificate.........................................18
(d) Accountants'Comfort Letter...................................18
(e) Bring-down Comfort Letter....................................18
(f) Maintenance of Rating........................................19
(g) Conditions to Purchase of Option Securities..................19
(i) Officers'Certificate....................................19
(ii) Opinion of Counsel for the Company and the Parent......19
(iii) Opinion of Counsel for Initial Purchaser..............19
(iv) Bring-down Comfort Letter..............................20
(v) Maintenance of Rating...................................20
(g) Additional Documents.........................................20
(h) Termination of Agreement.....................................20
SECTION 6. Subsequent Offers and Resales of the Securities...................20
(a) Offer and Sale Procedures....................................20
(i) Offers and Sales only to Qualified Institutional Buyers or
Institutional Accredited Investors....................20
(ii) No General Solicitation.................................21
(iii) Purchases by Non-Bank Fiduciaries......................21
(iv) Subsequent Purchaser Notification.......................21
ii
<PAGE>
Page
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(v) Minimum Purchase Amount..................................21
(vi) Restrictions on Transfer................................21
(vii) Delivery of Offering Memorandum........................21
(b) Covenants of the Company and the Parent......................22
(i) Integration..............................................22
(ii) Rule 144A Information...................................22
(iii) Restriction on Repurchases.............................22
(c) Qualified Institutional Buyer................................22
SECTION 7. Indemnification...................................................22
(a) Indemnification of Initial Purchaser.........................22
(b) Indemnification of Company and Parent........................23
(c) Actions against Parties; Notification........................24
(d) Settlement without Consent if Failure to Reimburse...........25
SECTION 8. Contribution......................................................25
SECTION 9. Representations, Warranties and Agreements to Survive Delivery....26
SECTION 10. Termination of Agreement..........................................26
(a) Termination; General.........................................26
(b) Liabilities..................................................27
SECTION 11. Default by the Initial Purchaser..................................27
SECTION 12. Notices...........................................................27
SECTION 13. Parties...........................................................28
SECTION 14. Governing Law And Time............................................28
SECTION 15. Effect of Headings................................................28
SECTION 16. Counterparts......................................................28
SCHEDULES
Schedule A - Pricing Information.....................................Sch A-1
Schedule B - List of Subsidiaries....................................Sch B-1
iii
<PAGE>
Page
----
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel.........................A-1
Exhibit B - Form of Opinion of Parent's Counsel..........................B-1
iv
<PAGE>
ALLIANT ENERGY RESOURCES, INC.
(a Wisconsin corporation)
5,166,052 PHONES
EXCHANGEABLE SENIOR NOTES DUE 2030
UNCONDITIONALLY GUARANTEED AS TO PAYMENT
OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
ALLIANT ENERGY CORPORATION
(A WISCONSIN CORPORATION)
PURCHASE AGREEMENT
January 26, 2000
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Alliant Energy Resources, Inc., a Wisconsin corporation (the
"Company"), and Alliant Energy Corporation, a Wisconsin corporation (the
"Parent"), confirm their agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") (the "Initial Purchaser"),
with respect to the issue and sale by the Company and the purchase by the
Initial Purchaser of 5,166,052 Exchangeable Senior Notes due 2030 (the
"PHONES"). The aforesaid 5,166,052 PHONES (the "Initial Securities") to be
purchased by the Initial Purchaser and all or any part of the PHONES subject to
the option described in section 2(b) hereof (the "Option Securities") are
hereinafter called the "Securities." The Securities will be unconditionally
guaranteed as to payment of principal, premium, if any, and interest by the
Parent and will be issued pursuant to an indenture dated as of November 4, 1999
(the "Indenture") between the Company, the Parent and Firstar Bank, N.A., as
trustee (the "Trustee"). The term "Indenture," as used herein, includes the
Second Supplemental Indenture to be executed in connection with the offering of
the PHONES (the "Supplemental Indenture") establishing the form and terms of the
Securities pursuant to Section 2.02 of the Indenture. Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depository
<PAGE>
Trust Company ("DTC") pursuant to a letter agreement, to be dated as of the
Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among the
Company, the Trustee and DTC.
The Company understands that the Initial Purchaser proposes to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchaser may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after this Agreement has been executed and delivered.
The Securities are to be offered and sold through the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A ("Rule
144A") of the rules and regulations promulgated under the 1933 Act by the
Securities and Exchange Commission (the "Commission") and the exemption under
Regulation D ("Regulation D") for sales to a limited number of institutional
"accredited investors" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act (each, an "Institutional Accredited Investor")).
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement"), to be entered at the Closing Time, among the
Company, the Parent and the Initial Purchaser, for so long as such Securities
constitute "Registrable Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Parent will use their reasonable best efforts to file with the Commission under
the circumstances set forth therein, (i) a registration statement under the 1933
Act (the "Exchange Offer Registration Statement") registering an issue of the
Company's PHONES identical in all material respects to the Securities (the
"Exchange Securities") to be offered in exchange for the Securities (the
"Exchange Offer") and (ii), under certain circumstances, a registration
statement pursuant to Rule 415 under the 1933 Act (the "Shelf Registration
Statement") to register the Securities.
The Company has prepared and delivered to the Initial Purchaser copies
of a preliminary offering memorandum dated January 26, 2000 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated January 26, 2000 (the "Final Offering Memorandum"),
each for use by the Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated
2
<PAGE>
therein by reference, which has been prepared and delivered by the Company to
the Initial Purchaser in connection with its solicitation of purchases of, or
offering of, the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
SECTION 1.Representations and Warranties by the Company and the Parent.
(a) Representations and Warranties. Except as otherwise noted herein,
the Company and the Parent severally and jointly represent and warrant to the
Initial Purchaser as of the date hereof and as of the Closing Time referred to
in Section 2(b) hereof, and severally and jointly agree with the Initial
Purchaser, as follows:
(i) Offering Memorandum. The Offering Memorandum does not, and
at the Closing Time will not, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided that this representation, warranty
and agreement shall not apply to statements in or omissions from the
Offering Memorandum made in reliance upon and in conformity with
information furnished to the Company in writing by the Initial
Purchaser expressly for use in the Offering Memorandum.
(ii) Incorporated Documents. (A) The Offering Memorandum as
delivered from time to time shall incorporate by reference the most
recent annual report of the Parent on Form 10-K for the year ended
December 31, 1998, as amended by Form 10-K/A filed with the Commission
on November 1, 1999, the quarterly reports of the Parent on Form 10-Q
for the quarters ended March 31, 1999 and June 30, 1999, each as
amended by Form 10-Q/As filed with the Commission on November 1, 1999,
and for the quarter ended September 30, 1999 and the current reports of
the Parent on Form 8-K, two filed with the Commission on January 20,
1999, one filed on January 25, 2000 as amended by the current report on
Form 8-K/A filed on January 25, 2000, and one filed on January 26,
2000, and any such reports filed with the Commission after the date of
the Offering Memorandum and before the end of the offering of the
Securities. (B) With respect to this subsection clause (B) of this
clause (ii) only, the Parent represents and
3
<PAGE>
warrants that the documents incorporated or deemed to be incorporated
by reference in the Offering Memorandum at the time they were or
hereafter are filed with the Commission complied or will comply, as the
case may be, in all material respects with the requirements of the 1934
Act and the rules and regulations of the Commission thereunder, and,
when read together with the other information in the Offering
Memorandum, at the time the Offering Memorandum was issued and at the
Closing Time, did not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants with respect to the
Company, the Parent and their respective subsidiaries within the
meaning of Regulation S-X under the 1933 Act.
(iv) Financial Statements. The financial statements, together
with the related schedules and notes, included in the Offering
Memorandum present fairly in all materials respects the financial
position of the Company and its consolidated subsidiaries and the
Parent and its consolidated subsidiaries at the dates indicated and the
statement of operations, shareowners' equity and cash flows of the
Company and its consolidated subsidiaries and the Parent and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules, if any, included in the
Offering Memorandum present fairly in all materials respects in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included
in the Offering Memorandum present fairly in all materials respects the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Offering
Memorandum.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings or business affairs of the Company and the Parent and
their respective subsidiaries, in each case, considered as one
enterprise, whether or not arising in the ordinary course of business
nor has there been any developments involving a prospective material
adverse change of the Company and the Parent and their respective
subsidiaries, in each case, considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company and the Parent or any of their respective
4
<PAGE>
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and the Parent and their
respective subsidiaries, and (C) except for regular dividends on the
common stock, par value $.01 per share, of the Parent (the "Common
Stock") in amounts per share that are consistent with past practice,
there has been no dividend or distribution of any kind declared, paid
or made by the Parent on any class of its capital stock.
(vi) Good Standing of the Company and the Parent. Each of the
Company and the Parent has been duly organized and is validly existing
as a corporation under the laws of the State of Wisconsin and has
corporate power and authority to own, lease and operate their
respective properties and to conduct their respective businesses as
described in the Offering Memorandum and to enter into and perform
their respective obligations under this Agreement; and each of the
Company and the Parent is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vii) Good Standing of Designated Subsidiaries. Each material
subsidiary of the Company is listed on Schedule B hereto (each
subsidiary on the list shall be referred to herein as a "Designated
Subsidiary" and, collectively, as the "Designated Subsidiaries"). Each
Designated Subsidiary has been duly organized and is validly existing
as a corporation under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Offering Memorandum and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the Offering
Memorandum, all of the issued and outstanding capital stock of each
Designated Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable (except, in the case of Designated
Subsidiaries that are Wisconsin corporations, for certain statutory
liabilities that may be imposed by Section 180.0622(b) of the Wisconsin
Business Corporation Law (the "WBCL") for unpaid employee wages) and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and none of the outstanding shares of capital stock of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights of any securityholder of such Designated Subsidiary.
5
<PAGE>
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Parent is as set forth in the Offering Memorandum
in the columns entitled "Actual" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement,
pursuant to reservations, agreements, employee benefit plans referred
to in the Offering Memorandum or pursuant to the exercise of
convertible securities or options referred to in the Offering
Memorandum). All of the issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid and non-assessable (except for certain statutory liabilities
that may be imposed by Section 180.0622(b) of the WBCL for unpaid
employee wages) and are owned by the Parent; and none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company. All of the issued and outstanding shares
if capital stock of the Parent have been duly authorized and validly
issued and are fully paid and non-assessable (except for certain
statutory liabilities that may be imposed by Section 180.0622(b) of the
WBCL for unpaid employee wages); and all of the issued and outstanding
capital stock of its significant subsidiaries (as such term is defined
in Rule 1-02 of Regulation S-X), including the Company, have been duly
authorized and validly issued and are fully paid and non-assessable
(except, in the case of such subsidiaries that are Wisconsin
corporations, for certain statutory liabilities that may be imposed by
Section 180.0622(b) of the WBCL for unpaid employee wages) and (except
for directors' qualifying shares and except as otherwise set forth in
the Offering Memorandum) are owned directly or indirectly by the
Parent, free and clear of all liens, encumbrances, equities or claims.
(ix) Authorization of Agreement. The Company and the Parent have
all requisite corporate power and authority to execute and deliver this
Agreement and to perform their obligations hereunder. This Agreement
has been duly authorized, executed and delivered by the Company and the
Parent.
(x) Authorization of the Indenture. The Indenture has been duly
authorized, executed and delivered by the Company, the Parent and the
Trustee and constitutes a valid and binding agreement of the Company
and the Parent, enforceable against the Company and the Parent in
accordance with its terms, except as (A) the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
(B) as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xi) Authorization of the Supplemental Indenture The
Supplemental Indenture has been duly authorized by the Company and the
Parent and, when executed and
6
<PAGE>
delivered by the Company, the Parent and the Trustee, will constitute a
valid and binding agreement of the Company and the Parent, enforceable
against the Company and the Parent in accordance with its terms, except
(A) as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and (B) as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xii) Authorization of the Registration Rights Agreement. The
Company and the Parent have all requisite corporate power and authority
to execute and deliver the Registration Rights Agreement. The
Registration Rights Agreement has been duly authorized by the Company
and the Parent and, when executed and delivered by the Company, the
Parent and the Initial Purchaser, will constitute a valid and binding
agreement of the Company and the Parent, enforceable against the
Company and the Parent in accordance with its terms, except (A) as the
enforcement thereof may be limited by bankruptcy, insolvency,
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and (B) as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xiii) Authorization of the Securities. The Securities have been
duly authorized and the Guarantees have been duly authorized and, at
the Closing Time or the Date of Delivery (as defined herein), as the
case may be, will have been duly executed by the Company and the
Securities will have been guaranteed by the Parent and, when
authenticated, issued and delivered in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor
as provided in this Agreement, will constitute valid and binding
obligations of the Company and the Parent, enforceable against the
Company and the Parent in accordance with their terms, except (A) as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and (B) as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law),
and will be in the form contemplated by, and entitled to the benefits
of, the Indenture.
(xiv) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms last
delivered to the Initial Purchaser prior to the date of this Agreement.
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(xv) Absence of Defaults and Conflicts. None of the Company, the
Parent or any of their respective subsidiaries is in violation of their
respective charters or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Company, the Parent or any of their respective subsidiaries is a
party or by which any of them may be bound, or to which any of the
property or assets of the Company, the Parent or any of their
respective subsidiaries is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement, the Indenture, the Registration Rights Agreement, the
Securities and the Guarantees and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company
and the Parent in connection with the transactions contemplated hereby
or thereby or in the Offering Memorandum and the consummation of the
transactions contemplated herein and in the Offering Memorandum
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use of Proceeds") and compliance by the
Company and the Parent with their respective obligations hereunder have
been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or a
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company, the Parent or any of their respective
subsidiaries pursuant to, the Agreements and Instruments except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that, singly or in the aggregate, would not result in a Material
Adverse Effect, nor will such action result in any violation of the
provisions of (x) the charter or by-laws of the Company, the Parent or
any of their respective subsidiaries (except for such conflicts,
breaches, defaults, events or liens, charges or encumbrances that would
not result in a Material Adverse Effect) or (y) any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company, the Parent or any of their
respective subsidiaries or any of their assets, properties or
operations, except for any such violations with respect to this clause
(y) as would not, individually or in the aggregate, result in a
Material Adverse Effect. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company, the Parent or any
of their respective subsidiaries.
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(xvi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company or the Parent, is imminent, and neither the
Company nor the Parent is aware of any existing or imminent labor
disturbance by the employees of the Company, its subsidiaries or their
respective principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xvii) Absence of Proceedings. Except as disclosed in the Offering
Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company or the Parent, threatened, against or affecting the Company,
the Parent or any of their respective subsidiaries which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect (A) the
properties or assets of the Company, the Parent or any of their
respective subsidiaries or (B) the consummation of the transactions
contemplated by this Agreement or the performance by the Company and
the Parent of their respective obligations hereunder. The aggregate of
all pending legal or governmental proceedings to which the Company, the
Parent or any of their respective subsidiaries is a party or of which
any of their respective property or assets is the subject which are not
described in the Offering Memorandum, including ordinary routine
litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xviii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company and
the Parent of their respective obligations hereunder, in connection
with (A) the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement or
(B) for the due execution, delivery or performance of the Indenture by
the Company and the Parent, except such as have been already obtained
and except such as may be required by the securities laws of the
various states in which the Securities will be offered or sold and the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act")
(solely with respect to filings required to be made with the Commission
subsequent to the Closing Time), with the offer and sale of the
Securities or by the 1933 Act or the Trust Indenture Act of 1939, as
amended (the "1939 Act"), in connection with the exchange offer as
contemplated by the Registration Rights Agreement.
(xix) Possession of Licenses and Permits. The Company, the
Parent and their respective subsidiaries possess such permits,
licenses, approvals, consents and other
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authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them except
where the failure to possess any such Governmental Licenses would not
have a Material Adverse Effect; the Company, the Parent and their
respective subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force
and effect, except where the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and none of the
Company, the Parent nor any of their respective subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xx) Title to Property. The Company, the Parent and their
respective subsidiaries have good and marketable title to all real
property owned by the Company, the Parent and their respective
subsidiaries and good title to all other properties owned by them, in
each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (A) are described in the Offering Memorandum or (B) do not, singly
or in the aggregate, materially affect the value of such property and
do not interfere with the use made and proposed to be made of such
property by the Company, the Parent or any of their respective
subsidiaries; and all of the leases and subleases material to the
business of the Company, the Parent and their respective subsidiaries,
considered as one enterprise, and under which the Company, the Parent
or any of their respective subsidiaries holds properties described in
the Offering Memorandum, are in full force and effect, and none of the
Company, the Parent nor any of their respective subsidiaries has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company, the Parent or any of their
respective subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of such the Company, the
Parent or any subsidiary thereof to the continued possession of the
leased or subleased premises under any such lease or sublease, except
where such would not have a Material Adverse Effect.
(xxi) Environmental Laws. Except as described in the Offering
Memorandum and the documents incorporated by reference therein and
except such matters as would not, singly or in the aggregate, result in
a Material Adverse Effect, (A) none of the Company, the Parent or any
of their respective subsidiaries is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any
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judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company, the
Parent and their respective subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company, the Parent or any of their respective
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company, the
Parent or any of their respective subsidiaries relating to Hazardous
Materials or Environmental Laws.
(xxii) Investment Company Act. Neither the Company nor the Parent
is, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Offering Memorandum will be, an "investment company"
or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxiii) Similar Offerings. None of the Company, the Parent or any
of their respective affiliates, as such term is defined in Rule 501(b)
under the 1933 Act (each, an "Affiliate"), has, directly or indirectly,
solicited any offer to buy, sold or offered to sell or otherwise
negotiated in respect of, or will solicit any offer to buy, sell or
offer to sell or otherwise negotiate in respect of, in the United
States or to any United States citizen or resident, any security which
is or would be integrated with the sale of the Securities in a manner
that would require the Securities to be registered under the 1933 Act.
(xxiv) Rule 144A Eligibility. The Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Time, of
the same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted in a U.S.
automated interdealer quotation system.
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(xxv) No General Solicitation. None of the Company, the Parent,
their Affiliates or any person acting on its or any of their behalf
(other than the Initial Purchaser, as to whom the Company and the
Parent make no representation) has engaged or will engage, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the 1933 Act.
(xxvi) No Registration Required. Subject to compliance by the
Initial Purchaser with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchaser and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum
to register the Securities under the 1933 Act or to qualify the
Indenture under the 1939 Act.
(xxvii) Reporting Company. With respect to this clause (xxvii)
only, the Parent represents and warrants that it is subject to the
reporting requirements of Section 13 or Section 15(d) of the 1934 Act.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company and of the Parent or any of their respective subsidiaries delivered
to the Initial Purchaser or to counsel for the Initial Purchaser shall be deemed
a representation and warranty by the Company and the Parent to the Initial
Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchaser; Closing.
(a) Initial Securities. On the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to the Initial Purchaser and the Initial
Purchaser agrees to purchase from the Company 5,166,052 Initial Securities, at
the price per PHONES set forth in Schedule A.
(b) Option Securities. In addition, on the basis of the
representations, warranties and agreements herein contained and subject to the
terms and conditions herein set forth, the Company hereby grants an option to
the Initial Purchaser to purchase from it any or all of the Option Securities at
the same price as is to be paid by the Initial Purchaser for the Initial
Securities plus, in the case of the Option Securities, accrued interest, if any,
from the Closing Time to the Date of Delivery. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in part at
any one time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial Securities upon
notice by the Initial Purchaser to the Company setting forth the number of
Option Securities as to which the Initial Purchaser is exercising the option and
the time and date of payment and delivery for such Option Securities. Such time
and date of delivery for the Option Securities (the "Date of Delivery") shall be
determined by the Initial Purchaser, but shall
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not be later than seven full business days nor earlier than two full business
days after the exercise of said option, nor in any event prior to the Closing
Time, unless otherwise agreed upon by the Initial Purchaser and the Company. If
the option is exercised as to all or any portion of the Option Securities, the
Initial Purchaser will purchase the total number of Option Securities then being
purchased.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of the Company at
222 West Washington Avenue, Madison, Wisconsin, 53703, or at such other place as
shall be agreed upon by the Initial Purchaser and the Company, at 10:00 A.M.
(Eastern time) on the third business day after the date hereof (unless postponed
in accordance with the provisions of Section 11), or such other time not later
than ten business days after such date as shall be agreed upon by the Initial
Purchaser and the Company (such time and date of payment and delivery being
herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Initial Purchaser of certificates for the Securities to be purchased by
them.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities shall be in such denominations and
registered in such names as the Initial Purchaser may request in writing at
least one full business day before the Closing Time or the Date of Delivery, as
the case may be. The Initial Securities and the Option Securities will be made
available for examination and packaging by the Initial Purchaser in Madison,
Wisconsin not later than 10:00 A.M. on the last business day prior to the
Closing Time or the Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company and the Parent. The Company and the
Parent, jointly and severally, covenant with the Initial Purchaser as follows:
(a) Offering Memorandum. The Company and the Parent, as promptly as
possible, will furnish to the Initial Purchaser, without charge, such number of
copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and
any amendments and supplements thereto and documents incorporated by reference
therein as the Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company and the Parent
will immediately notify the Initial Purchaser, and confirm such notice in
writing, of (x) any filing made by the Company or the Parent of information
relating to the offering of the Securities with any securities exchange or any
other regulatory body in the United States or any other jurisdiction, and (y)
prior to the completion of the placement of the Securities by the Initial
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Purchaser as evidenced by a notice in writing from the Initial Purchaser to the
Company, any material changes in or affecting the condition, financial or
otherwise, or the earnings or business affairs of the Company and the Parent and
their respective subsidiaries, taken as a whole, nor has there been any
developments involving a prospective material adverse change of the Company and
the Parent and their respective subsidiaries, taken as a whole, which (i) make
any statement in the Offering Memorandum materially false or misleading or (ii)
are not disclosed in the Offering Memorandum. In such event or if during such
time any event shall occur as a result of which it is necessary, in the
reasonable opinion of any of the Company, the Parent, their counsel, the Initial
Purchaser or counsel for the Initial Purchaser, to amend or supplement the Final
Offering Memorandum in order that the Final Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
Final Offering Memorandum by preparing and furnishing to the Initial Purchaser
an amendment or amendments of, or a supplement or supplements to, the Final
Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Initial Purchaser) so that, as so amended or
supplemented, the Final Offering Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the time
it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company and
the Parent will advise the Initial Purchaser promptly of any proposal to amend
or supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchaser, which consent shall not
be unreasonably withheld. Neither the consent of the Initial Purchaser, nor the
Initial Purchaser's delivery of any such amendment or supplement, shall
constitute a waiver of any of the conditions set forth in Section 5 hereof. The
Company will furnish to the Initial Purchaser, without charge, such number of
copies of such amendment or supplement as the Initial Purchaser may reasonably
request.
(d) Qualification of Securities for Offer and Sale. The Company will
use its best efforts, in cooperation with the Initial Purchaser, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions as the Initial Purchaser may designate and will
maintain such qualifications in effect as long as required for the sale of the
Securities; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc. ("S&P"), and
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Moody's Investors Service Inc. ("Moody's") to provide their respective credit
ratings of the Securities.
(f) DTC. The Company will cooperate with the Initial Purchaser and use
its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(g) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds."
(h) Restriction on Sale of Securities. During a period of ninety (90)
days from the date of the Closing Time, none of the Company, the Parent or their
respective subsidiaries will, without the prior written consent of Merrill
Lynch, directly or indirectly, issue, sell, offer or agree to sell, grant any
option for the sale of, or otherwise dispose of, any of the Securities, any
securities substantially similar to the Securities, any securities of the
Company or the Parent convertible into or exchangeable or exercisable for the
Securities, or any securities substantially similar to the Securities, except in
connection with a registered exchange offer for the Securities and except for
the offer or sale of up to an aggregate of 300,000 shares of McLeodUSA
Incorporated's Class A Common Stock, par value $0.01 per share (the "McLeod
Shares") pursuant to Section 3.1(b) of the Second Amended and Restated November
1998 Stockholders' Agreement dated as of December 17, 1999 by and among
McLeodUSA Incorporated ("McLeod"), the Parent, certain subsidiaries of the
Parent and certain stockholders of McLeod named therein; provided, however, that
the foregoing shall not prohibit the Company from taking any of the foregoing
actions in connection with any exchanges or redemptions of the Securities.
(i) Filing of Registration Statement. The Company and the Parent (A)
shall use their reasonable best efforts to file the Exchange Offer Registration
Statement on an appropriate form under the 1933 Act (assuming that the Exchange
Offer can be effectively registered thereunder) with the Commission within 135
days of the Closing Time, (B) shall use their reasonable best efforts to cause
the Exchange Offer Registration Statement to be declared effective under the
1933 Act within 180 days of the Closing Time, (C) shall use their reasonable
best efforts to keep the Exchange Offer Registration Statement effective until
the closing of the Exchange Offer and (D) shall use their reasonable best
efforts to cause the Exchange Offer to be consummated not later than 45 days
following the effective date of the Exchange Offer Registration Statement. In
the event that (a) the Company and the Parent are not permitted to effect the
Exchange Offer as contemplated because the law or applicable interpretations of
the law by the staff of the Commission, United States Treasury or the Internal
Revenue Service do not permit the Company and the Parent or make it
impracticable or inadvisable for the Company and the Parent to effect the
Exchange Offer as contemplated, (b) for any other reason, the Exchange Offer
Registration
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Statement is not declared effective within 180 days following the Closing Time
or the Exchange Offer is not consummated within 45 days after the effectiveness
of the Exchange Offer Registration Statement, (c) upon the request of the
Initial Purchaser within 90 days following the consummation of the Exchange
Offer (d) if, as a result of any changes in law, Commission rules or regulations
or applicable interpretations thereof by the staff of the commission or
otherwise a holder of Securities (other than the Initial Purchaser holding
Securities acquired directly from the Company) is not permitted to participate
in the Exchange Offer or does not receive fully tradeable Exchange Securities
pursuant to the Exchange Offer or (e) if, unless the Company determines
otherwise, at the time of the issuance of the Exchange Securities or the Private
Exchange Securities (as defined herein), the interest rate of such securities
will be 300 basis points above the yield to maturity of a United States Treasury
obligation having a remaining term equal to the average life of such security,
the Company and the Parent shall thereafter use their reasonable best efforts to
cause to be declared effective as promptly as practicable but not later than 210
days after the issuance of the Securities a Shelf Registration Statement as
provided in the Registration Rights Agreement. For purposes of this Agreement,
"Private Exchange Securities" shall mean those securities issued by the Company
and the Parent upon the request of the Initial Purchaser for the Securities held
by the Initial Purchaser which were acquired from the Company and have the
status of an unsold allotment in the initial distribution. The Private Exchange
Securities shall be issued and delivered to the Initial Purchaser simultaneously
with the delivery of the Exchange Securities in the Exchange Offer.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchaser and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated therein by reference) and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Initial Purchaser of this Agreement, the Indenture and such other documents
as may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of the
Securities to the Initial Purchaser, including any transfer taxes, any stamp or
other duties payable upon the sale, issuance and delivery of the Securities to
the Initial Purchaser and any charges of DTC in connection therewith, (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors,
(v) the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Initial Purchaser in connection
therewith and in connection with the preparation of the Blue Sky Survey, any
supplement thereto; provided, that, counsel fees in connection therewith do not
exceed $5,000, (vi) the fees and expenses of the Trustee, including the fees and
disbursements of
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counsel for the Trustee in connection with the Indenture and the Securities and
(vii) any fees payable in connection with the rating of the Securities
(b) Termination of Agreement. If this Agreement is terminated by the
Initial Purchaser in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchaser for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchaser, provided, that, such fees and expenses do not
exceed $200,000.
SECTION 5. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy in
all material respects of the representations and warranties of the Company and
the Parent contained in Section 1 hereof or in certificates of any officer of
the Company, the Parent or any of their respective subsidiaries delivered
pursuant to the provisions hereof, to the performance in all material respects
by the Company and the Parent of their respective covenants and other
obligations hereunder, and to the following further conditions:
(a) Opinions of Counsel for Company and the Parent. At the Closing
Time, the Initial Purchaser shall have received the favorable opinions, dated as
of the Closing Time, of Brown & Wood LLP (as to tax matters), Thelen Reid &
Priest (as to 1935 Act matters) and Foley & Lardner (as to all other matters),
in each case counsel for the Company, in form and substance satisfactory to
counsel for the Initial Purchaser to the effect set forth in Exhibit A hereto.
In addition, the Initial Purchaser shall have received the favorable opinions,
dated as of the Closing Time, of Brown & Wood LLP (as to tax matters), Thelen
Reid & Priest (as to 1935 Act matters) and Foley & Lardner (as to all other
matters), in each case counsel for the Parent, in form and substance
satisfactory to counsel for the Initial Purchaser to effect set forth in Exhibit
B hereto. Such counsel may also state that they have relied on certificates of
public officials and, insofar as such opinions involve factual matters, they
have relied, to the extent they deem proper, upon certificates of officers of
the Company, the Parent and their respective subsidiaries.
(b) Opinion of Counsel for Initial Purchaser. At the Closing Time, the
Initial Purchaser shall have received the favorable opinion, dated as of the
Closing Time, of Chadbourne & Parke LLP, counsel for the Initial Purchaser, with
respect to certain matters. In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Initial Purchaser. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company, the Parent and their
respective subsidiaries and certificates of public officials.
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(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings or business affairs of
the Company and the Parent and their respective subsidiaries, in each case,
considered as one enterprise, whether or not arising in the ordinary course of
business, nor has there been any developments involving a prospective material
adverse change of the Company and the Parent and their respective subsidiaries,
in each case, considered as one enterprise, whether or not arising in the
ordinary course of business, and the Initial Purchaser shall have received a
certificate of the President, Chief Executive Officer or a Vice President of the
Company and of the chief financial or chief accounting officer of the Company,
dated as of the Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Section 1
hereof are true and correct in all materials respects with the same force and
effect as though expressly made at and as of the Closing Time and (iii) the
Company has complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Time. The Initial Purchaser shall also have received a certificate of
the President, Chief Executive Officer or Vice President of the Parent and of
the chief financial or chief accounting officer of the Parent, dated as of the
Closing Time, to the effect that (i) the representations and warranties in
Section 1 hereof are true and correct in all material respects with the same
force and effect as through made at and as of the Closing Time and (ii) the
Parent has complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Time.
(d) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchaser shall have received from Arthur Andersen LLP a
letter dated such date, in form and substance satisfactory to the Initial
Purchaser containing statements and information of the type ordinarily included
in accountants' "comfort letters" to initial purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchaser shall have received from Arthur Andersen LLP a letter, dated as of the
Closing Time, (i) to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section and (ii) responsive
to the additional statements and information requested by the Initial Purchaser,
of the type ordinarily included in accountants' "comfort letters" to initial
purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum, in form and substance
satisfactory to the Initial Purchaser; except that the specified date referred
to shall be a date not more than three business days prior to the Closing Time.
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(f) Maintenance of Rating. At the Closing Time and at the Date of
Delivery, the Securities shall be rated at least A3 by Moody's and A by S&P, and
the Company shall have delivered to the Initial Purchaser a letter dated the
Closing Time, from each such rating agency, or other evidence satisfactory to
the Initial Purchaser, confirming that the Securities have such ratings; and
since the date of this Agreement, there shall not have occurred a downgrading in
the rating assigned to the Securities or any of the Company's other debt
securities by any "nationally recognized statistical rating agency," as that
term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933
Act, and no such securities rating agency shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of the Securities or any of the Company's other debt securities .
(g) Conditions to Purchase of Option Securities. In the event that the
Initial Purchaser exercise its option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company and the Parent contained herein and the statements in
any certificates furnished by the Company, the Parent or any of their respective
subsidiaries hereunder shall be true and correct as of the Date of Delivery and,
at the Date of Delivery, the Initial Purchaser shall have received:
(i) Officers' Certificate. A certificate, dated the Date of
Delivery, of the President, Chief Executive Officer or a Vice President
of the Company and of the chief financial or chief accounting officer
of the Company confirming that the certificate delivered at Closing
Time pursuant to Section 5(c) hereof remains true and correct as of the
Date of Delivery, and a certificate, dated the Date of Delivery, of the
President, Chief Executive Officer or a Vice President of the Parent
and of the chief financial or chief accounting officer of the Parent
confirming that the certificate delivered pursuant to Section 5(c)
hereof remains true and correct as of the Date of Delivery;
(ii) Opinions of Counsel for the Company and the Parent. The
favorable opinions of Brown & Wood LLP (as to tax matters), Thelen Reid
& Priest (as to 1935 Act matters) and Foley & Lardner (as to all other
matters), in each case counsel for the Company and the Parent, in form
and substance satisfactory to counsel for the Initial Purchaser, dated
the Date of Delivery, relating to the Option Securities to be purchased
on the Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(a) hereof;
(iii) Opinion of Counsel for Initial Purchaser. The favorable
opinion of Chadbourne & Parke LLP, counsel for the Initial Purchaser,
dated the Date of Delivery, relating to the Option Securities to be
purchased on the Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof;
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<PAGE>
(iv) Bring-down Comfort Letter. A letter from Arthur Andersen
LLP, in form and substance satisfactory to the Initial Purchaser and
dated the Date of Delivery, substantially the same in form and
substance as the letters furnished to the Initial Purchaser pursuant to
Section 5(e) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to the Date of Delivery; and
(v) Maintenance of Rating. A letter from the rating agencies or
other evidence in form satisfactory to the Initial Purchaser dated the
Date of Delivery confirming that the Securities have the ratings as set
forth in Section 5(f) hereof and otherwise to the same effect as the
letter required by Section 5(f) hereof.
(h) Additional Documents. At the Closing Time and at the Date of
Delivery, counsel for the Initial Purchaser shall have been furnished with the
above-referenced opinions and such documents as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Initial Purchaser and counsel for the Initial
Purchaser.
(i) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement (or, with respect to the Initial Purchaser's exercise of the
over-allotment option for the purchase of Option Securities on the Date of
Delivery after the Closing Time, the obligations of the Initial Purchaser to
purchase the Option Securities on the Date of Delivery) may be terminated by the
Initial Purchaser by notice to the Company at any time at or prior to the
Closing Time (or the Date of Delivery, as applicable), and such termination
shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 7, 8 and 9 shall survive any such
termination and remain in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. The Initial Purchaser and the Company
hereby establish and agree to observe the following procedures in connection
with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers or
Institutional Accredited Investors. Offers and sales of the Securities
shall only be made (A) to persons whom the offeror or seller reasonably
believes to be qualified institutional buyers, as defined in Rule 144A
under the 1933 Act ("Qualified Institutional Buyers") or (B) to a
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<PAGE>
limited number of persons who are other institutional accredited
investors, as such term is defined in Rule 501(a)(1), (2), (3) or (7)
under the 1933 Act that the offeror or seller reasonably believes to be
and, with respect to sales and deliveries, that are such institutional
accredited investors ("Institutional Accredited Investors").
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will
be used in the United States in connection with the offering or sale of
the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for
one or more third parties, each third party shall, in the judgment of
the Initial Purchaser, be an Institutional Accredited Investor or a
Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. The Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
Affiliates to take reasonable steps to inform, persons acquiring
Securities from the Initial Purchaser or affiliate, as the case may be,
in the United States that the Securities (A) have not been and will not
be registered under the 1933 Act, (B) are being sold to them without
registration under the 1933 Act in reliance on Rule 144A or in
accordance with another exemption from registration under the 1933 Act,
as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company or (2) inside the United States
in accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such
Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to
another available exemption from registration under the 1933 Act.
(v) Minimum Purchase Amount. No sale of the Securities to any
one Subsequent Purchaser will be for less than an original principal
amount of $100,000. If the Subsequent Purchaser is a non-bank fiduciary
acting on behalf of others, each person for whom it is acting must
purchase at least an original principal amount of $100,000.
(vi) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading
"Transfer Restrictions," including the legend required thereby, shall
apply to the Securities except as otherwise agreed by the Company and
the Initial Purchaser.
(vii) Delivery of Offering Memorandum. The Initial Purchaser will
deliver to each purchaser of the Securities from the Initial Purchaser,
in connection with its original
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<PAGE>
distribution of the Securities, a copy of the Offering Memorandum, as
amended and supplemented at the date of such delivery.
(b) Covenants of the Company and the Parent. The Company and the
Parent, jointly and severally, covenant with the Initial Purchaser as follows:
(i) Integration. The Company and the Parent agree that they
will not and will cause their respective Affiliates not to, directly or
indirectly, solicit any offer to buy, sell or make any offer or sale
of, or otherwise negotiate in respect of, securities of the Company of
any class if, as a result of the doctrine of "integration" referred to
in Rule 502 under the 1933 Act, such offer or sale would render invalid
(for the purpose of (i) the sale of the Securities by the Company to
the Initial Purchaser, (ii) the resale of the Securities by the Initial
Purchaser to Subsequent Purchasers or (iii) the resale of the
Securities by such Subsequent Purchasers to others) the exemption from
the registration requirements of the 1933 Act provided by Section 4(2)
thereof or by Rule 144A thereunder or otherwise.
(ii) Rule 144A Information. The Company and the Parent agree
that, in order to render the Securities eligible for resale pursuant to
Rule 144A under the 1933 Act, while any of the Securities remain
outstanding, they will make available, upon request, to any holder of
Securities or prospective purchasers of Securities the information
specified in Rule 144A(d)(4), unless such information is furnished to
the Commission pursuant to Section 13 or 15(d) of the 1934 Act.
(iii) Restriction on Repurchases. Until the expiration of two
years after the original issuance of the Securities, the Company and
the Parent will not, and will cause their respective Affiliates not to,
resell any Securities which are "restricted securities" (as such term
is defined under Rule 144(a)(3) under the 1933 Act), whether as
beneficial owner or otherwise (except as agent acting as a securities
broker on behalf of and for the account of customers in the ordinary
course of business in unsolicited broker's transactions).
(c) Qualified Institutional Buyer. The Initial Purchaser represents and
warrants to, and agrees with, the Company and the Parent that it is a Qualified
Institutional Buyer within the meaning of Rule 144A under the 1933 Act and an
"accredited investor" within the meaning of Rule 501(a) under the 1933 Act (an
"Accredited Investor").
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchaser. The Company and the Parent,
jointly and severally, agree to indemnify and hold harmless the Initial
Purchaser and each person, if any,
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<PAGE>
who controls the Initial Purchaser within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum or the Final Offering Memorandum (or
any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 7(d) below) any such settlement is effected
with the written consent of the Company and the Parent; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or the
Parent, as the case may be, by any Initial Purchaser expressly for use in the
Offering Memorandum (or any amendment thereto).
(b) Indemnification of Company and Parent. The Initial Purchaser agrees
to indemnify and hold harmless the Company and the Parent and each person, if
any, who controls the Company or the Parent within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Offering
Memorandum in reliance upon and in conformity with written information furnished
to the Company or the Parent, as the case may be, by the Initial Purchaser
expressly for use in the Offering Memorandum.
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<PAGE>
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Parent. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. In addition, the indemnifying
party shall be entitled to, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense of any claim or
action brought against an indemnified party with counsel reasonably satisfactory
to the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Initial Purchaser shall have
the right to employ one counsel to represent it and its officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchaser against the
Company and the Parent under this Section 7 if, in the reasonable judgment of
the Initial Purchaser, either (i) there is an actual or potential conflict
between the position of the Company and the Parent on the one hand and the
Initial Purchaser on the other hand or (ii) there may be defenses available to
it or them that are different from or additional to those available to the
Company and Parent (in any of which events the Company shall not have the right
to direct the defense of such action on behalf of the Initial Purchaser with
respect to such different defenses), in any of which events such reasonable fees
and expenses shall be borne by the Company and Parent. No indemnifying party
shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 8
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as
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<PAGE>
to or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in Section
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Parent on the one hand and the Initial Purchaser on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Parent on the one
hand and of the Initial Purchaser on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Parent on the one
hand and the Initial Purchaser on the other hand in connection with the offering
of the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchaser, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company and the Parent on the one hand and
the Initial Purchaser on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company and the Parent or by the Initial
Purchaser and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
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<PAGE>
The Company, the Parent and the Initial Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation (even if the Initial Purchaser were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities purchased and sold by it hereunder
exceeds the amount of any damages which the Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Initial
Purchaser, and each person, if any, who controls the Company or the Parent
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company and the Parent.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, the Parent or any of
their respective subsidiaries submitted pursuant hereto shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of the Initial Purchaser or controlling person, or by or on behalf of the
Company or the Parent, and shall survive delivery of the Securities to the
Initial Purchaser.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchaser may terminate this
Agreement, by notice to the Company and the Parent, at any time at or prior to
the Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company and the Parent
and
26
<PAGE>
their respective subsidiaries, in each case, considered as one enterprise,
whether or not arising in the ordinary course of business, nor has there been
any developments involving a prospective material adverse change of the Company
and the Parent and their respective subsidiaries, in each case, considered as
one enterprise, whether or not arising in the ordinary course of business, (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the reasonable judgment of the Initial Purchaser,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, (iii) if trading in any securities of the Company or the Parent,
or in McLeod Shares, has been suspended or materially limited by the Commission,
the New York Stock Exchange or The Nasdaq Stock Market, as the case may be, or
if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ System has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7, 8 and 9 shall survive such termination and remain in full force and
effect.
SECTION 11. Default by the Initial Purchaser. If the Initial Purchaser
shall fail at the Closing Time or the Date of Delivery, as the case may be, to
purchase the Securities which it is obligated to purchase under this Agreement
(the "Defaulted Securities"), this Agreement shall terminate.
The termination of this Agreement due to such default by the Initial
Purchaser shall not relieve the Initial Purchaser from liability in respect of
its default.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchaser shall be directed to the Initial Purchaser at North Tower, World
Financial Center, New York, New York 10281, attention of John Thorndike,
Managing Director, notices to the Company shall be directed to it 222 West
Washington Avenue, Madison, Wisconsin 53703, attention of Edward M. Gleason and
notices to the Parent shall be directed to it at 222 West Washington Avenue,
Madison, Wisconsin 53703, attention of Edward M. Gleason.
27
<PAGE>
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchaser, the Company, the Parent and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Initial Purchaser, the Company, the Parent and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Initial
Purchaser, the Company, the Parent and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from the Initial Purchaser shall be deemed to be a
successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts hereof shall constitute a single instrument.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Parent a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Initial Purchaser, the Company and the Parent in
accordance with its terms.
Very truly yours,
ALLIANT ENERGY RESOURCES, INC.
By: /s/ Edward M. Gleason
----------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
ALLIANT ENERGY CORPORATION
By: /s/ Edward M. Gleason
----------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Mary E. Ryan
-----------------------------
Authorized Signatory
29
<PAGE>
SCHEDULE A
ALLIANT ENERGY RESOURCES, INC.
5,166,052 PHONES
EXCHANGEABLE SENIOR NOTES DUE 2030
UNCONDITIONALLY GUARANTEED AS TO PAYMENT
OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
ALLIANT ENERGY CORPORATION
1. The Price to Investors of the Securities shall be $67.75 per PHONES.
2. The Initial Purchaser's Discount for the Securities shall be $2.0325 per
PHONES.
3. The Securities shall be issued in an Original Principal Amount of $67.75
per PHONES.
4. The number of Reference Shares attributable to each PHONES shall be
0.8772 shares of McLeodUSA Incorporated Class A Common Stock, par value $0.01
per share, subject to dilution adjustments as described in the form of
Securities.
5. Quarterly interest shall be paid in the amount equal to the sum of
$1.2280 per PHONES, reflecting a basic interest rate of 7.25% per year on the
Original Principal Amount, through February 15, 2003, and thereafter in an
amount equal to $0.4234 per PHONES, reflecting a basic interest rate of 2.50%
per year on the Original Principal Amount, in each case plus an amount equal to
the amount of any regular cash dividends paid on the Reference Shares
attributable to each PHONES.
6. The Securities may be redeemed at any time, in whole but not in part, at
a redemption price equal to the sum of (a) the greater of (i) the Contingent
Principal Amount of the PHONES or (ii) the sum of the then Current Market Value
of the Reference Shares on the Redemption Date plus any deferred quarterly
payment of interest (including any Accrued Interest thereon), plus, in the case
of either (i) or (ii), the Final Period Distribution, and (b) a Redemption
Premium in an amount equal to $14.736 per PHONES if the Redemption Date is prior
to the Interest Payment Date on May 15, 2000, which Redemption Premium shall be
successively reduced by $1.2280 if the Securities are redeemed prior to each
following quarterly Interest Payment Date through the twelfth quarterly Interest
Payment Date on February 15, 2003, provided that no Redemption Premium shall be
payable in the event the Securities are redeemed between February 6 and February
15, 2003.
Sch A - 1
<PAGE>
7. This offering of the Securities is subject to an over-allotment option
to the Initial Purchaser to purchase up to 774,908 additional PHONES at the
Price to Investors, less then Initial Purchaser's Discount, as described above.
8. Any capitalized terms above not specifically defined herein are as used
in the form of Securities attached to the Indenture.
Sch A - 2
<PAGE>
SCHEDULE B
List of Subsidiaries
Alliant Energy Investments, Inc.
Alliant Energy International, Inc.
Alliant Energy Industrial Services, Inc.
Whiting Petroleum Corporation
Sch B - 1
Execution Copy
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF FEBRUARY 1, 2000
ALLIANT ENERGY RESOURCES, INC.,
Company,
ALLIANT ENERGY CORPORATION,
As Guarantor
and
FIRSTAR BANK, N.A.,
as Trustee
Second Supplemental Indenture to the
Indenture
dated as of November 4, 1999
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of February 1, 2000 (the
"Second Supplemental Indenture"), among ALLIANT ENERGY RESOURCES, INC., a
Wisconsin corporation (the "Company"), ALLIANT ENERGY CORPORATION, a Wisconsin
corporation, as guarantor (the "Guarantor"), and FIRSTAR BANK, N.A., as Trustee
(the "Trustee").
RECITALS OF THE COMPANY AND THE GUARANTOR
The Company and the Guarantor have heretofore executed and
delivered to the Trustee an Indenture, dated as of November 4, 1999 (as
supplemented by the First Supplemental Indenture dated as of November 4, 1999
and as may be further supplemented and amended from time to time, the
"Indenture"), providing for the issuance from time to time of the Company's
unsecured unsubordinated debentures, notes or other evidences of indebtedness
(the "Securities"), to be issued in one or more series as provided in the
Indenture.
It is provided in Section 2.02 of the Indenture that the Company,
the Guarantor and the Trustee may enter into indentures supplemental thereto to
establish the form or terms of Securities of any series.
The Company and the Guarantor desire to supplement and amend the
Indenture to allow for the issuance of Securities to be initially sold within
the United States to U.S. Persons that are Qualified Institutional Buyers and
Institutional Accredited Investors and issued in the form of one or more
Restricted Global Securities deposited with the Trustee, as custodian for the
Depositary, and registered in the name of a nominee of the Depositary, and
Restricted Physical Securities.
The Company and the Guarantor desire to set forth the terms and
form of a new series of Restricted Securities to be known as the Company's
Exchangeable Senior Notes due 2030 (the "PAY PHONES" or the "PHONES"), which are
exchangeable for cash based on the value of McLeodUSA Incorporated's Class A
Common Stock, initially limited to an aggregate number of 5,166,052 PHONES (or
up to 5,940,960 if additional PHONES are issued in connection with the exercise
by the Initial Purchaser (as such term is defined in the Purchase Agreement
dated January 26, 2000 among the Company, the Guarantor and the Initial
Purchaser named therein) of its over-allotment option) and unconditionally
guaranteed by the Guarantor.
The PHONES, the related guarantee and the certificate of
authentication to be borne by the PHONES are to be substantially in the form set
forth in Exhibit A hereto.
<PAGE>
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
PHONES by the Holders (as defined herein) thereof, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the Holders of the
PHONES:
ARTICLE 1.
AMENDMENTS
Section 1.01. Article 1 of the Indenture shall be amended by
inserting in Section 1.01 the following new terms with the following definitions
in the appropriate alphabetic positions:
"Closing Time" means, with respect to the PHONES, February 1,
2000, the date of initial issuance of the PHONES issued under the Second
Supplemental Indenture.
"First Supplemental Indenture" means the First Supplemental
Indenture dated as of November 4, 1999 among the Company, the Guarantor and the
Trustee.
"PHONES" has the meaning set forth in the preamble and Section
2.01 of the Second Supplemental Indenture. The term PHONES shall be
interchangeable with the term "PAY PHONES."
"Registration Rights Agreement" means, with respect to the
PHONES, the Registration Rights Agreement dated as of February 1, 2000, among
the Company, the Guarantor and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as the initial purchaser.
"Second Supplemental Indenture" means the Second Supplemental
Indenture dated as of February 1, 2000 among the Company, the Guarantor and the
Trustee.
Section 1.02 The Indenture shall be amended by adding an exhibit
titled "Exhibit E." Exhibit E to the Indenture shall be the form of PHONES and
the related guarantee attached as Exhibit A hereto.
2
<PAGE>
ARTICLE 2.
PROVISIONS FOR THE PHONES
Section 2.01. There shall be a series of Securities entitled
"Exchangeable Senior Notes due 2030" (herein designated the "PHONES"). The form
of the PHONES, the Guarantees issued by the Guarantor and the Trustee's
certificate of authentication to be borne thereby shall be substantially in the
forms set forth in Exhibit A hereto and shall be executed, authenticated and
delivered in accordance with the provisions of, and shall in all respects be
subject to, all of the terms, conditions and covenants of the Indenture and this
Second Supplemental Indenture, including, but not limited to, the provisions of
the Indenture with respect to the transfer, exchange and replacement thereof.
The aggregate number, and the Original Principal Amount (as defined below), of
the PHONES that may be executed by the Company and authenticated by the Trustee
hereunder shall be limited to 5,166,052 and $350,000,023, respectively (or up to
5,940,960 and $402,500,040, respectively, if additional PHONES are issued in
connection with the exercise by the Initial Purchaser of its over-allotment
option); provided, however, any exchanges or replacements of the PHONES made
pursuant to the Indenture and the Second Supplemental Indenture following the
original issuance thereof shall not be counted against this limit.
Section 2.02. In accordance with the terms and conditions of the
Indenture, the Company may issue and sell the PHONES inside the United States
without registration under the Securities Act in reliance on Rule 144A and
Regulation D thereunder.
Section 2.03. Except as provided below, the PHONES shall be
represented initially in the form of a Restricted Global Security. Each
Restricted Global Security shall be registered in the name of a nominee of the
Depositary and deposited on behalf of the purchasers of the PHONES represented
thereby with a custodian for the Depositary for credit to the respective
accounts of the purchasers (or to such other accounts as they may direct).
Except as set forth below, each Restricted Global Security shall be in the form
of the PHONES attached hereto as Exhibit A and may be transferred, in whole and
not in part, only to another nominee of the Depositary or to a successor of the
Depositary or its nominee.
Notwithstanding the above, PHONES sold to Institutional
Accredited Investors who are not Qualified Institutional Buyers shall be issued
in certificated, fully registered form (a "Restricted Physical Security"). A
Restricted Physical Security shall be subject to restrictions on transfer in
accordance with the IAI Letter that such investor shall be required to sign,
substantially in the form attached to the Indenture as Exhibit D.
3
<PAGE>
Section 2.04. (a) Each Restricted Global Security, or any PHONES
that may be issued in exchange for an interest in a Restricted Global Security,
shall be dated as provided in Section 2.03 of the Indenture, shall mature on
February 15, 2030 and shall bear interest quarterly in an amount equal to the
sum of $1.2280 per PHONES, reflecting a basic interest rate of 7.25% per year on
the Original Principal Amount through February 15, 2003, and thereafter in an
amount equal to $0.4234 per PHONES, reflecting a Basic Interest Rate of 2.50%
per year on the Original Principal Amount, in each case plus an amount equal to
any regular cash dividends paid on the Reference Shares attributable to each
PHONES. The Company will also distribute, as additional interest on the PHONES,
any property, including cash (other than any regular cash dividends),
distributed on or with respect to the Reference Shares (other than publicly
traded equity securities, which will themselves become Reference Shares).
Interest on the PHONES shall be paid quarterly in arrears on February 15, May
15, August 15 and November 15 of each year, beginning May 15, 2000, to holders
of record at the close of business on February 1, May 1, August 1 and November
1, as the case may be, immediately preceding the payment date (whether or not a
business day), but subject to the Company's right to defer quarterly payments of
basic interest beginning after the February 15, 2003 payment.
(b) Both principal of and interest on the PHONES shall be payable
at the office of the Paying Agent in the Milwaukee, Wisconsin and the Borough of
Manhattan, The City of New York, New York or at any other office maintained by
the Company or the Guarantor, as the case may be, for such purpose; provided
that interest may be payable, at the option of the Company or the Guarantor, as
the case may be, by check mailed to the registered address of the person
entitled thereto as such address shall appear on the registry books of the
Company. On each interest payment date the Trustee shall pay to the registered
holder interest accrued in respect of such PHONES. Payment of principal on
PHONES shall be paid to the registered holder or upon his order only upon
presentation and surrender for payment of such PHONES on or after the payment
date at the offices of the Company or the Guarantor, as the case may be, in
Milwaukee, Wisconsin and the Borough of Manhattan, The City of New York, New
York or at any other office of the Company or the Guarantor, as the case may be,
maintained for such purpose.
(c) The PHONES shall not be convertible into or exchangeable for
equity securities of the Company, the Guarantor or McLeodUSA Incorporated.
(d) The PHONES shall not be subject to any sinking fund.
(e) The Trustee, at its Corporate Trust Office located at 1555
North RiverCenter Drive, Suite 301, Milwaukee, Wisconsin 53212, shall initially
act as Paying Agent for the PHONES.
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<PAGE>
Section 2.05. (a) So long as a nominee of the Depositary is the
registered owner of any Restricted Global Security, such nominee shall be
considered the sole owner and holder of the PHONES represented by such
Restricted Global Security under the Indenture, as supplemented and amended
hereby. Except as herein provided, owners of beneficial interests in any
Restricted Global Security shall not be entitled to have PHONES represented by
such Restricted Global Security registered in their names, shall not receive or
be entitled to receive physical delivery of PHONES in certificated form and
shall not be considered the owners or holders thereof under the Indenture.
(b) None of the Company, the Guarantor or the Trustee shall have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in any Restricted
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
Section 2.06 Income Tax Characterization. The Company and the
Holders (by virtue of their acceptance of the PHONES) shall treat the PHONES as
indebtedness of the Company for all tax purposes. The Company shall hereby
instruct the Trustee to treat the PHONES as indebtedness of the Company for all
tax reporting purposes. The Company, the Trustee and the Holders shall not take
any position that is inconsistent with the treatment of the PHONES as
indebtedness of the Company for all tax purposes.
ARTICLE 3.
MISCELLANEOUS
Section 3.01. Capitalized terms used but not defined herein shall
have the respective meanings set forth in the Indenture and the form of PHONES
attached hereto as Exhibit A.
Section 3.02. The form of PHONES, and the related guarantee,
attached hereto as Exhibit A, constitute a part of the provisions with respect
to the PHONES and are incorporated into this Second Supplemental Indenture in
its entirety and shall for all purposes have the same effect as if fully set
forth in this Second Supplemental Indenture.
Section 3.03. Except as supplemented and amended hereby, the
Indenture as supplemented and amended by the First Supplemental Indenture is in
all respects ratified and confirmed, and all of the terms, provisions and
conditions thereof shall be and remain in full force and effect, and this Second
Supplemental Indenture and all its provisions shall be deemed a part thereof.
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<PAGE>
Section 3.04. In case any provision in this Second Supplemental
Indenture 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 3.05. If any provision of this Second Supplemental
Indenture limits, qualifies or conflicts with any other provision hereof or of
the Indenture which provision is required to be included in the Indenture by any
of the provisions of the Trust Indenture Act, such required provision shall
control.
Section 3.06. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN
WITHOUT REGARD TO THE CONFLICTS OF LAWS AND RULES OF SAID STATE.
Section 3.07. This Second Supplemental Indenture has been
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument. Delivery by telecopier of an executed signature page
hereto shall be effective as delivery of a manually executed counterpart hereof.
Section 3.08. This Second Supplemental Indenture shall be deemed
to have been executed on the date of the acknowledgment thereof by the officer
of the Trustee who signed it on behalf of the Trustee.
6
<PAGE>
IN WITNESS WHEREOF, the Company, the Guarantor and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized and their respective corporate seals, duly attested,
to be hereunto affixed, all as of the day and year first above written.
ALLIANT ENERGY RESOURCES, INC.
ATTEST:
By: /s/ Enrique Bacalao By: /s/ Edward M. Gleason
------------------------------ ----------------------------------
Name: Enrique Bacalao Name: Edward M. Gleason
Title: Assistant Secretary Title: Vice President-Treasurer and
Corporate Secretary
ALLIANT ENERGY CORPORATION,
ATTEST: as Guarantor
By: /s/ Enrique Bacalao By: /s/ Edward M. Gleason
------------------------------ ----------------------------------
Name: Enrique Bacalao Name: Edward M. Gleason
Title: Assistant Secretary Title: Vice President-Treasurer and
Corporate Secretary
FIRSTAR BANK, N.A.,
as Trustee
By: /s/ R. Christian Davis
----------------------------------
Name: R. Christian Davis
Title: Vice President
7
<PAGE>
Exhibit A
NY3: 209294.06
[Form of PHONES]
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Alliant Energy Resources, Inc., or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or to such other entity or in such other name as is requested by an
authorized representative of DTC (and any payment hereon 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 since the registered owner hereof, Cede & Co., has an
interest herein.
Transfers of this Global Security shall be limited to transfers
in whole, but not in part, to nominees of Cede & Co. or to a successor thereof
or such successor's nominee and transfers of portions of this Global Security
shall be limited to transfers made in accordance with the restrictions set forth
in Section 2.20 of the Indenture referred to in this Global Security.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" ("QIB") (AS DEFINED IN RULE 144A ("RULE 144A")
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPHS (a)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF SUCH INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT (2) AGREES NOT TO OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT) AFTER THE
LATER OF THE ORIGINAL ISSUE DATE OF THE SECURITIES AND THE LAST DATE ON WHICH
ALLIANT ENERGY RESOURCES, INC. OR ANY "AFFILIATE"
<PAGE>
(AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF ALLIANT ENERGY RESOURCES,
INC. WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR (Y)
SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE
RESTRICTION TERMINATION DATE") EXCEPT (A) TO ALLIANT ENERGY RESOURCES, INC., (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO
AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS
(a)(1), (2), (3) or (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER
OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT
OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SUBJECT IN EACH OF THE FOREGOING CASES TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH
INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL, AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT ALLIANT
ENERGY RESOURCES, INC. AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, BUT ONLY
IF THIS SECURITY IS NOT A GLOBAL SECURITY (AS DEFINED IN THE INDENTURE REFERRED
TO HEREIN), TO REQUIRE THAT A CERTIFICATION OF TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
ALLIANT ENERGY RESOURCES, INC. AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
<PAGE>
ALLIANT ENERGY RESOURCES, INC.
Exchangeable Senior Notes due 2030
(Exchangeable for cash based on value of
McLeodUSA Incorporated Class A Common Stock)
CUSIP No.
________ PHONES
Global Note
Alliant Energy Resources, Inc., a corporation duly organized and
existing under the laws of the State of Wisconsin (the "Company," which term
includes any successor person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co. or registered assigns, the
Maturity Amount (as defined below) at the office or agency of the Company
referred to below, in such coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts, upon presentation and surrender of this PHONES on the 15th of February,
2030 (the "Maturity Date") and to pay interest ("Basic Interest") on the
Original Principal Amount (as defined below) from the date of original issuance
or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, as more fully described below.
Payment of Basic Interest may be deferred, at the election of the
Company as specified herein. Additional Interest (as defined below), if any,
shall be distributed as specified herein. As of the date of original issuance
hereof, 0.8772 Reference Shares (as defined below) is attributable to each
PHONES represented hereby, subject to adjustment as provided herein.
This PHONES is a "book-entry" security and is being registered in
the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), a
clearing agency. Subject to the terms of the Indenture, dated as of November 4,
1999 (as supplemented by the First Supplemental Indenture dated as of November
4, 1999, the Second Supplemental Indenture dated February 1, 2000 and as may be
further supplemented and amended from time to time, the "Indenture"), among the
Company, Alliant Energy Corporation (the "Guarantor"), and Firstar Bank, N.A.,
as trustee (the "Trustee"), and except as provided therein, this PHONES will be
held by a clearing agency or its nominee, and beneficial interests will be held
by beneficial owners through the book-entry facilities of such clearing agency
or its nominee.
2
<PAGE>
The statements set forth in the restrictive legend above are an
integral part of the terms of this PHONES and by acceptance hereof each holder
of this PHONES agrees to be subject to and bound by the terms and provisions set
forth in such legend.
This PHONES is one of a duly authorized issue of unsecured,
unsubordinated debentures, notes or other evidences of indebtedness (hereinafter
called the "Securities") of the Company of the series hereinafter specified,
which PHONES initially are limited in aggregate number to 5,166,052 (or up to
5,940,960 if additional PHONES are issued in connection with the exercise by the
Initial Purchaser (as such term is defined in the Purchase Agreement dated as of
January 26, 2000 among the Company, the Guarantor and the Initial Purchaser
named therein) of its over-allotment option) PHONES and an aggregate Original
Principal Amount of $350,000,023 (or up to $402,500,040 if the Initial
Purchaser's over-allotment option is exercised), all such Securities issued or
to be issued under the Indenture. Terms defined in the Indenture and not defined
herein have the meaning ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Holders are referred to the Indenture for a
statement of those terms. As provided in the Indenture, the Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may be denominated in currencies other than U.S.
Dollars (including composite currencies), may mature at different times, may
bear interest, if any, at different rates, may be subject to different
redemption provisions, if any, may be subject to different sinking fund or other
purchase provisions, if any, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided or permitted. This
PHONES is one of a series of the Securities designated as Exchangeable Senior
Notes Due 2030, which are exchangeable for cash based on the value of McLeodUSA
Incorporated's Class A Common Stock.
The Maturity Amount, the Redemption Amount (as defined below),
Additional Interest and Basic Interest on the PHONES shall be payable at the
office or agency the Company or the Guarantor, as the case may be, maintains for
such purpose within Milwaukee, Wisconsin and the Borough of Manhattan, the City
of New York, New York, or at the Company's option, any such payments of cash may
be made by check mailed to the Holders of the PHONES at their respective
addresses set forth in the register of Holders of PHONES. The PHONES shall be
issued in denominations of one PHONES and integral multiples thereof.
1. Interest
The Company shall pay Basic Interest on the Original Principal
Amount from the date of original issuance or from the most recent Interest
Payment Date to which interest has been paid or duly provided for in an amount
equal to $1.2280 per PHONES,
3
<PAGE>
reflecting a basic interest rate of 7.25% per annum on the Original Principal
Amount, through February 15, 2003, and thereafter in an amount equal to $0.4234
per PHONES, reflecting a basic interest rate of 2.50% per annum on the Original
Principal Amount (as applicable, the "Basic Interest Rate"), in each case plus
the amount of any regular cash dividends paid on the Reference Shares
attributable to each PHONES. Interest on the PHONES will accrue from the date of
issuance and will be paid quarterly in arrears on February 15, May 15, August 15
and November 15 of each year (each, an "Interest Payment Date" and collectively,
the "Interest Payment Dates" and each quarterly period ending on such Interest
Payment Date, an "Interest Payment Period"), beginning May 15, 2000, until
payment of the Maturity Amount, or if redeemed earlier, the Redemption Amount
(as defined below) or until earlier exchanged upon exercise of the Exchange
Right (as defined below) by the Holder hereof. The Company's first payment of
Basic Interest on May 15, 2000 shall equal $1.4327 per PHONES, which is
calculated to equal an annual rate of 7.25% on the Original Principal Amount
from the date hereof.
Basic Interest payable on any Interest Payment Date shall
(subject to exceptions provided in the Indenture referred to herein) be paid to
the person in whose name this PHONES, or the PHONES in exchange or substitution
for which this PHONES shall have been issued, shall have been registered at the
close of business on February 1, May 1, August 1 or November 1 (each a "Regular
Record Date"), as the case may be, immediately preceding such Interest Payment
Date whether or not a Business Day (as defined below). Changes in the Contingent
Principal Amount (as defined below) shall not affect the amount of Basic
Interest. At least five (5) Business Days prior to each Interest Payment Date,
the Company shall deliver an Officers' Certificate to the Trustee setting forth:
(i) the amount of Basic Interest per PHONES for such quarterly period and (ii)
the total quarterly interest due for such quarterly period on all PHONES
outstanding.
The Company shall also distribute to the Holder of each PHONES,
an amount equal to any property, including cash (other than any regular cash
dividends), distributed on or with respect to the Reference Shares attributable
to each PHONES (other than publicly traded equity securities, which shall
themselves become Reference Shares) ("Additional Interest"). If any Additional
Interest includes publicly traded securities (other than equity securities) that
can be transferred by the Company to the Holders without registration under the
federal securities laws and without breach of any contractual arrangements of
the Company with McLeodUSA Incorporated, and that will be freely transferable in
the hands of the Holders, such securities shall be distributed to the Holder of
each PHONES; provided however, that no fractional units of such securities shall
be distributed, and the Company shall distribute cash representing the then fair
market value of such fractional units of such securities as determined in good
faith by the Board of Directors. If any Additional Interest is not publicly
traded securities or is publicly
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<PAGE>
traded securities not meeting the above standards, cash representing the then
fair market value of such property (as determined in good faith by the Board of
Directors) shall be distributed to the Holder of each PHONES.
Additional Interest shall be distributed to the Holder of each
PHONES on the twentieth (20th) Business Day (the "Additional Interest
Distribution Date") after the Reference Shares Distribution Date. "Reference
Shares Distribution Date" means the date on which any property, including cash
(other than any regular cash dividends), distributed on or with respect to the
Reference Shares shall be distributed to the holders of Reference Shares. The
record date for any distribution of Additional Interest shall be the tenth
(10th) Business Day after the Reference Shares Distribution Date.
At least five (5) Business Days prior to any Additional Interest
Distribution Date, the Company shall deliver an Officers' Certificate to the
Trustee setting forth: (i) the amount of Additional Interest to be distributed
per PHONES; and (ii) the total amount of Additional Interest to be distributed
for all outstanding PHONES on such Additional Interest Distribution Date. If any
Additional Interest consists of any property that is not publicly traded
securities or is publicly traded securities not meeting the standards described
above, then at least five (5) Business Days prior to such Additional Interest
Distribution Date, the Company shall deliver to the Trustee: (i) a certified
copy of a Board Resolution establishing the fair market value of such property;
and (ii) an Officers' Certificate setting forth (A) the total amount of cash
relating to the fair market value of such property to be distributed per PHONES,
and (B) the total amount of cash relating to the fair market value of such
property to be distributed for all outstanding PHONES. In each case described
above, the Company shall state in such Officers' Certificate whether it shall
distribute such Additional Interest in property or cash. The Trustee shall only
be responsible for distributing Additional Interest in the form of cash or
global book-entry securities which are DTC eligible. The Company shall be
responsible for acting as its own paying agent to make all other distributions
of Additional Interest. The Company shall prepare a press release relating to
any such distribution of Additional Interest to be provided to DTC for
dissemination through the DTC broadcast facility.
If Basic Interest or Additional Interest is payable on a date
that is not a Business Day, payment shall be made on the next Business Day (and
without any interest or other payment in respect of such delay). A "Business
Day" means any day that is not a Saturday, a Sunday or a legal holiday or a day
on which banking institutions or trust companies in The City of New York are
authorized or obligated by law to close.
The Company shall pay interest at a rate equal to the Basic
Interest Rate per annum then in effect on (i) any overdue Maturity Amount; (ii)
any overdue installments of Basic Interest; and (iii) any overdue payments of
Additional Interest based
5
<PAGE>
on the fair market value of such Additional Interest, in each case, without
regard to any applicable grace period. Notwithstanding any other provision
herein, no interest shall accrue or be payable in accordance with the
immediately preceding sentence on any Deferred Basic Interest (as defined
below).
Interest on the PHONES shall be computed on the basis of a
360-day year of twelve 30-day months.
2. Deferral of Interest Payments
If no Event of Default has occurred and is continuing under the
PHONES, the Company may, on one or more occasions, beginning after the February
15, 2003 payment, defer payments of Basic Interest ("Deferred Basic Interest")
for up to twenty (20) consecutive quarterly periods. Any deferral of Basic
Interest may not extend beyond the Maturity Date, and the Company may not defer
distributions of Additional Interest or quarterly payments equal to regular cash
dividends paid on the maximum number of Reference Shares.
If the Company defers payments of Basic Interest, the Contingent
Principal Amount shall increase during each quarter by the amount of such
Deferred Basic Interest (plus accrued interest thereon at an annual rate equal
to 2.50%, compounded quarterly ("Accrued Interest") ) and the Early Exchange
Ratio (as defined below) shall be 100% of the Reference Shares for the quarter
following such deferral. Once the Company has paid all Deferred Basic Interest
(plus Accrued Interest), together with the Basic Interest for the then current
quarterly period, the Contingent Principal Amount shall decrease by the amount
of the payment of such Deferred Basic Interest (plus Accrued Interest), the
Early Exchange Ratio will change to 95% of the Reference Shares, and the Company
may again defer Basic Interest as described above. The Company may only pay
Deferred Basic Interest (plus Accrued Interest) on an Interest Payment Date.
If the Company elects to defer payments of Basic Interest for any
quarterly period, the Company shall provide the Trustee with notice of such
election (a "Deferral Notice") and shall prepare a press release relating to
such deferral to be provided to DTC for dissemination through the DTC broadcast
facility. The Deferral Notice with respect to any quarterly period shall be
given to the Trustee not later than one (1) Business Day before the earlier of:
(i) the Regular Record Date for the payment of Basic Interest for such quarterly
period; or (ii) the date that the Company is required to give notice to The
Nasdaq Stock Market (or any other applicable self-regulatory organization) or to
the Holders of the PHONES as of such Regular Record Date or the applicable
Interest Payment Date.
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The Deferral Notice shall be in the form of an Officers'
Certificate to the Trustee setting forth: (i) the period with respect to which
the Company is electing to defer Basic Interest; (ii) the amount of increase of
Contingent Principal Amount per PHONES; (iii) the total amount of increase of
the Contingent Principal Amount for all outstanding PHONES; (iv) a statement
that the Early Exchange Ratio will change to 100% of the Reference Shares, or
will continue at such rate, prospectively from such date for the following
quarter; and (v) that no Event of Default has occurred and is continuing under
the PHONES. The Company shall deliver a Deferral Notice for each deferral of
Basic Interest.
If and when the Company pays all of the Deferred Basic Interest
and Accrued Interest, the Company shall deliver to the Trustee an Officers'
Certificate setting forth: (i) the calculation of Deferred Basic Interest and
Accrued Interest owed per PHONES; (ii) the total amount of Deferred Basic
Interest and Accrued Interest owed on all outstanding PHONES; (iii) a statement
that the Early Exchange Ratio will change to 95% of the Reference Shares
prospectively from such date for the following quarter; (iv) the amount of
decrease of the Contingent Principal Amount per PHONES; and (v) the total amount
of decrease of the Contingent Principal Amount for all outstanding PHONES.
3. Principal Amount
The "Original Principal Amount" per PHONES is equal to $67.75.
The minimum amount payable upon redemption or maturity of each PHONES (the
"Contingent Principal Amount") shall be initially equal to the Original
Principal Amount. The Contingent Principal Amount for each PHONES will be
increased during each quarter, based on the Contingent Principal Amount at the
beginning of the Interest Payment Period, by an amount equal to interest accrued
on such beginning Contingent Principal Amount at the Basic Interest Rate on the
PHONES then in effect, and, on the dates the following amounts are paid to
Holders of the PHONES, will be reduced by: (a) each Basic Interest Payment made
on the PHONES, (b) any amounts paid on the PHONES in respect of regular cash
dividends paid on the Reference Shares during that quarter and (c) any
Additional Interest paid on the PHONES. In no event will the Contingent
Principal Amount be less than zero. Notwithstanding the foregoing, in the event
that the Company redeems the PHONES on a date which is between February 6 and
February 15, 2003 (not including February 6 or February 15), the Contingent
Principal Amount will not be increased by an amount equal to the interest
accrued on the beginning Contingent Principal Amount for the Interest Payment
Period beginning on November 15, 2002.
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For purposes of the Indenture, the "principal" of a PHONES on any
day and for any purpose means the amount that is payable with respect to such
PHONES as of such date and for such purpose (including without limitation, upon
any redemption at the option of the Company, upon any exchange at the option of
the Holder of such PHONES and upon the acceleration of the maturity of such
PHONES). For purposes of the Indenture, "Interest" on a PHONES for any purpose
includes Basic Interest, any regular cash dividends paid on the Reference
Shares, Additional Interest and any Final Period Distribution.
At maturity, the Holder of each PHONES shall be entitled to
receive the Maturity Amount. The "Maturity Amount" per PHONES means the higher
of: (i) the Contingent Principal Amount of the PHONES on the Maturity Date or
(ii) the sum of (1) the then Current Market Value (as defined below) of the
Reference Shares on the Maturity Date attributable to each PHONES and (2) any
Deferred Basic Interest (including any Accrued Interest), plus, in the case of
either (i) or (ii), the Final Period Distribution.
"Final Period Distribution" per PHONES means, in respect of (i)
the Maturity Date, a distribution determined in accordance with clauses (2), (3)
and (4) below and (ii) the Redemption Date (as defined below), a distribution
determined in accordance with clauses (1), (2), (3) and (4) below. If the
Redemption Date is in connection with a Rollover Offering (as defined below),
the distribution determined in accordance with clause (4) shall be a
distribution equal to all dividends and distributions on or in respect of the
Reference Shares which a holder of the Reference Shares on the Pricing Date (as
defined below) would be entitled to receive.
(1) Unless (i) the Redemption Date of the PHONES is also an Interest
Payment Date or (ii) Basic Interest has been deferred for the
then current quarterly period, an amount equal to the Basic
Interest Rate accrued on the Original Principal Amount from the
most recent Interest Payment Date to the Redemption Date, or to
the next Interest Payment Date in the case of a redemption of the
PHONES on a date which is between February 6 and February 15,
2003 (not including February 6 or February 15), plus
(2) a distribution equal to the sum of all dividends and
distributions on or in respect of the Reference Shares declared
by the applicable Reference Company (as defined below) and for
which the ex-date for the dividend or distribution falls during
the period from the date of original issuance of the PHONES to
the most recent Interest Payment Date and which have not been
distributed to holders of
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Reference Shares prior to the most recent Interest Payment Date,
plus
(3) a distribution equal to the sum of all dividends and
distributions on or in respect of the Reference Shares which a
holder of Reference Shares on the latest ex-date for a dividend
or distribution occurring during the period from the most recent
Interest Payment Date to the date immediately preceding the first
Trading Day (as defined below) of the Averaging Period (as
defined below) is entitled to receive, plus
(4) a distribution equal to the sum of, for each successive day in
the Averaging Period that is anticipated on the first day of the
Averaging Period to be a Trading Day, the amounts determined in
accordance with the following formula:
E x (1 - 0.05n)
where:
E= all dividends and distributions on or in respect of the
Reference Shares which a holder of the Reference Shares on
the applicable day would be entitled to receive, provided
that the ex-date for the dividend or distribution date that
occurs on a day that is not a scheduled Trading Day shall be
deemed to have occurred on the immediately preceding
scheduled Trading Day; and
n= the number of scheduled Trading Days that have elapsed in
the Averaging Period with the first Trading Day of the
Averaging Period being counted as zero.
The Holder of each PHONES is only entitled to receive
distributions determined in accordance with clauses (2), (3) or (4) to the
extent actually distributed by the applicable Reference Company. Distributions
related to cash amounts paid by the applicable Reference Company on Reference
Shares as described in clauses (2), (3) or (4) before the Redemption Date or the
Maturity Date, as the case may be, shall be paid on the Redemption Date or the
Maturity Date, as the case may be. Distributions related to all other property
distributed, or the cash value of such property, shall be distributed within
twenty (20) Business Days after the Reference Shares Distribution Date.
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Upon maturity, the Company shall deliver to the Trustee an
Officers' Certificate (i) informing the Trustee of the applicable Maturity
Amount per PHONES and in the aggregate for all outstanding PHONES and the
Company's calculation thereof and (ii) directing the Trustee to adjust the
Trustee's records and to request DTC to adjust DTC's records.
Notwithstanding any other provision hereof, if the Contingent
Principal Amount is reduced to zero or if all of the Reference Shares cease to
be outstanding, the PHONES shall continue to remain outstanding until the
Maturity Date unless the Company shall elect to earlier redeem the PHONES, and
each Holder of PHONES will receive the Contingent Principal Amount, if any, on
the Redemption Date or the Maturity Date, as applicable.
4. Exchange Option
The Holder of each PHONES shall have a right, at any time and
from time to time, to exchange (an "Exchange Right") each PHONES for an amount
of cash equal to a percentage of the then Exchange Market Value (as defined
below) of the Reference Shares attributable to each PHONES (the "Early Exchange
Ratio"). The Early Exchange Ratio at any time shall be equal to: (i) 95% of the
then Exchange Market Value of the Reference Shares attributable to each PHONES
or (ii) during a deferral of Basic Interest or, if the Company so elects, during
the pendency of any tender or exchange offer for any of the Reference Shares,
100% of the then Exchange Market Value of the Reference Shares attributable to
each PHONES. The Company shall pay the Holder of each PHONES the amount due upon
exchange as soon as reasonably practicable after such Holder delivers notice (an
"Exchange Notice") to the Trustee, but in no event earlier than three Trading
Days after the date of such Exchange Notice or later than fifteen (15) Trading
Days after the date of such Exchange Notice.
"Exchange Market Value" means the Closing Price (as defined
below) on the Trading Day following the date a Holder of PHONES delivers an
Exchange Notice to the Trustee (an "Exchange Date"); provided, however, if
Exchange Notices relating to more than 200,000 PHONES have been delivered on any
Exchange Date, then the Exchange Market Value shall be the average Closing Price
on the five (5) Trading Days following such Exchange Date. If Exchange Notices
relating to more than 200,000 PHONES are delivered on any Exchange Date, the
Trustee shall notify the Company of such fact by 6:00 p.m., New York City time,
on the Exchange Date, and the Company shall give notice of such fact by issuing
a press release prior to 9:00 a.m., New York City time, on the next Trading Day,
which shall be provided to DTC for dissemination through the DTC broadcast
facility and to the Trustee. The Company's failure to provide this
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<PAGE>
notice, however, shall not affect the determination of Exchange Market Value as
described above.
If the PHONES are held through DTC, the Holder of each PHONES may
exercise such Holder's Exchange Right through the relevant direct participant in
DTC through the DTC ATOP system by delivering an agent's message and delivering
the PHONES of such Holder to the Trustee's DTC participant account. If the
PHONES are held in certificated form, the Holder may exercise such Exchange
Right as follows: the Holder shall (i) complete and manually sign an Exchange
Notice in the form available from the Trustee and deliver such Exchange Notice
to the Trustee at the office maintained by the Trustee for such purpose, (ii)
surrender such PHONES to the Trustee, (iii) if required, furnish appropriate
endorsement and transfer documents, and (iv) if required, pay all transfer or
similar taxes.
By 12:00 noon, New York City time, on each Business Day following
receipt by the Trustee of notification from DTC that DTC has received an agent's
message from a DTC participant electing to exercise such participant's Exchange
Right and delivery of such PHONES into the Trustee's DTC participant account or
following receipt of a complete manually signed Exchange Notice and receipt of
the related PHONES from the Holder, the Trustee shall notify the Company of the
amount of such PHONES so tendered. The Company shall deliver an Officers'
Certificate to the Trustee no later than one (1) Business Day after the Trading
Day following the Exchange Date; provided however, if Exchange Notices relating
to more than 200,000 PHONES have been delivered on any Exchange Date, the
Company shall deliver such Officers' Certificate no later than one (1) Business
Day after the fifth (5th) Trading Day following such Exchange Date. Such
Officers' Certificate shall set forth the amount to be paid to such tendering
Holder and the date of payment of such amount (the "Exchange Payment Date"). The
Company shall deposit such amount with the Trustee on the Exchange Payment Date,
and upon receipt of such payment from the Company, the Trustee shall pay DTC, as
soon as practicable or, in the case of PHONES that are held in certificated
form, as directed by the tendering Holder.
The date on which all of the foregoing requirements have been
satisfied shall be the Redemption Date with respect to the PHONES delivered for
exchange.
5. Redemption
The Company may redeem, at any date (the "Redemption Date"), the
PHONES in whole but not in part (a "Redemption") at a redemption price per
PHONES (the "Redemption Amount") equal to the sum of: (i) the higher of (A) the
Contingent Principal Amount per PHONES or (B) the sum of (1) the then Current
Market Value of
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<PAGE>
the Reference Shares on the Redemption Date attributable to each PHONES and (2)
any Deferred Basic Interest (plus Accrued Interest) per PHONES; plus, in the
case of either (A) or (B), the Final Period Distribution; and (ii) a "Redemption
Premium" in an amount equal to $14.9407 per PHONES if the Company redeems the
PHONES prior to the first quarterly Interest Payment Date on May 15, 2000, and
such amount as successively reduced by $1.2280 per PHONES if the Company redeems
the PHONES prior to each following quarterly Interest Payment Date through the
twelfth quarterly Interest Payment Date on February 15, 2003; except that no
such amount referred to in this clause (ii) shall be payable in the event the
PHONES are redeemed between February 6 and February 15, 2003 (not including
February 6 or February 15). In addition, if any Additional Interest Distribution
Date falls after the Redemption Date, the Company shall make such distribution
on the Additional Interest Distribution Date.
The "Current Market Value" (other than in the case of a Rollover
Offering, as defined below) is defined in respect of: (i) the Maturity Date, as
the average Closing Price per Reference Share on the twenty (20) Trading Days
(the "Averaging Period") immediately prior to (but not including) the fifth
(5th) Business Day preceding the Maturity Date; and (ii) the Redemption Date, as
the average Closing Price per Reference Share during the Averaging Period
immediately prior to (but not including) the fifth (5th) Business Day preceding
the Redemption Date; provided, however, that for purposes of determining the
payment required upon Redemption in connection with a Rollover Offering,
"Current Market Value" means the Closing Price per Reference Share on the
Trading Day immediately preceding the date that the Rollover Offering is priced
(the "Pricing Date") or, if the Rollover Offering is priced after 4:00 p.m., New
York City time, on the Pricing Date, the Closing Price per Reference Share on
the Pricing Date, except that if there is not a Trading Day immediately
preceding the Pricing Date or (where pricing occurs after 4:00 p.m., New York
City time, on the Pricing Date) if the Pricing Date is not a Trading Day,
"Current Market Value" means the market value per Reference Share as of the
Redemption Date as determined by a nationally recognized independent investment
banking firm retained by the Company.
A "Rollover Offering" means a refinancing of the PHONES by way of
either (i) a sale of the Reference Shares or (ii) a sale of securities that are
priced by reference to the Reference Shares, in either case, by means of a
completed public or private offering or offerings by the Company and which is
expected to yield net proceeds which are sufficient to pay the Redemption Amount
for all of the PHONES. The Trustee will notify the Holders of the PHONES if the
Company elects to redeem the PHONES in connection with a Rollover Offering not
less than thirty (30) nor more than sixty (60) Business Days prior to the
Redemption Date. The Company will also issue a press release prior to 4:00 p.m.,
New York City time, on the Business Day immediately prior to the day
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on which the Closing Price of the Reference Shares is to be measured for the
purpose of determining the Current Market Value in connection with a Rollover
Offering. Such notice shall state that the Company is firmly committed to price
the Rollover Offering, shall specify the date on which the Rollover Offering is
to be priced (including whether the Rollover Offering shall be priced during
trading on the Pricing Date or after the close of trading on the Pricing Date)
and consequently, whether the Closing Price for the Reference Shares by which
the Current Market Value shall be measured shall be the Closing Price on the
Trading Day immediately preceding the Pricing Date or the Closing Price on the
Pricing Date. The Company shall provide such press release to DTC for
dissemination through the DTC broadcast facility.
The "Closing Price" of any security on any date of determination
means the closing sale price (or, if no closing sale price is reported, the last
reported sale price) of such security (regular way) on The Nasdaq Stock Market
on such date or, if such security is not listed for trading on The Nasdaq Stock
Market on that date, as reported in the composite transactions for the principal
United States securities exchange on which such security is so listed, or if
such security is not so listed on a United States national or regional
securities exchange, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization. In the event that no such quotation is available for any day, the
Board of Directors shall be entitled to determine the Closing Price on the basis
of such quotations as it in good faith considers appropriate. To the extent that
trading of Reference Shares normal way continues past 4:00 p.m., New York City
time, "Closing Price" shall be deemed to refer to the price at the time that is
then customary for determining the Trading Day's index levels for stocks traded
on the primary national securities exchange or automated quotation system on
which the Reference Shares are then traded or quoted. All references to 4:00
p.m., New York City time, in the definition of Current Market Value shall
thereafter be deemed to refer to the then customary determination time.
A "Trading Day" is defined as a day on which the security, the
Closing Price of which is being determined, (i) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (ii) has traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of such security.
In case of any Redemption (other than a Redemption in connection
with a Rollover Offering), the Company shall give thirty (30) Business Days'
notice to the Trustee and to the Holders of the PHONES of such Redemption and
the Redemption Date, such notice to include the issuance of a press release by
the Company, which press release shall also be provided by the Company to DTC
for dissemination through the DTC
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broadcast facility. On the fifth Business Day preceding the Redemption Date (or
as soon as practicable thereafter), the Company shall provide to the Trustee an
Officer's Certificate and prepare a press release to be provided to DTC for
dissemination through the DTC broadcast facility. Such Officer's Certificate and
press release shall set forth on a per PHONES and an aggregate basis, (i) the
Redemption Amount, (ii) the Contingent Principal Amount as of the Redemption
Date, (iii) the Current Market Value of the Reference Shares, and (iv) the
Deferred Basic Interest in respect of such Redemption. The Company shall
irrevocably deposit with the Trustee sufficient funds to pay the Redemption
Amount on the Redemption Date. Distributions to be paid on or before the
Redemption Date shall be payable to the Holders on the record dates for the
related dates of distribution. In addition, if any Additional Interest
Distribution Date falls after the Redemption Date, the Company shall make such
distribution on the Additional Interest Distribution Date.
Once notice of Redemption is given and funds are irrevocably
deposited, interest on the PHONES shall cease to accrue on and after the
Redemption Date and all rights of the Holders shall cease, except for the right
of such Holders to receive the Redemption Amount (but without interest on such
Redemption Amount).
If the Redemption Date is not a Business Day, then the Redemption
Amount shall be payable on the next Business Day (and without any interest or
other payment in respect of any such delay).
If the Company improperly holds or refuses to pay any Redemption
Amount, interest on the PHONES shall continue to accrue at a rate equal to the
Basic Interest Rate then in effect, even if such rate is lower than the rate in
effect when the amount owed originally accrued, from the original Redemption
Date (the "Original Redemption Date") to the actual date of payment (the "Actual
Redemption Date"). In such case, the Actual Redemption Date shall be considered
the Redemption Date for purposes of calculating the Redemption Amount. The Final
Period Distribution shall be deemed paid on the Original Redemption Date to the
extent paid as set forth in the definition of Final Period Distribution above.
6. Reference Share Adjustments
For purposes hereof, "Reference Company" means McLeodUSA
Incorporated, a Delaware corporation ("McLeodUSA"), and any other issuer of a
Reference Share. A "Reference Share" means, collectively (i) initially, 0.8772
share of McLeodUSA's Class A Common Stock, par value $0.01 (the "McLeodUSA
Stock"); (ii) and, after the date hereof, each share or fraction of a share of
publicly traded equity securities received by a holder of a Reference Share in
respect of such Reference Share
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and, to the extent that the Reference Share remains outstanding after any of the
following events but without duplication, including the Reference Share, in each
case directly or as the result of successive applications of this paragraph upon
any of the following events: (A) the distribution on or in respect of a
Reference Share in Reference Shares; (B) the combination of Reference Shares
into a smaller number of shares or other units; (C) the subdivision of
outstanding shares or other units of Reference Shares; (D) the conversion or
reclassification of Reference Shares by issuance or exchange of other
securities; (E) any consolidation or merger of a Reference Company, or any
surviving entity or subsequent surviving entity of a Reference Company (a
"Reference Company Successor"), with or into another entity (other than a merger
or consolidation in which the Reference Company is the continuing corporation
and in which the Reference Company common stock outstanding immediately prior to
the merger or consolidation is not exchanged for cash, securities or other
property of the Reference Company or another corporation); (F) any statutory
exchange of securities of the Reference Company or any Reference Company
Successor with another corporation (other than in connection with a merger or
acquisition and other than a statutory exchange of securities in which the
Reference Company is the continuing corporation and in which the Reference
Company common stock outstanding immediately prior to the statutory exchange is
not exchanged for cash, securities or other property of the Reference Company or
another corporation); or (G) any liquidation, dissolution or winding up of the
Reference Company or any Reference Company Successor; and (iii) any Reference
Share as adjusted by any Reference Share Offer Adjustment (as defined below).
A "Reference Share Offer" means any tender offer or exchange
offer made for all or a portion of a class or series of Reference Shares of a
Reference Company. If a Reference Share Offer is made, the Company shall, at its
option, either: (i) during the pendency of the Reference Share Offer, increase
the Early Exchange Ratio to 100% of the Reference Shares and, if the Company
exercises this option prior to February 15, 2003, agree to pay to each
exchanging Holder of a PHONES an amount equal to the Redemption Premium that
would be owed to such Holder if the Company had redeemed the PHONES on the date
of exchange; or (ii) make a Reference Share Offer Adjustment.
A "Reference Share Offer Adjustment" means including as part of a
Reference Share each share of publicly traded equity securities, if any, deemed
to be distributed on or in respect of a Reference Share as Average Transaction
Consideration (as defined below) less the Reference Share Proportionate
Reduction (as defined below).
"Average Transaction Consideration" deemed to be received by a
holder of one Reference Share in a Reference Share Offer shall be equal to (i)
the aggregate consideration actually paid or distributed to all holders of
Reference Shares that participated in the Reference Share Offer, divided by (ii)
the total number of Reference
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Shares outstanding immediately prior to the expiration of the Reference Share
Offer and entitled to participate in such Reference Share Offer.
A "Reference Share Proportionate Reduction" means a proportionate
reduction in the number of Reference Shares which are the subject of the
applicable Reference Share Offer and attributable to one PHONES calculated in
accordance with the following formula:
R= X
--
N
where:
R= the fraction by which the number of Reference Shares of the
class of Reference Shares subject to the Reference Share
Offer and attributable to one PHONES shall be reduced.
X= the aggregate number of Reference Shares of the class or
series of Reference Shares subject to the Reference Share
Offer accepted in the Reference Share Offer.
N= the aggregate number of Reference Shares of the class of
series of Reference Shares subject to the Reference Share
Offer outstanding immediately prior to the expiration of the
Reference Share Offer.
If the Company elects to make a Reference Share Offer Adjustment,
the Company will distribute as Additional Interest the Average Transaction
Consideration (other than Average Transaction Consideration that is publicly
traded equity securities which will themselves become Reference Shares as a
result of a Reference Share Offer Adjustment) deemed to be received on the
Reference Shares of the class or series subject to the Reference Share Offer and
attributable to each PHONES immediately prior to giving effect to the Reference
Share Proportionate Reduction relating to such Reference Share Offer.
If the Company elects to make a Reference Share Offer Adjustment,
and during the pendency of the Reference Share Offer another Reference Share
Offer is commenced in relation to the Reference Shares that are the subject of
the then existing Reference Share Offer, the Company may change its original
election by electing to increase the Early Exchange Ratio to 100% of the
Reference Shares and agreeing to pay the other amounts described above during
the pendency of the new Reference Share Offer, or the Company may continue to
elect to make a Reference Share Offer Adjustment. The
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Company shall similarly be entitled to change its election for each further
Reference Share Offer made during the pendency of any Reference Share Offer for
the same class of Reference Shares. For the purposes of these adjustments, a
material change to the terms of an existing Reference Share Offer will be deemed
to be a new Reference Share Offer.
If the Company elects to increase the Early Exchange Ratio to
100% of the Reference Shares in connection with a Reference Share Offer, no
Reference Share Offer Adjustment shall be made and the Company may not change
such election if any further Reference Share Offer is made.
The Company shall give the Trustee notice of the Company's
election in the event of a Reference Share Offer. The Company shall also prepare
a press release and provide such press release to DTC for dissemination through
the DTC broadcast facility. The Company shall give such notice no later than ten
(10) Business Days before the scheduled expiration of the Reference Share Offer.
7. Acceleration of PHONES
If an Event of Default with respect to the PHONES shall occur and
be continuing, the Maturity Amount of all PHONES then outstanding may be
declared, or may become, due and payable upon the conditions and in the manner
and with the effect provided in the Indenture.
8. Calculations in Respect of the PHONES
The Company shall be responsible for making all calculations
required under the PHONES, including, without limitation, the determination of:
(i) the Contingent Principal Amount; (ii) the Current Market Value of the
Reference Shares; (iii) the Exchange Market Value of the Reference Shares; (iv)
the Final Period Distribution on the PHONES; (v) the fair market value of any
property distributed on the Reference Shares; (vi) the Average Transaction
Consideration; (vii) the composition of a Reference Share; (viii) the Redemption
Amount; (ix) the Maturity Amount; (x) Basic Interest; (xi) Additional Interest;
and (xii) the amount of Accrued Interest payable upon Redemption or at Maturity
of the PHONES.
The Company shall make all such calculations in good faith and,
absent manifest error, such calculations shall be final and binding on Holders
of the PHONES. The Company shall provide a schedule of such calculations to the
Trustee and the Trustee shall be entitled to rely upon the accuracy of such
calculations without independent verification.
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9. Amount Payable Upon Bankruptcy
Upon dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other similar proceedings in respect of the Company, Holders of the PHONES may
be entitled to a claim against the Company with respect to each PHONES in an
amount equal to the higher of: (i) the Contingent Principal Amount or (ii) the
sum of (1) the then Current Market Value (without giving effect to the
provisions relating to any Rollover Offering) of the Reference Shares
attributable to each PHONES and (2) any unpaid Deferred Basic Interest
(including any Accrued Interest) plus, in the case of either (i) or (ii), the
Final Period Distribution determined as if the date of such event were the
Maturity Date of the PHONES.
10. Discharge and Defeasance
The Indenture contains provisions for defeasance of the entire
indebtedness of the PHONES upon compliance with certain conditions set forth
therein, which provisions shall not apply to the PHONES.
11. Amendment; Waiver
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 Guarantor and the rights of the Holders of
the PHONES under the Indenture at any time by the Company, the Guarantor and the
Trustee with the consent of the Holders of a majority in Original Principal
Amount of the PHONES at the time outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in Original Principal
Amount of the PHONES at the time outstanding, on behalf of the Holders of all
PHONES, to waive compliance by the Company or the Guarantor 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 PHONES
shall be conclusive and binding upon such Holder and upon all future Holders of
this PHONES and of any PHONES issued upon the registration of transfer thereof
or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this PHONES. Notwithstanding any other provision
of this PHONES or the Indenture, no supplemental indenture, without the consent
of the Holders of each PHONES shall:
(a) reduce the amount of PHONES whose Holders must consent to an
amendment or waiver;
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<PAGE>
(b) change the rate or the time for payment of interest,
including Basic Interest, Additional Interest and amounts
relating to cash dividends on the Reference Shares;
(c) change the principal or the fixed maturity;
(d) waive a default in the payment of principal, premium or
interest;
(e) make the PHONES payable in a different currency;
(f) make any change in the provisions of the Indenture
concerning (i) waiver of existing Defaults; (ii) right of
Holders of PHONES to receive payment; or (iii) amendments
and waivers with consent of Holders of PHONES;
(g) impair the right to institute suit for the enforcement of
any payment on or after the stated maturity of such payment
or, in the case of Redemption, on or after the Redemption
Date; or
(h) modify or effect in any manner adverse to the Holders the
terms and conditions of the Guarantor's obligations
regarding due and punctual payment of principal of, or any
premium or interest on the PHONES.
12. Payment
No reference herein to the Indenture and provision of this PHONES
or of the Indenture shall alter or impair the obligation of the Company and the
Guarantor, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this PHONES at the times, place and rate, and
in the coin or currency, herein prescribed.
13. Transfers
As provided in the Indenture and subject to certain limitations
on transfer of this PHONES by DTC or its nominee, the transfer of this PHONES is
registrable by the Registrar, upon surrender of this PHONES for registration of
transfer at the office or agency of the Company or the Guarantor, as the case
may be, in Milwaukee, Wisconsin and the Borough of Manhattan, The City of New
York, New York, duly endorsed by, or accompanied by the written instrument of
transfer attached hereto duly executed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new PHONES, of authorized
denominations and for the same aggregate principal amount, shall be issued to
the designated transferee or transferees. The Registrar need not register the
transfer of or exchange any PHONES for a period of 15 days before an Interest
Payment Date.
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<PAGE>
No service charge shall be made for any such registration of
transfer or exchange of PHONES, but the Company and the Guarantor 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 PHONES for registration of
transfer, the Company, the Guarantor, the Trustee and any agent of the Company,
the Guarantor or the Trustee may treat the person in whose name this PHONES is
registered as the owner hereof for all purposes, whether or not this PHONES be
overdue, and none of the Company, the Guarantor, the Trustee or any such agent
shall be affected by notice to the contrary.
14. Persons Deemed Owners
The registered Holder of this PHONES may be treated as the owner
of it for all purposes.
15. Unclaimed Money
If money for the payment of principal of, or premium, if any, or
interest on, any PHONES remains unclaimed for two years, the Trustee or paying
agent shall pay the money back to the Company at its request unless an abandoned
property law designates another person. After any such payment, Holders entitled
to the money must look only to the Company and not to the Trustee for payment.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the PHONES or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. By accepting a PHONES,
each Holder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the PHONES.
17. Registration Rights
The Holder of this PHONES is entitled to the benefits of the
Registration Rights Agreement, dated as of February 1, 2000 (the "Registration
Rights Agreement"), among the Company, the Guarantor and the Initial Purchaser.
20
<PAGE>
18. Representation and Warranty by Holders
Each purchaser of PHONES, by its acquisition thereof, will be
deemed to have acknowledged, represented to and agreed with the Initial
Purchaser, the Company and the Guarantor as follows:
(1) Such purchaser understands and acknowledges that the PHONES
have not been registered under the Securities Act or any other
applicable securities laws, are being offered for resale in
transactions not requiring registration under the Securities Act or
any other securities laws including sales pursuant to Rule 144A under
the Securities Act, and may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of
the Securities Act or any other applicable securities law, or pursuant
to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with the conditions for transfer set forth
in paragraph (4) below.
(2) Such purchaser is not an "affiliate" (as defined in Rule 144
under the Securities Act) of the Company and it is either:
(a) a QIB and is aware that any sale of PHONES to it will be
made in reliance on Rule 144A and such acquisition will be for
its own account or for the account of another QIB with respect to
which it exercises sole investment discretion and to whom it has
given notice that the PHONES are being sold in reliance on Rule
144A; or
(b) an Institutional Accredited Investor and, if the PHONES
are to be purchased for one or more accounts ("investor
accounts") for which it is acting as fiduciary or agent, each
such investor account is an Institutional Accredited Investor on
a like basis; in the normal course of its business, it invests in
or purchases securities similar to the PHONES and such purchaser
has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
purchasing any of the PHONES and it is aware that it (or any such
investor account) may be required to bear the economic risk of an
investment in the PHONES for an indefinite period of time and it
(or such investor account) is able to bear such risk for an
indefinite period and such purchaser has agreed to deliver a
letter substantially in the form of Exhibit D to the Second
Supplemental Indenture to the Company.
(3) Such purchaser acknowledges that none of the Company, the
Guarantor or the Initial Purchaser, or any person representing the
Company, the
21
<PAGE>
Guarantor or the Initial Purchaser, has made any representation to it
with respect to the Company, the Guarantor or the offering or sale of
any PHONES other than the information contained in the Offering
Memorandum, dated January 26, 2000, relating to the PHONES, which has
been delivered to it and upon which such purchaser is relying in
making its investment decision with respect to the PHONES.
Accordingly, such purchaser acknowledges that no representation or
warranty is made by the Initial Purchaser as to the accuracy or
completeness of such materials. Such purchaser has had access to such
financial and other information concerning the Company, the Guarantor
and the PHONES (and the Guarantees) as it has deemed necessary in
connection with its decision to purchase any of the PHONES, including
an opportunity to ask questions of and request information from the
Initial Purchaser, the Company and the Guarantor.
(4) Such purchaser is purchasing the PHONES for its own account,
or for one or more investor accounts for which it is acting as a
fiduciary or agent, in each case for investment, and not with a view
to, or for offer or sale in connection with, any distribution thereof
in violation of the Securities Act, subject to any requirement of law
that the disposition of its property or the property of such investor
account or accounts be at all times within its or their control and
subject to its or their ability to resell such PHONES pursuant to Rule
144A or any exemption from registration available under the Securities
Act or pursuant to a registration statement which has been declared
effective under the Securities Act. Such purchaser agrees on its own
behalf and on behalf of any investor account for which it is
purchasing the PHONES, and each subsequent holder of the PHONES by its
acceptance thereof will be deemed to agree, not to offer, sell or
otherwise transfer the PHONES prior to (x) the date which is two years
(or such shorter period of time as permitted by Rule 144(k) under the
Securities Act) after the later of the date of original issue of the
PHONES and the last date on which the Company or any of its
"affiliates" (as defined in Rule 144 under the Securities Act) was the
owner of the PHONES (or any predecessor thereto) or (y) such later
date, if any, as may be required by applicable law (the "Resale
Restriction Termination Date"), unless such sale, offer or transfer is
made (a) to the Company, (b) pursuant to a registration statement
which has been declared effective under the Securities Act, (c) for so
long as the PHONES are eligible for resale pursuant to Rule 144A to a
person it reasonably believes is a QIB that purchases for its own
account or for the account of a QIB, in each case to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) to
an Institutional Accredited Investor that is acquiring the PHONES for
its own account or for the account of such an Institutional Accredited
Investor for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the
Securities
22
<PAGE>
Act or (e) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of
the foregoing cases to any requirement of law that the disposition of
its property or the property of such investor account or accounts be
at all times within its or their control and to compliance with any
applicable state or other securities laws. If any resale or transfer
of the PHONES is proposed to be made pursuant to clause (d) above
prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of
Exhibit D to the Indenture to the Company and the Trustee. The
foregoing restrictions on resale will not apply subsequent to the
Resale Restriction Termination Date. Each purchaser of PHONES
acknowledges that the Company, the Guarantor and the Trustee reserve
the right prior to any offer, sale or other transfer of PHONES prior
to the Resale Restriction Termination Date pursuant to clauses (d) or
(e), above, to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to them and the
Trustee. Each purchaser of PHONES acknowledges that each PHONES will
contain a legend substantially in the form on the face of this PHONES
unless otherwise agreed by the Company, the Guarantor and the Trustee.
(5) Such purchaser acknowledges that the Company, the Guarantor,
the Initial Purchaser, the Trustee and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations and
agreements and agree that, if any of the acknowledgments,
representations, warranties and agreements deemed to have been made by
its purchase of the notes are no longer accurate, it shall promptly
notify the Initial Purchaser. If such purchaser is acquiring any notes
as a fiduciary or agent for one or more investor accounts, it
represents that it has sole investment discretion with respect to each
such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of each such
account and that each such investor account is eligible to purchase
the PHONES.
(6) Such purchaser acknowledges that the Trustee, the transfer
agent and the registrar will not be required to accept for
registration of transfer any PHONES acquired by it, except upon
presentation of evidence satisfactory to the Company and the Trustee
that the restrictions set forth above have been complied with.
(7) Such purchaser acknowledges that the foregoing restrictions
apply to holders of beneficial interests in the PHONES, as well as the
holders of the PHONES.
23
<PAGE>
19. Sinking Fund
The PHONES do not have the benefit of any sinking fund
obligations.
20. Indenture
The Company shall furnish to any Holder of record of PHONES, upon
written request and without charge, a copy of the Indenture.
21. Governing Law
The Indenture and this PHONES each shall be governed by and
construed in accordance with the laws of the State of Wisconsin without regard
to principles of conflicts of law.
22. Authentication
Unless the certificate of authentication hereon has been executed
by the Trustee by manual signature, this PHONES shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
24
<PAGE>
In Witness Whereof, Alliant Energy Resources, Inc. has caused
this PHONES to be signed in its corporate name by the facsimile signature of two
of its officers thereonto duly authorized and has caused a facsimile of its
corporate seal to be affixed hereto or imprinted or otherwise reproduced hereon.
ALLIANT ENERGY RESOURCES, INC.
ATTEST:
By: __________________________________ By: __________________________________
Name: Name:
Title: Title:
25
<PAGE>
FOR VALUE RECEIVED, the Guarantor, hereby unconditionally
guarantees to the Holder of the Security upon which this Guarantee is endorsed
the due and punctual payment of the principal, of premium, if any, or interest
on said Security, when and as the same shall be become due and payable, whether
at maturity, upon redemption or otherwise, according to the terms thereof and of
the Indenture referred to therein.
The Guarantor agrees to determine, at least one business day
prior to the date upon which a payment of principal, of premium, if any, or
interest on said Security is due and payable, whether the Company has available
the funds to make such payment as the same shall become due and payable. In case
of the failure of the Company punctually to pay any such principal, premium, if
any, or interest, the Guarantor hereby agrees to cause any such payment to be
made punctually when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, and as if such payment were made by the
Company.
The Guarantor hereby agrees that its obligations hereunder shall
be unconditional, irrevocable and absolute, irrespective of the validity,
regularity or enforceability of said Security or said Indenture, the absence of
any action to enforce the same, any waiver or consent by the Holder of said
Security with respect to any provisions thereof, the recovery of any judgment
against the Company or any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company,
protest or notice with respect to said Security or indebtedness evidenced
thereby, and all demands whatsoever and covenants that this Guarantee will not
be discharged except by complete performance of the obligations contained in
said Security and in this Guarantee.
The Guarantor shall be subrogated to all rights of the Holder of
said Security against the Company in respect to any amounts paid by the
Guarantor pursuant to the provisions of this Guarantee; provided, however, that
the Guarantor shall not, without the consent of the Holders of all of the
Securities then outstanding, 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 Securities shall have been paid in full
or payment thereof shall have been provided for in accordance with said
Indenture.
Notwithstanding anything to the contrary contained herein, if
following any payment of principal or interest by the Company on the Securities
to the Holders of the
26
<PAGE>
Securities it is determined by a final decision of a court of competent
jurisdiction that such payment shall be avoided by a trustee in bankruptcy
(including any debtor-in-possession) as a preference under 11 U.S.C. Section 547
and such payment is paid by such Holder to such trustee in bankruptcy, then and
to the extent of such repayment the obligations of the Guarantor hereunder shall
remain in full force and effect.
This Guarantee shall not be valid or become obligatory for any
purpose with respect to a Security until a certificate of authentication on such
Security shall have been signed by the Trustee (or the authenticating agent).
This Guarantee shall be governed by the laws of the State of
Wisconsin.
IN WITNESS WHEREOF, ALLIANT ENERGY CORPORATION has caused this
Guarantee to be signed in its corporate name by the signature of two of its
officers thereunto duly authorized and has caused its corporate seal to be
affixed hereto or imprinted or otherwise reproduced hereon.
ALLIANT ENERGY CORPORATION,
as Guarantor
ATTEST:
By: _________ ________________________ By: __________________________________
Name: Name:
Title: Title:
27
<PAGE>
TRUSTEE CERTIFICATE OF AUTHENTICATION
This is one of the PHONES described in the within-named Indenture.
FIRSTAR BANK, N.A.,
as Trustee
By: ________________________________
Name:
Title:
28
Execution Copy
================================================================================
Registration Rights Agreement
Dated as of February 1, 2000
among
Alliant Energy Resources, Inc.,
ALLIANT ENERGY CORPORATION
and
MERRILL LYNCH & CO.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into this 1st day of February, 2000, among Alliant Energy Resources,
Inc., a Wisconsin corporation (the "Company"), Alliant Energy Corporation, a
Wisconsin corporation (the "Parent"), and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
January 26, 2000, among the Company, the Parent, as guarantor, and the Initial
Purchaser (the "Purchase Agreement"), which provides for the sale by the Company
to the Initial Purchaser of 5,166,052 (or 5,940,960 if the over-allotment option
is exercised in full) Exchangeable Senior Notes due 2030 (the "Securities"). In
order to induce the Initial Purchaser to enter into the Purchase Agreement, the
Company and the Parent have agreed to provide to the Initial Purchaser and their
direct and indirect transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of l934,
as amended from time to time.
"Agreement" shall have the meaning set forth in the
preamble.
"Closing Date" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble
and shall also include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Company, provided, however, that
such
<PAGE>
depositary must have an address in the Borough of Manhattan, in the
City of New York.
"Effectiveness Period" shall have the meaning set forth in
Section 2.2 hereof.
"Exchange Offer" shall mean the exchange offer by the
Company and the Parent of Exchange Securities for Registrable
Securities pursuant to Section 2.1 hereof.
"Exchange Offer Registration" shall mean a registration
under the 1933 Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if applicable,
on another appropriate form), and all amendments and supplements to
such registration statement, including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by
reference therein.
"Exchange Period" shall have the meaning set forth in
Section 2.1 hereof.
"Exchange Securities" shall mean the Securities, issued by
the Company under the Indenture containing terms identical to the
Securities in all respects (except for restrictions on transfers and
restrictive legends), to be offered to Holders of Registrable
Securities pursuant to the Exchange Offer.
"Holder" shall mean an Initial Purchaser, for so long as it
owns any Registrable Securities, and each of its successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture and each Participating
Broker-Dealer that holds Exchange Securities for so long as such
Participating Broker-Dealer is required to deliver a prospectus
meeting the requirements of the 1933 Act in connection with any resale
of such Exchange Securities.
"Indenture" shall mean the Indenture relating to, among
other debt securities, the Securities, dated as of November 4, 1999,
between the Company, the Parent and Firstar Bank, N.A., as trustee, as
the same may be amended, supplemented, waived or otherwise modified
from time to time in accordance with the terms thereof.
2
<PAGE>
"Initial Purchaser" shall have the meaning set forth in the
preamble.
"Majority Holders" shall mean the Holders of a majority of
the aggregate principal amount of Outstanding (as defined in the
Indenture) Registrable Securities; provided that whenever the consent
or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the
Company and other obligors on the Securities or any Affiliate (as
defined in the Indenture) of the Company shall be disregarded in
determining whether such consent or approval was given by the Holders
of such required percentage amount.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Parent" shall have the meaning set forth in the preamble
and shall also include the Parent's successors.
"Participating Broker-Dealer" shall mean Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and any other broker-dealer which
makes a market in the Securities and exchanges Registrable Securities
in the Exchange Offer for Exchange Securities.
"Person" shall mean an individual, partnership (general or
limited), corporation, limited liability company, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Private Exchange" shall have the meaning set forth in
Section 2.1 hereof.
"Private Exchange Securities" shall have the meaning set
forth in Section 2.1 hereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including any such prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, and by all other amendments
and supplements to a prospectus, including post-effective amendments,
and in each case including all material incorporated by reference
therein.
3
<PAGE>
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities and, if
issued, the Private Exchange Securities; provided, however, that the
Securities and, if issued, the Private Exchange Securities, shall
cease to be Registrable Securities when (i) a Registration Statement
with respect to such securities shall have been declared effective
under the 1933 Act and such securities shall have been disposed of
pursuant to such Registration Statement, (ii) such securities have
been sold to the public pursuant to Rule l44 (or any similar provision
then in force, but not Rule 144A) under the 1933 Act, (iii) such
securities shall have ceased to be outstanding or (iv) the Exchange
Offer is consummated (except in the case of Securities purchased from
the Company and continued to be held by the Initial Purchaser).
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company and the Parent
with this Agreement, including without limitation: (i) all SEC, stock
exchange or the NASD registration and filing fees, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained by any
holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws and
compliance with the rules of the NASD (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection
with blue sky qualification of any of the Exchange Securities or
Registrable Securities and any filings with the NASD), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating
to the performance of and compliance with this Agreement, (iv) all
fees and expenses incurred in connection with the listing, if any, of
any of the Registrable Securities on any securities exchange or
exchanges, (v) all rating agency fees, (vi) the fees and disbursements
of counsel for the Company and the Parent and of the independent
public accountants of the Company and the Parent, including the
expenses of any special audits or "cold comfort" letters required by
or incident to such performance and compliance, (vii) the fees and
expenses of the Trustee, and any escrow agent or custodian, (viii) in
the case of a Shelf Registration Statement, the reasonable fees and
disbursements of one special counsel designated in writing by the
Majority Holders to represent the Holders of Registrable Securities
and (ix) any fees and
4
<PAGE>
disbursements of the underwriters customarily required to be paid by
issuers or sellers of securities and the fees and expenses of any
special experts retained by the Company and the Parent in connection
with any Registration Statement, but excluding underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration
statement of the Company and the Parent which covers any of the
Exchange Securities or Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and supplements to
any such Registration Statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission or
any successor agency or government body performing the functions
currently performed by the United States Securities and Exchange
Commission.
"SEC Order" shall have the meaning set forth in Section 2.1.
"Securities" shall have the meaning set forth in the
preamble.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company and the Parent pursuant to the
provisions of Section 2.2 of this Agreement which covers all of the
Registrable Securities or all of the Private Exchange Securities on an
appropriate form under Rule 415 under the 1933 Act, or any similar
rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"TIA" shall mean Trust Indenture Act of 1939, as amended.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
"Underwriter" shall have the meaning set forth in Section 4
hereof.
5
<PAGE>
2. Registration Under the 1933 Act.
2.1 Exchange Offer. Except as provided in Section 2.2 and to the
extent not prohibited by any applicable law or applicable interpretation of the
staff of the SEC, the Company and the Parent shall, for the benefit of the
Holders, at the cost of the Company and the Parent, (A) prepare and, as soon as
practicable but not later than 135 days following the Closing Date, use their
reasonable best efforts to file with the SEC an Exchange Offer Registration
Statement on an appropriate form under the 1933 Act with respect to a proposed
Exchange Offer and the issuance and delivery to the Holders, in exchange for the
Registrable Securities (other than Private Exchange Securities), of a like
principal amount of Exchange Securities, (B) use their reasonable best efforts
to cause the Exchange Offer Registration Statement to be declared effective
under the 1933 Act within 180 days of the Closing Date, (C) use their reasonable
best efforts to keep the Exchange Offer Registration Statement effective until
the closing of the Exchange Offer and (D) use their reasonable best efforts to
cause the Exchange Offer to be consummated not later than 45 days after the
effective date of the Exchange Offer Registration Statement. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company and the Parent shall promptly
commence the Exchange Offer, it being the objective of such Exchange Offer to
enable each Holder eligible and electing to exchange Registrable Securities for
Exchange Securities (assuming that such Holder (a) is not an affiliate of the
Company within the meaning of Rule 405 under the 1933 Act, (b) is not a
broker-dealer tendering Registrable Securities acquired directly from the
Company for its own account, (c) acquired the Exchange Securities in the
ordinary course of such Holder's business and (d) has no arrangements or
understandings with any Person to participate in the Exchange Offer for the
purpose of distributing the Exchange Securities) to transfer such Exchange
Securities from and after their receipt without any limitations or restrictions
under the 1933 Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the Parent
shall:
(a) mail as promptly as practicable to each Holder a copy of
the Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal and
related documents;
(b) keep the Exchange Offer open for acceptance for a period
of not less than 20 business days after the date notice thereof is
mailed to the Holders (or longer if required by applicable law) (such
period referred to herein as the "Exchange Period");
6
<PAGE>
(c) utilize the services of the Depositary for the Exchange
Offer;
(d) permit Holders to withdraw tendered Registrable
Securities at any time prior to 5:00 p.m. (Eastern Time), on the last
business day of the Exchange Period, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Securities delivered for exchange, and a statement that
such Holder is withdrawing such Holder's election to have such
Securities exchanged;
(e) notify each Holder that any Registrable Security not
tendered will remain outstanding and continue to accrue interest, but
will not retain any rights under this Agreement (except in the case of
the Initial Purchaser and Participating Broker-Dealers as provided
herein); and
(f) otherwise comply in all respects with all applicable
laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, the Initial
Purchaser holds any Securities acquired by it and having the status of an unsold
allotment in the initial distribution, the Company and the Parent upon the
request of the Initial Purchaser shall, simultaneously with the delivery of the
Exchange Securities in the Exchange Offer and subject to compliance with
applicable securities laws, issue and deliver to the Initial Purchaser in
exchange (the "Private Exchange") for the Securities held by the Initial
Purchaser, a like principal amount of debt securities of the Company on a senior
basis, that are identical (except that such securities shall bear appropriate
transfer restrictions) to the Exchange Securities (the "Private Exchange
Securities").
The Exchange Securities and the Private Exchange Securities shall
be issued under the Indenture which has been qualified under the TIA or is
exempt from such qualification and shall provide that the Exchange Securities
shall not be subject to the transfer restrictions set forth in the Indenture but
that the Private Exchange Securities shall be subject to such transfer
restrictions. The Indenture shall provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together
on all matters as one class and that none of the Exchange Securities, the
Private Exchange Securities or the Securities will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities shall
be of the same series as and the Company and the Parent shall use all
commercially reasonable efforts to have the Private Exchange Securities bear the
same CUSIP number as the Exchange Securities. Neither the Company nor the Parent
shall have any liability under this Agreement solely as
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<PAGE>
a result of such Private Exchange Securities not bearing the same CUSIP number
as the Exchange Securities.
As soon as practicable after the close of the Exchange Offer
and/or the Private Exchange, as the case may be, the Company and the Parent
shall:
(i) accept for exchange all Registrable Securities duly
tendered and not validly withdrawn pursuant to the Exchange Offer in
accordance with the terms of the Exchange Offer Registration Statement
and the letter of transmittal which shall be an exhibit thereto;
(ii) accept for exchange all Securities properly tendered
pursuant to the Private Exchange;
(iii) deliver to the Trustee for cancellation all
Registrable Securities so accepted for exchange; and
(iv) cause the Trustee promptly to authenticate and deliver
Exchange Securities or Private Exchange Securities, as the case may
be, to each Holder of Registrable Securities so accepted for exchange
in a principal amount equal to the principal amount of the Registrable
Securities of such Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange Security
will accrue from the last date on which interest was paid on the Registrable
Securities surrendered in exchange therefor or, if no interest has been paid on
the Registrable Securities, from the date of original issuance. The Exchange
Offer and the Private Exchange shall not be subject to any conditions, other
than (i) that the Exchange Offer or the Private Exchange, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer and the Private Exchange, (iii)
that each Holder of Registrable Securities exchanged in the Exchange Offer shall
have represented that all Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and that at the time of the
consummation of the Exchange Offer it shall have no arrangement or understanding
with any person to participate in the distribution (within the meaning of the
1933 Act) of the Exchange Securities and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or before
any governmental agency with respect to the Exchange Offer or the Private
Exchange which, in the
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judgment of the Company and the Parent, would reasonably be expected to impair
the ability of the Company and the Parent to proceed with the Exchange Offer or
the Private Exchange and that the Exchange Offer and the Private Exchange shall
comply with the provisions of the SEC's Release No. 35-27069, 70-9455 dated as
of August 26, 1999 by which the Parent and the Company are bound (the "SEC
Order"). The Company and the Parent shall inform the Initial Purchaser of the
names and addresses of the Holders to whom the Exchange Offer is made, and the
Initial Purchaser shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
2.2 Shelf Registration. (i) If the law, SEC rules or regulations
or applicable interpretations thereof by the staff of the SEC, U.S. Department
of the Treasury or the Internal Revenue Service do not permit or make it
impractical or inadvisable for the Company and the Parent to effect the Exchange
Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the
Exchange Offer Registration Statement is not declared effective within 180 days
following the Closing Date or the Exchange Offer is not consummated within 45
days after effectiveness of the Exchange Offer Registration Statement (provided
that if the Exchange Offer Registration Statement shall be declared effective
after such 180-day period or if the Exchange Offer shall be consummated after
such 45-day period, then the obligation of the Company and the Parent under this
clause (ii) arising from the failure of the Exchange Offer Registration
Statement to be declared effective within such 180-day period or the failure of
the Exchange Offer to be consummated within such 45-day period, respectively,
shall terminate), (iii) upon the request of the Initial Purchaser within 90 days
following the consummation of the Exchange Offer or (iv) if, as a result of any
changes in law, SEC rules or regulations or applicable interpretations thereof
by the staff of the SEC or otherwise, a Holder (other than the Initial Purchaser
holding securities acquired directly from the Company) is not permitted to
participate in the Exchange Offer or does not receive fully tradeable Exchange
Securities pursuant to the Exchange Offer, then in case of each of clauses (i)
through (iv) the Company and the Parent shall, at their cost:
(a) To the extent not prohibited by any applicable law or
applicable interpretations thereof by the staff of the SEC or
otherwise, as promptly as practicable, use their reasonable best
efforts to file with the SEC and thereafter to cause to be declared
effective as promptly as practicable but no later than 210 days after
the Closing Date, a Shelf Registration Statement relating to the offer
and sale of the Registrable Securities by the Holders from time to
time in accordance with the methods of distribution elected by the
Majority Holders participating in the Shelf Registration and set forth
in such Shelf Registration Statement.
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<PAGE>
(b) Use their reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period
of two years from the Closing Date, or for such shorter period that
will terminate when all Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding or otherwise to be
Registrable Securities (the "Effectiveness Period"); provided,
however, that the Effectiveness Period in respect of the Shelf
Registration Statement shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery
requirements of Rule 174 under the 1933 Act and as otherwise provided
herein.
(c) Notwithstanding any other provisions hereof, use their
reasonable best efforts to ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any supplement thereto complies in all material respects
with the 1933 Act and the rules and regulations thereunder, (ii) any
Shelf Registration Statement and any amendment thereto does not, when
it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
supplement to such Prospectus (as amended or supplemented from time to
time), does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading;
provided, however, that clauses (ii) and (iii) shall not apply to any
information relating to the Initial Purchaser or any Holder furnished
to the Company in writing by the Initial Purchaser or Holder expressly
for use in the Shelf Registration Statement.
The Company and the Parent further agree, if necessary, to
supplement or amend the Shelf Registration Statement, as required by Section
3(b) below, and to furnish to the Holders of Registrable Securities copies of
any such supplement or amendment promptly after its being used or filed with the
SEC.
2.3 Expenses. The Company and the Parent shall pay all
Registration Expenses in connection with the registration pursuant to Section
2.1 or 2.2. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
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<PAGE>
2.4. Effectiveness.
(a) The Company and the Parent will be deemed not to have used
their reasonable best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to
become, or to remain, effective during the requisite period if the
Company and the Parent voluntarily take any action that would, or omit
to take any action which omission would, result in any such
Registration Statement not being declared effective or in the Holders
of Registrable Securities covered thereby not being able to exchange
or offer and sell such Registrable Securities during that period as
and to the extent contemplated hereby, unless such action is required
by applicable law, as contemplated by clause (i) of Section 2.2, or,
in the case of the Exchange Offer Registration Statement, such action
would violate the provisions of the SEC Order.
(b) An Exchange Offer Registration Statement pursuant to Section
2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2
hereof will not be deemed to have become effective unless it has been
declared effective by the SEC; provided, however, that if, after it
has been declared effective, the offering of Registrable Securities
pursuant to an Exchange Offer Registration Statement or a Shelf
Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be
deemed not to have become effective during the period of such
interference, until the offering of Registrable Securities pursuant to
such Registration Statement may legally resume.
(c) Notwithstanding anything in this Agreement to the contrary,
during the Effectiveness Period, upon notice to the Holders of the
Securities (as described in Section 3(e)(viii) hereunder), the Company
and the Parent may suspend the availability of the Shelf Registration
Statement for up to two (2) periods of up to 30 consecutive days each,
but not more than an aggregate of 30 days during any 365-day period,
if the board of directors of the Company and the Parent in their
respective reasonable judgments believe that they may possess material
non-public information that makes it advisable to so suspend the
availability of the Shelf Registration Statement.
3. Registration Procedures.
In connection with and subject to the rights and the obligations
of the Company and the Parent with respect to Registration Statements pursuant
to Sections 2.1, 2.2 and 2.4(c) hereof, the Company and the Parent shall:
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<PAGE>
(a) prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on the
appropriate form under the 1933 Act, which form (i) shall be selected
by the Company and the Parent, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities
by the selling Holders thereof, (iii) shall comply as to form in all
material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required
by the SEC to be filed therewith or incorporated by reference therein
and (iv) shall comply in all material respects with the requirements
of Regulation S-T under the 1933 Act, and use their reasonable best
efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary under applicable law to keep such Registration Statement
effective for the applicable period; and cause each Prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provision then in force) under the 1933 Act and comply with the
provisions of the 1933 Act, the 1934 Act and the rules and regulations
thereunder applicable to them with respect to the disposition of all
securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder
of Registrable Securities, at least five business days prior to
filing, that a Shelf Registration Statement with respect to the
Registrable Securities is being filed and advising such Holders that
the distribution of Registrable Securities will be made in accordance
with the method selected by the Majority Holders participating in the
Shelf Registration; (ii) furnish to each Holder of Registrable
Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment
or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, including financial statements and
schedules and, if the Holder so requests, all exhibits in order to
facilitate the public sale or other disposition of the Registrable
Securities; and (iii) hereby consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
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<PAGE>
(d) use their reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement and each underwriter of
an underwritten offering of Registrable Securities shall reasonably
request by the time the applicable Registration Statement is declared
effective by the SEC, and do any and all other acts and things which
may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that neither the Company nor the Parent shall be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), or (ii) take any action
which would subject it to general service of process or taxation in
any such jurisdiction where it is not then so subject;
(e) notify promptly each Holder of Registrable Securities under a
Shelf Registration or any Participating Broker-Dealer who has notified
the Company and the Parent that it is utilizing the Exchange Offer
Registration Statement as provided in paragraph (f) below and, if
requested by such Holder or Participating Broker-Dealer, confirm such
advice in writing promptly (i) when a Registration Statement has
become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any request by the SEC
or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Securities covered thereby, the representations and
warranties of the Company and the Parent contained in any underwriting
agreement, securities sales agreement or other similar agreement, if
any, relating to the offering cease to be true and correct in all
material respects, (v) of the happening of any event or the discovery
of any facts during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration
Statement or the related Prospectus untrue in any material respect or
which requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not
misleading, (vi) of the receipt by the Company or the Parent of any
notification with respect to the suspension of the qualification of
the Registrable Securities or the Exchange Securities, as the case may
be, for sale
13
<PAGE>
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, (vii) of any determination by the Company and the
Parent that a post-effective amendment to such Registration Statement
would be appropriate and (viii) of any determination to suspend the
use of the Shelf Registration Statement under Section 2.4(c);
(f) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution" which section shall be reasonably
acceptable to Merrill Lynch on behalf of the Participating
Broker-Dealers, and which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with respect
to the potential "underwriter" status of any broker-dealer that holds
Registrable Securities acquired for its own account as a result of
market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of Exchange Securities to be received by such broker-dealer in the
Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of Merrill Lynch on behalf of the
Participating Broker-Dealers and its counsel, represent the prevailing
views of the staff of the SEC, including a statement that any such
broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the requirements of
the 1933 Act in connection with any resale of such Exchange
Securities, (ii) furnish to each Participating Broker-Dealer who has
delivered to the Company and the Parent the notice referred to in
Section 3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as
such Participating Broker-Dealer may reasonably request, (iii) hereby
consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto,
by any Person subject to the prospectus delivery requirements of the
SEC, including all Participating Broker-Dealers, in connection with
the sale or transfer of the Exchange Securities covered by the
Prospectus or any amendment or supplement thereto, and (iv) include in
the transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as
a result of market-making activities or other trading
activities,
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<PAGE>
it will deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of
Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer;"
and
(y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus
in connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration
Statement, the Company and the Parent agree to deliver to the Initial
Purchaser on behalf of the Participating Broker-Dealers upon the
effectiveness of the Exchange Offer Registration Statement (i) an
opinion of counsel or opinions of counsel substantially in the form
attached hereto as Exhibit A, (ii) officers' certificates
substantially in the form customarily delivered in a public offering
of debt securities and (iii) a comfort letter or comfort letters in
customary form to the extent permitted by Statement on Auditing
Standards No. 72 of the American Institute of Certified Public
Accountants (or if such a comfort letter is not permitted, an agreed
upon procedures letter in customary form) from the independent
certified public accountants of the Company and the Parent (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or the Parent or of any business acquired by
the Company or the Parent for which financial statements are, or are
required to be, included in the Registration Statement) at least as
broad in scope and coverage as the comfort letter or comfort letters
delivered to the Initial Purchaser in connection with the initial sale
of the Securities to the Initial Purchaser;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchaser and (ii) in the case of a Shelf Registration,
furnish counsel for the Holders of Registrable Securities copies of
any comment letters received from the SEC or any other request by the
SEC or any state securities authority for amendments or supplements to
a Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder
of Registrable Securities, and each underwriter, if any, without
charge, at least one
15
<PAGE>
conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference and all exhibits
thereto, unless requested);
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in
such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing
of any sale of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of
any event or the discovery of any facts, each as contemplated by
Sections 3(e)(v), 3(e)(vi) and 3(e)(viii) hereof, as promptly as
practicable after the occurrence of such an event, use their
reasonable best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers
of the Registrable Securities or Participating Broker-Dealers, such
Prospectus will not contain at the time of such delivery any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or will
remain so qualified. At such time as such public disclosure is
otherwise made or the Company and the Parent determine that such
disclosure is not necessary, in each case to correct any misstatement
of a material fact or to include any omitted material fact, the
Company and the Parent agree promptly to notify each Holder of such
determination and to furnish each Holder such number of copies of the
Prospectus as amended or supplemented, as such Holder may reasonably
request;
(l) in the case of a Shelf Registration, a reasonable time prior
to the filing of any Registration Statement, any Prospectus, any
amendment to a Registration Statement or amendment or supplement to a
Prospectus or any document which is to be incorporated by reference
into a Registration Statement or a Prospectus after initial filing of
a Registration Statement, provide copies of such document to the
Initial Purchaser on behalf of such Holders; and make representatives
of the Company and the Parent as shall be reasonably requested by the
Holders of Registrable Securities, or the Initial Purchaser on behalf
of such Holders, available for discussion of such document upon
reasonable advance
16
<PAGE>
notice. In connection with such discussions, the Holders or the
Initial Purchaser, on behalf of such Holders, shall use their
reasonable best efforts to minimize any disruption to the business of
the Company and the Parent;
(m) obtain a CUSIP number for all Exchange Securities, Private
Exchange Securities or Registrable Securities, as the case may be, not
later than the effective date of a Registration Statement, and provide
the Trustee with certificates for the Exchange Securities, Private
Exchange Securities or the Registrable Securities, as the case may be,
in a form eligible for deposit with the Depositary;
(n) (i) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Securities or
Registrable Securities, as the case may be, (ii) cooperate with the
Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with
the terms of the TIA and (iii) execute, and use their reasonable best
efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(o) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and
appropriate actions in order to expedite or facilitate the disposition
of such Registrable Securities and in such connection whether or not
an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(i) make such representations and warranties to the Holders
of such Registrable Securities and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be
reasonably requested by them;
(ii) obtain opinions of counsel to the Company and the
Parent and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority in
principal amount of the Registrable Securities being sold)
addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
sales of securities or underwritten offerings and
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<PAGE>
such other matters as may be reasonably requested by such Holders
and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company and
the Parent (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or the Parent
or of any business acquired by the Company or the Parent for
which financial statements are, or are required to be, included
in the Registration Statement) addressed to the underwriters, if
any, and use reasonable efforts to have such letter addressed to
the selling Holders of Registrable Securities (to the extent
consistent with Statement on Auditing Standards No. 72 of the
American Institute of Certified Public Accountants), such letters
to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the
Holders and an agent of the Holders providing for, among other
things, the appointment of such agent for the selling Holders for
the purpose of soliciting purchases of Registrable Securities,
which agreement shall be in form, substance and scope customary
for similar offerings;
(v) if an underwriting agreement is entered into, cause the
same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and
procedures set forth in Section 4 hereof with respect to the
underwriters and all other parties to be indemnified pursuant to
said Section or, at the request of any underwriters, in the form
customarily provided to such underwriters in similar types of
transactions; and
(vi) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings to the Holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters,
if any.
The above shall be done at (i) the effectiveness of such Registration
Statement (and each post-effective amendment thereto) and (ii) each closing
under any underwriting or similar agreement as and to the extent required
thereunder;
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<PAGE>
(p) in the case of a Shelf Registration or if a Prospectus is
required to be delivered by any Participating Broker-Dealer in the
case of an Exchange Offer, make available for inspection by
representatives of the Holders of the Registrable Securities, any
underwriters participating in any disposition pursuant to a Shelf
Registration Statement, any Participating Broker-Dealer and any
counsel or accountant retained by any of the foregoing, all financial
and other records, pertinent corporate documents and properties of the
Company and the Parent reasonably requested by any such persons, and
cause the respective officers, directors, employees, and any other
agents of the Company and the Parent to supply all information
reasonably requested by any such representative, underwriter, special
counsel or accountant in connection with a Registration Statement, and
make such representatives of the Company and the Parent available for
discussion of such documents as shall be reasonably requested by the
Initial Purchaser;
(q) (i) in the case of an Exchange Offer Registration Statement,
a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to the
Initial Purchaser and to counsel to the Holders of Registrable
Securities and make such changes in any such document prior to the
filing thereof as the Initial Purchaser or counsel to the Holders of
Registrable Securities may reasonably request and, except as otherwise
required by applicable law, not file any such document in a form to
which the Initial Purchaser on behalf of the Holders of Registrable
Securities and counsel to the Holders of Registrable Securities shall
not have previously been advised and furnished a copy of or to which
the Initial Purchaser on behalf of the Holders of Registrable
Securities or counsel to the Holders of Registrable Securities shall
reasonably object, and make the representatives of the Company and the
Parent available for discussion of such documents as shall be
reasonably requested by the Initial Purchaser; and
(ii) in the case of a Shelf Registration, a reasonable time prior
to filing any Shelf Registration Statement, any Prospectus forming a
part thereof, any amendment to such Shelf Registration Statement or
amendment or supplement to such Prospectus, provide copies of such
document to the Holders of Registrable Securities, to the Initial
Purchaser, to counsel for the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable Securities, if
any, make such changes in any such document prior to the filing
thereof as the Initial Purchaser, the counsel to the Holders or the
underwriter or underwriters reasonably request and not file any such
document in a form to
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<PAGE>
which the Majority Holders, the Initial Purchaser on behalf of the
Holders of Registrable Securities, counsel for the Holders of
Registrable Securities or any underwriter shall not have previously
been advised and furnished a copy of or to which the Majority Holders,
the Initial Purchaser of behalf of the Holders of Registrable
Securities, counsel to the Holders of Registrable Securities or any
underwriter shall reasonably object, and make the representatives of
the Company and the Parent available for discussion of such document
as shall be reasonably requested by the Holders of Registrable
Securities, the Initial Purchaser on behalf of such Holders, counsel
for the Holders of Registrable Securities or any underwriter.
(r) following effectiveness of a Registration Statement, use
their reasonable best efforts to cause all Exchange Securities to be
listed on the New York Stock Exchange if requested by the Majority
Holders, or if requested by the underwriter or underwriters of an
underwritten offering of Exchange Securities, if any;
(s) in the case of a Shelf Registration, use their reasonable
best efforts to cause the Registrable Securities to be rated by the
appropriate rating agencies, if so requested by the Majority Holders,
or if requested by the underwriter or underwriters of an underwritten
offering of Registrable Securities, if any;
(t) otherwise comply with all applicable rules and regulations of
the SEC and make available to its security holders, as soon as
reasonably practicable, an earnings statement of the Parent covering
at least 12 months which shall satisfy the provisions of Section 11(a)
of the 1933 Act and Rule 158 thereunder;
(u) cooperate and assist in any filings required to be made with
the NASD and, in the case of a Shelf Registration, in the performance
of any due diligence investigation by any underwriter and its counsel
(including any "qualified independent underwriter" that is required to
be retained in accordance with the rules and regulations of the NASD);
and
(v) upon consummation of an Exchange Offer or a Private Exchange,
obtain a customary opinion of counsel to the Company and the Parent
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or Private Exchange,
and which includes an opinion that (i) each of the Company and the
Parent has duly authorized, executed and delivered the Exchange
Securities and/or Private Exchange Securities, as applicable, and the
related indenture, and (ii) each of the Exchange Securities and
related indenture constitute a legal, valid and binding obligation of
the Company and the Parent, enforceable against the Company
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<PAGE>
and the Parent in accordance with its respective terms (with customary
exceptions).
In the case of a Shelf Registration Statement, the Company and
the Parent may (as a condition to such Holder's participation in the Shelf
Registration) require each Holder of Registrable Securities (i) to furnish to
the Company and the Parent such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Parent may from time to time reasonably request and (ii) to
agree in writing to be bound by this Agreement, including the indemnification
provisions.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company and the Parent of the
happening of any event or the discovery of any facts, each of the kind described
in Sections 3(e)(v) and 3(e)(viii) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by
the Company and the Parent, such Holder will deliver to the Company and the
Parent (at its expense) all copies in such Holder's possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company and the Parent.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
4. Indemnification; Contribution.
(a) The Company and the Parent jointly and severally agree to
indemnify and hold harmless the Initial Purchaser, each Holder, each
Participating Broker-Dealer, each Person who participates as an
underwriter (any such Person being an "Underwriter") and each Person,
if any, who controls any Holder or Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
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(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment or
supplement thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 4(d) below) any such
settlement is effected with the written consent of the Company
and the Parent; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any
indemnified party), reasonably incurred in investigating,
preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not
paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information furnished to the Company by the Holder or Underwriter
expressly for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
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<PAGE>
(b) Each Holder severally, but not jointly, agrees to indemnify
and hold harmless the Company, the Parent, the Initial Purchaser, each
Underwriter and the other selling Holders, and each of their
respective directors and officers, and each Person, if any, who
controls the Company, the Parent, the Initial Purchaser, any
Underwriter or any other selling Holder within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Shelf Registration Statement (or any amendment
thereto) or any Prospectus included therein (or any amendment or
supplement thereto) in reliance upon and in conformity with written
information with respect to such Holder furnished to the Company by
such Holder expressly for use in the Shelf Registration Statement (or
any amendment thereto) or such Prospectus (or any amendment or
supplement thereto); provided, however, that no such Holder shall be
liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure so to notify an indemnifying party shall
not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in
any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action
or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. In
addition, the indemnifying party shall be entitled to, to the extent
that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense of any claim or action brought against an
indemnified party with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under this Section 7 for any legal or other expenses
23
<PAGE>
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation;
provided, however, that the Initial Purchaser shall have the right to
employ one counsel to represent it and its officers, employees and
controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Initial
Purchaser against the Company and the Parent under this Section 4 if,
in the reasonable judgment of the Initial Purchaser, either (i) there
is an actual or potential conflict between the position of the Company
and the Parent on the one hand and the Initial Purchaser on the other
hand or (ii) there may be defenses available to it or them that are
different from or additional to those available to the Company and
Parent (in any of which events the Company shall not have the right to
direct the defense of such action on behalf of the Initial Purchaser
with respect to such different defenses), in any of which events such
reasonable fees and expenses shall be borne by the Company and Parent.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of
any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4
(whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section
4(a)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for
any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount of such
24
<PAGE>
losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate
to reflect the relative fault of the Company and the Parent on the one
hand and the Holders and the Initial Purchaser on the other hand in
connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative fault of the Company and the Parent on the one hand
and the Holders and the Initial Purchaser on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Parent, the Holders or
the Initial Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Parent, the Holders and the Initial Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 4 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 4. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 4 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total price at which the Securities sold by it were offered exceeds
the amount of any damages which the Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls
the Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the
Initial Purchaser or Holder, and each director of the Company, the Parent and
each Person, if any, who controls the
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<PAGE>
Company or the Parent within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company and the Parent.
5. Miscellaneous.
5.1 Rule 144 and Rule 144A. For so long as the Parent is subject
to the reporting requirements of Section 13 or 15 of the 1934 Act, the Parent
covenants that it will file the reports required to be filed by it under the
1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Parent ceases to be so
required to file such reports, the Parent covenants that it will upon the
request of any Holder of Registrable Securities (a) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the 1933
Act, (b) deliver such information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the 1933 Act and it will take such
further action as any Holder of Registrable Securities may reasonably request,
and (c) take such further action that is reasonable in the circumstances, in
each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under the 1933 Act within
the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act,
as such Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Parent will deliver to such Holder a written
statement as to whether it has complied with such requirements. The Company
shall not be subject to the requirements of this Section 5.1, provided, that, it
obtains no-action relief from the SEC regarding its reporting requirements under
Section 13 or 15 of the 1934 Act and under the 1933 Act.
5.2 No Inconsistent Agreements. Neither the Company nor the
Parent has entered into and neither the Company nor the Parent will after the
date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not and will not for the term of this Agreement in any way
conflict with the rights granted to the holders of the Company's or the Parent's
other issued and outstanding securities under any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Parent have obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure.
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<PAGE>
5.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company or the Parent, as the case may be, by means of a notice given in
accordance with the provisions of this Section 5.4, which address initially is
the address set forth in the Purchase Agreement with respect to the Initial
Purchaser; (b) if to the Company, initially at the Company's address set forth
in the Purchase Agreement, and thereafter at such other address of which notice
is given in accordance with the provisions of this Section 5.4 and (c) if to the
Parent, initially at the Parent's address set forth in Purchase Agreement, and
thereafter at such other address of which notice is given in accordance with the
provisions of this Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial Purchaser (even if the
Initial Purchaser is not a Holder of Registrable Securities) shall be a third
party beneficiary to the agreements made hereunder between the Company and the
Parent, on the one hand, and the Holders, on the other hand, and shall have the
right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a
27
<PAGE>
third party beneficiary to the agreements made hereunder between the Company and
the Parent, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights hereunder.
5.7. Specific Enforcement. Without limiting the remedies
available to the Initial Purchaser and the Holders, the Company and the Parent
acknowledge that any failure by the Company and the Parent to comply with its
obligations under Sections 2.1 through 2.4 hereof may result in material
irreparable injury to the Initial Purchaser or the Holders for which there is no
adequate remedy at law, that it would not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the obligations of the Company and the Parent under
Sections 2.1 through 2.4 hereof.
5.8. Restriction on Resales. Until the expiration of two years
after the original issuance of the Securities and the related guarantees, the
Company and the Parent will not, and will cause their "affiliates" (as such term
is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any Securities
and related guarantees which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by
any of them and shall immediately upon any purchase of any such Securities and
related guarantees submit such Securities and related guarantees to the Trustee
for cancellation.
5.9 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.10 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
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<PAGE>
5.12 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
ALLIANT ENERGY RESOURCES, INC.
By: /s/ Edward M. Gleason
----------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
ALLIANT ENERGY CORPORATION,
By: /s/ Edward M. Gleason
----------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Mary E. Ryan
----------------------------------
Name: Mary E. Ryan
Title: Vice President
30
<PAGE>
Exhibit A
Form of Opinion of Counsel
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have acted as counsel for Alliant Energy Resources, Inc., a
Wisconsin corporation (the "Company"), and Alliant Energy Corporation, a
Wisconsin corporation (the "Parent"), in connection with the sale by the Company
to the Initial Purchaser (as defined below) of 5,166,052 (or 5,940,960 if the
over-allotment option is exercised in full) Exchangeable Senior Notes Due 2030
of the Company pursuant to the Purchase Agreement dated January 26, 2000 (the
"Purchase Agreement") among the Company, the Parent, as guarantor and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Initial Purchaser") and the
filing by the Company and the Parent of an Exchange Offer Registration Statement
(the "Registration Statement") in connection with an Exchange Offer to be
effected pursuant to the Registration Rights Agreement (the "Registration Rights
Agreement"), dated February 1, 2000 among the Company, the Parent and the
Initial Purchaser. This opinion is furnished to you pursuant to Section 3(f)(B)
of the Registration Rights Agreement. Unless otherwise defined herein,
capitalized terms used in this opinion that are defined in the Registration
Rights Agreement are used herein as so defined.
We have examined such documents, records and matters of law as we
have deemed necessary for purposes of this opinion. In rendering this opinion,
as to all matters of fact relevant to this opinion, we have assumed the
completeness and accuracy of, and are relying solely upon, the representations
and warranties of the Company and the Parent set forth in the Purchase Agreement
and the statements set forth in certificates of public officials and officers of
the Company and the Parent, without making any independent investigation or
inquiry with respect to the completeness or accuracy of such representations,
warranties or statements, other than a review of the certificate of
incorporation, by-laws and relevant minute books of the Company and the Parent.
<PAGE>
Based on and subject to the foregoing, we are of the opinion
that:
1. The Exchange Offer Registration Statement and the Prospectus
(other than the financial statements, notes or schedules thereto and other
financial and statistical data and supplemental schedules included or
incorporated by reference therein or omitted therefrom and the Form T-1, as to
which such counsel need express no opinion), comply as to form in all material
respects with the requirements of the 1933 Act and the applicable rules and
regulations promulgated under the 1933 Act.
We have participated in the preparation of the Registration
Statement and the Prospectus and in the course thereof have had discussions with
representatives of the Underwriters, officers and other representatives of the
Company, the Parent and Arthur Andersen LLP, the independent certified public
accountants of the Company and the Parent, during which the contents of the
Registration Statement and the Prospectus were discussed. We have not, however,
independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus. Based on our
participation as described above, nothing has come to our attention that would
lead us to believe that the Registration Statement (except for financial
statements and schedules and other financial and statistical data included
therein as to which we make no statement) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial and statistical data included
therein, as to which such counsel need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
This opinion is being furnished to you solely for your benefit in
connection with the transactions contemplated by the Registration Rights
Agreement, and may not be used for any other purpose or relied upon by any
person other than you. Except with our prior written consent, the opinions
herein expressed are not to be used, circulated, quoted or otherwise referred to
in connection with any transactions other than those contemplated by the
Registration Rights Agreement by or to any other person.
Very truly yours,
2
