As filed with the Securities and Exchange Commission on November 10, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CINCINNATI BELL INC.
(Exact name of registrant as specified in its charter)
Ohio 31-1056105
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
Telephone: (513) 397-9900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------------
THOMAS E. TAYLOR, ESQ.
Cincinnati Bell Inc.
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
Telephone: (513) 397-9900
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------------------
Copies To:
ROBERT A. KINDLER, ESQ.
ROBERT I. TOWNSEND, III, ESQ.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
---------
Approximate date of commencement of proposed sale to public: At such time
or times after the Registration Statement becomes effective as the Selling
holders may determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed
Maximum Proposed
Offering Maximum
Title of Each Price Aggregate Amount of
Class of Securities Amount to Per Offering Registration
to be Registered be Registered(1) Security(1) Price(1) Fee
6 3/4% Convertible
Subordinated Notes
due 2009 $400,000,000 100% $400,000,000 $111,200.00
Common Stock, $.01
par value (including
the associated
preferred stock 18,650,385 -- -- --
purchase rights)(3) shares(2)
==============================================================================
(1) Equals the aggregate principal amount at issuance of the securities being
registered; the aggregate principal amount of such securities will
accrete at the rate of 6 3/4% per annum until July 21, 2004. Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457 under the Securities Act.
(2) Such number represents the number of shares of Common Stock that are
issuable upon conversion of the Notes at maturity; pursuant to Rule 416
under the Securities Act, the Registrant is also registering such
indeterminate number of shares of common stock as may be issued from time
to time upon conversion of the Notes as a result of the antidilution
provisions of the Notes. Pursuant to Rule 457(i), no registration fee is
required for these shares.
(3) This Registration Statement also covers the associated preferred stock
purchase rights (the "Rights") issued pursuant to a Rights Agreement
dated as of April 29, 1997, as amended, between Cincinnati Bell and The
Fifth Third Bank, as rights agent. Prior to the occurrence of certain
events, the Rights will not be exercisable or evidenced separately from
Cincinnati Bell common stock.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
The information in this Prospectus is not complete and may be changed. The
selling holders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission relating to these securities
is effective. This Prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer
of sale is not permitted.
Preliminary Prospectus Subject to Completion, Dated November 10, 1999
$400,000,000
(original issue price)
Cincinnati Bell Inc.
6 3/4% Convertible Subordinated Notes due 2009
18,650,385 Shares of Common Stock Issuable Upon Conversion of the Notes
Associated Rights to Purchase Series A Preferred Shares
Note holders may sell the notes and the underlying common stock with its
associated preferred stock purchase rights. See "Plan of Distribution". The
notes have the following terms:
o We will pay cash interest on the notes on January 21 and July 21 of each
year, commencing on January 21, 2005.
o Prior to July 21, 2004, the value of the notes will accrete at the
rate of 6 3/4% per annum, compounded semi-annually.
o The notes will mature on July 21, 2009.
o The notes are subordinated to all of our existing and future senior
indebtedness.
o We may redeem some or all of the notes at any time after July 21, 2004,
at a redemption price equal to the principal amount of the notes we
redeem plus a premium and accrued interest.
o The redemption price is described beginning on page 10 of this
prospectus.
o Each note holder has the right to require us to repurchase all or a
portion of the holder's notes upon a change of control.
o Holders may convert their notes at any time prior to maturity or
redemption into shares of our common stock at a conversion price of
$29.89 per share, which is equivalent to a conversion rate of 33.456
shares per $1,000 principal amount of notes, and is subject to
adjustment.
Our common stock is listed on the New York Stock Exchange under the symbol
"CSN." The last reported sale price of our common stock on the New York Stock
Exchange on November 8, 1999 was $24 3/4 per share.
Investing in the notes or the common stock into which the notes are
convertible involves risk. See "Risk Factors" beginning on page 4 of
this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Prospectus dated , 1999.
---------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY................................................................... 2
RATIO OF EARNINGS TO FIXED CHARGES........................................ 4
RISK FACTORS.............................................................. 4
USE OF PROCEEDS........................................................... 8
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................................. 8
DESCRIPTION OF NOTES...................................................... 9
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS.......................... 17
SELLING HOLDERS........................................................... 22
PLAN OF DISTRIBUTION...................................................... 24
LEGAL MATTERS............................................................. 25
EXPERTS................................................................... 25
WHERE YOU CAN FIND MORE INFORMATION....................................... 26
---------------------------
<PAGE>
SUMMARY
This summary highlights selected information from this prospectus, but
does not contain all information that may be important to you. This prospectus
includes specific terms of the notes, information about our business and
financial data. We encourage you to read this prospectus in its entirety
before making an investment decision. In this prospectus we refer to
Cincinnati Bell Inc. and its wholly owned and majority-owned subsidiaries as
"we," "us" or "Cincinnati Bell," unless the context clearly indicates
otherwise.
About Cincinnati Bell
Cincinnati Bell is a full service, integrated communications company that
provides competitive local communications as well as data, Internet, wireless,
entertainment, directory, long distance and data networking services to
customers in the Cincinnati, Ohio metropolitan area and in many other
Midwestern cities.
The local communications services division provides local, long distance,
data networking and transport, Internet access and pay phone services, as well
as sales of communications equipment, in southwestern Ohio, northern Kentucky
and southeastern Indiana, to both residential and business customers. The
directory services division sells directory advertising and information
services primarily to customers in the geographic areas described above.
Cincinnati Bell also resells long distance and Internet access services and
provides data services and products to small- and medium-sized business
customers mainly in a five-state Midwestern area, and telecommunications and
computer equipment in the secondary market.
We are an Ohio corporation. Our principal executive offices are located
at 201 East Fourth Street, 102-760, Cincinnati, Ohio 45201-2301 and our
telephone number is (800) 345-6301.
Recent Developments
On November 9, 1999, we consummated our acquisition of IXC
Communications, Inc. IXC is a leading provider of data and voice
telecommunications transmission services. IXC owns and operates an advanced
coast-to-coast digital communications network that includes approximately
13,000 route miles of fiber optic transmission facilities. IXC's network-
based delivery solutions are designed to address the speed and capacity
requirements of the global telecommunications market. IXC offerings include
private line, fast packet (ATM and frame relay), Internet and long distance
switched and dedicated services. IXC is at the forefront of the industry's new
class of emerging domestic and international carriers. See "Where You Can Find
More Information."
The Offering
We present below a summary of this offering:
Securities Offered.................... $400,000,000 aggregate principal amount
at issuance of 6 3/4% convertible
subordinated note is due 2009 and
18,650,385 shares of our common stock
and the associated preferred stock
purchase rights issuable upon
conversion of the notes at maturity.
Maturity.............................. July 21, 2009.
Cash Interest Payment Dates........... January 21 and July 21, commencing
January 21, 2005.
Interest Rate......................... 6 3/4% per annum.
Accretion............................. Prior to January 21, 2004, the aggregate
principal amount of the notes will
accrete at the rate of 6 3/4% per annum,
compounded semi-annually.
Conversion............................ The notes are convertible at any time
prior to maturity or redemption into
shares of our common stock at a
conversion price of $29.89 per share,
which is equivalent to a conversion rate
of 33.456 shares per $1,000 principal
amount of notes, and is subject to
adjustment under the terms of the notes.
See "Description of Notes--Conversion
Rights."
Optional Redemption................... We may redeem some or all of the notes
at any time after July 21, 2004, at a
redemption price equal to the principal
amount of the notes we redeem plus a
premium and accrued interest. See
"Description of Notes--Redemption."
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<PAGE>
Subordination......................... The notes are subordinated in right of
payment to all of our, and our
subsidiaries', existing and future
senior debt and other obligations,
except for trade payables and
other accrued current liabilities. See
"Description of Notes--Subordination."
Security.............................. The notes are not secured.
Change of Control Repurchase Right.... Each note holder has the right to
require us to repurchase all or a
portion of the holder's notes upon a
change of control. See "Description of
Notes--Change of Control Repurchase."
Use of Proceeds....................... We will not receive any proceeds from
the sale by the note holders of the
notes and any common stock issuable upon
conversion of the notes. See "Use of
Proceeds."
Form and Denomination of Notes........ The notes were originally issued in
certificated form. The notes offered
pursuant to the offering contemplated by
this prospectus are represented by a
global note which has been deposited
with a custodian for, and registered in
the name of a nominee of, DTC in New
York City. Beneficial interests in the
global notes are shown on, and transfers
of the global notes will be effected
only through, records maintained by DTC
and its participants. See "Description
of Notes -- Book-Entry, Delivery and
Form."
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<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
We present below our ratio of earnings to fixed charges on a historical
basis for the years ended December 31, 1994 through 1998 and for the six
months ended June, 1999. Also presented below is our deficiency of earnings to
fixed charges for the year ended December 31, 1998 and for the six months
ended June 30, 1999 on a pro forma basis after giving effect to the
acquisition of IXC. For purposes of computing the ratio of earnings to fixed
charges (1) earnings consist of pretax income (loss) from continuing
operations, excluding minority interest in losses of consolidated subsidiaries
and equity investees income (losses), and (2) fixed charges consist of pretax
interest (including capitalized interest) on all indebtedness, amortization of
debt discount and expense, that portion of rental expense which Cincinnati
Bell and IXC believe to be representative of interest, and dividend
requirements on mandatorily redeemable preferred securities and preferred
dividends.
<TABLE>
<CAPTION>
Pro Forma
Six Months Ended Year Ended Six Months Ended
Year Ended December 31, June 30, December 31 June 30,
-------------------------------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges... 2.5 -- 6.0 5.7 5.5 3.6 -- --
Deficiency of earnings to fixed
charges.............................. -- $45.1 -- -- -- -- $58.2 $126.9
(in millions)
</TABLE>
RISK FACTORS
In evaluating Cincinnati Bell's business, prospective investors should
carefully consider the following risk factors in addition to the other
information presented in this prospectus.
Risk Factors Relating to the Merger of Cincinnati Bell and IXC
o The integration of Cincinnati Bell and IXC following the merger will
present significant challenges. Cincinnati Bell and IXC will face
significant challenges in consolidating functions, integrating their
organizations, procedures, operations and product lines in a timely and
efficient manner, and retaining key Cincinnati Bell and IXC personnel.
The integration of Cincinnati Bell and IXC will be complex and
time-consuming. The failure to successfully integrate Cincinnati Bell and
IXC and to successfully manage the challenges presented by the
integration process may result in Cincinnati Bell and IXC not achieving
the anticipated potential benefits of the merger.
o The merger may cause customers to delay purchasing decisions. There can
be no assurance that the customers of each of Cincinnati Bell and IXC
will continue to use and purchase Cincinnati Bell's or IXC's products or
services as they have in the past without regard to the merger.
Uncertainties regarding new product development by the combined company,
for example, may cause customers to delay purchasing decisions.
Regulatory and Competitive Risks
o Changes in the regulation of the industry present legal uncertainty and
have the potential to increase competition. Some of our operations are
regulated by the Federal Communications Commission (FCC) under the
Communications Act of 1934. In addition, some of our businesses are
regulated by state public utility or public service commissions.
Regulatory or interpretive changes in existing legislation or new
legislation that affects our operations could have a material adverse
effect on our business, financial condition and results of operations.
o The consequences of the Telecommunications Act of 1996 have yet to be
fully determined. In February 1996, Congress enacted the
Telecommunications Act of 1996 (the "1996 Act"), the primary purpose of
which was to introduce greater competition into the market for
telecommunications services. The 1996 Act seeks to facilitate competition
by eliminating many of the legal and regulatory barriers that, until
then, had operated to restrict competitive entry in the areas of local
exchange telephone service, long distance telephone service, and cable
television service. Since February 1996, the FCC has initiated numerous
rulemaking proceedings to adopt regulations pursuant to the 1996 Act.
Some of these regulations have already taken effect; others are currently
being challenged before various United States Circuit Courts of Appeal.
The 1996 Act and the FCC's rulemaking proceedings can be expected to
impact our in-territory local exchange operations in the form of greater
competition. However, these statutes and regulations also create
opportunities for us to expand the scope of our operations, both
geographically and in terms of products and services offered. At this
time, the full impact of the 1996 Act and any associated FCC regulations
cannot readily be determined.
o We are subject to Federal regulatory uncertainty. On February 25, 1999,
the FCC issued a Declaratory Ruling classifying dial-up traffic to
Internet service providers (ISPs) as interstate traffic. The FCC stated
this conclusion does not in itself determine whether reciprocal
compensation is due in any particular instance and that the parties
should be bound by their
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<PAGE>
existing interconnection agreements, as interpreted by state commissions.
In addition, the FCC issued a Notice of Proposed Rule Making, opening a
proceeding which will address, on a prospective basis, if Federal rules
are required to address reciprocal compensation issues for ISP traffic.
At this time, we cannot determine the full impact that the ultimate
outcome of the proceeding will have on the operations of Cincinnati Bell
Telephone ("CB Telephone"). CB Telephone is our principal local telephone
service operating company.
o We are subject to legal uncertainty with regards to certain Ohio state
regulation. In March 1998, CB Telephone, and several intervening parties
reached agreement on the terms of a proposed settlement of most of the
outstanding issues associated with CB Telephone's application for
approval of an alternative regulation plan known as CB Telephone's
Commitment 2000 plan. The proposed settlement was subsequently approved
by the Public Utilities Commission of Ohio ("PUCO") on April 9, 1998. The
terms of the Commitment 2000 plan approved by the PUCO include: the
elimination of rate- of-return regulation and greater pricing flexibility
for most services; no increase in basic residential access line rates for
the term of the plan; greater pricing flexibility for business services;
a 30% reduction in basic rates for qualified, low-income residential
consumers. The plan has an initial term of three and one-half years,
which can be extended up to two additional years at CB Telephone's
discretion so long as certain service quality benchmarks are maintained.
The portion of CB Telephone's alternative regulation case dealing with
the rates CB Telephone can charge to competitive local exchange carriers
for unbundled network elements is still pending. The hearing on this
portion of the case was conducted in March and April 1999. On November 4,
1999, the PUCO issued its Supplemental Opinion and Order, specifying
certain parameters and methods CB Telephone must use to set its rates for
unbundled network elements and requiring compliant cost studies within
three months. We have not yet been able to assess the full impact of this
decision on CB Telephone's rates, but believe that most rates will be
below the levels CB Telephone had requested, particularly with respect to
local loops. CB Telephone is considering whether to seek rehearing or an
appeal of the decision.
o We face regulation in Kentucky which may have a material adverse effect
on operations. On June 29, 1998, CB Telephone filed an application with
the Public Service Commission of Kentucky ("PSCK") seeking approval of an
alternative regulation plan similar to the Commitment 2000 plan approved
by the PUCO in Ohio. On January 25, 1999, the PSCK issued an order
approving the Kentucky alternative regulation plan with certain
modifications. One of the modifications was the adoption of an
earnings-sharing provision whereby customers would receive one-half of
earnings on equity in excess of 13.5%. The PSCK also ordered that
residential rates be frozen for three years and required rate reductions
of approximately $3 million per year versus current rates. On February
12, 1999, CB Telephone filed a petition seeking rehearing of the PSCK's
January 25, 1999 order. On July 26, 1999, the PSCK issued an order which
eliminated the automatic earnings-sharing provision and revised the
required rate reductions to $2.3 million per year, instead of the $3
million per year previously ordered.
o The prospects for future growth of our subsidiaries are uncertain. Each
of the business segments in which our subsidiaries conduct their business
has grown significantly in the last several years. To the extent that
growth in these industry segments declines, this decline could adversely
affect the growth of each subsidiary's business.
o The communications industry is subject to rapid and significant changes
in technology. Our businesses are highly dependent on our computer,
communications and software systems. Our failure to maintain the
superiority of our technological capabilities or to respond effectively
to technological changes could have an adverse effect on our business,
results of operations or financial condition. Our future success also
will be highly dependent upon our ability to enhance existing services
and introduce new services or products to respond to changing
technological developments. There can be no assurance that we can
successfully develop and bring to market any new services or products in
a timely manner, that such services or products will be commercially
successful or that competitors' technologies or services will not render
our products or services noncompetitive or obsolete.
o We face significant competitive risks. Evolving technology, the
preferences of consumers, the legislative and regulatory initiatives of
policy makers and the convergence of other industries with the
communications industry are causes for increasing competition throughout
the communications industry. The range of communications services, the
equipment available to provide and access such services, and the number
of competitors offering such services, continue to increase. These
initiatives and developments could make it difficult for us to maintain
current revenue and profit levels. CB Telephone's current and potential
competitors include other incumbent local exchange carriers, wireless
services providers, interexchange carriers, competitive local exchange
carriers and others.
o Our other subsidiaries face intense competition in their markets,
principally from larger companies. These subsidiaries primarily seek to
differentiate themselves by leveraging the strength and recognition of
our brand equity, by providing customers with superior service and by
focusing on niche markets and opportunities to develop and market
customized packages of services.
Risks relating to year 2000 compliance
o We face uncertainties with regard to year 2000 compliance. Since 1996, we
have devoted significant time and resources to achieve year 2000
compliance. A steering committee, chaired by a Senior Vice President of
Cincinnati Bell, and composed of upper-level management personnel, sets
the direction and monitors the activity of the year 2000 Program
Management Office. Our subsidiaries have completed all remediation,
replacement, and compliance testing efforts for critical components of
their respective networks, facilities, and information technology. Each
of our subsidiaries will spend the remainder of the year performing
additional enterprise testing and testing interfaces with outside
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<PAGE>
business partners. Work will continue with suppliers and business
partners to monitor their progress. Although we anticipate minimal
business disruption as a result of the century change, if we were to be
unsuccessful in readying our software and systems for the year 2000 or
preparing adequate plans to avoid business interruption that could result
from the century change, this would have a material adverse impact on us.
This material adverse effect could include a disruption to the provision
of services to its customers, which could result in lost revenues, the
incurrence of material contractual penalties and damaged customer
relationships.
o The failure of one of our significant customers to modify their systems
for the year 2000 successfully or to provide the appropriate business
continuity planning also could have an adverse impact on us as we are, to
a certain extent, dependent on the success of our customers. Our success
in becoming year 2000 compliant largely depends on our vendors and
business partners being year 2000 compliant. We are working diligently
with our vendors and business partners to assure ourselves, to the extent
possible, that our vendors and business partners are taking the necessary
steps to become year 2000 compliant. To the extent that any of our
vendors or business partners experience year 2000 technology difficulties
which materially affect their businesses, such difficulties could have a
material adverse effect on the our business, results of operations and
financial condition.
Risks Relating to the Notes and Common Stock
o No public market for the notes may develop. The notes were issued in July
1999 to a small number of accredited investors. We do not intend to apply
for listing of the notes on any securities exchange. Accordingly, there
can be no assurance as to the development or liquidity of any market for
the notes. If an active market for the notes fails to develop or be
sustained, their trading price could be adversely affected.
o If we are unable to pay all our debts, then you will receive payments on
the notes only if we have funds remaining after we have repaid our
existing and future senior indebtedness. The notes are general unsecured
obligations. We may repay the notes only after we have paid all of our
existing and future senior indebtedness. Upon any distribution of our
assets because of insolvency, bankruptcy, dissolution, winding up,
liquidation or reorganization, we may pay the principal of and interest
on the notes only to the extent provided in the indenture, and only after
we pay all of our senior indebtedness in full. Senior indebtedness
includes all indebtedness for money borrowed, other than indebtedness
that is expressly junior or equal in right of payment to the notes. At
June 30, 1999, our senior indebtedness was approximately $366.3 million,
all of which was secured. On November 9, 1999 we entered into a $1.8
billion credit agreement among us and IXC Communication Services, Inc.,
as borrowers, Citicorp USA, Inc., as administrative agent, Bank of
America, N.A. as syndication agent, and certain lender parties thereto.
The terms of the notes do not limit the amount of additional
indebtedness, including senior indebtedness, which we can create, incur,
assume or guarantee. See "Description of Notes -- Subordination."
o Because we may be unable to raise the funds necessary to repurchase your
notes in the event of a change in control, we may default on the notes in
the event of a change in control. We cannot assure you that we will have
sufficient financial resources or be able to arrange financing to pay the
repurchase price of the notes in the event of a change in control. Our
ability to repurchase the notes may be limited by law, the indenture and
the terms of other agreements relating to our senior indebtedness. In
addition, we may not repurchase any notes in a change in control if the
provisions of the indenture would prohibit us from making payments of
principal on the notes. We may be required to refinance our senior
indebtedness in order to repurchase the notes. We may not have the
financial ability to repurchase the notes if our creditors accelerate
payment of our senior indebtedness.
o Our interest deduction with respect to the notes will be disallowed to
the extent that the notes are treated as "corporate acquisition
indebtedness" of the Company under Section 279 of the Internal Revenue
Code of 1986, as amended. Corporate acquisition indebtedness includes
subordinated convertible notes issued to provide consideration for the
acquisition of stock in another corporation if certain debt to equity or
earnings ratios are met. The notes will be treated as corporate
acquisition indebtedness to the extent their proceeds were used to fund
the acquisition of IXC Communications, Inc.
Litigation Risks Relating to IXC
o There are certain stockholder suits pending concerning IXC. On July 21,
1999, July 23, 1999 and July 27, 1999, five purported stockholder class
action suits were filed in the Delaware Court of Chancery against IXC,
certain present and former members of the IXC board of directors,
Cincinnati Bell and Ivory Merger Inc. These complaints allege, among
other things, that the IXC director defendants, aided and abetted by
Cincinnati Bell and Ivory Merger Inc., have breached their fiduciary
duties to IXC's stockholders by failing to maximize stockholder value in
connection with entering into the merger agreement in connection with the
Cincinnati Bell/IXC merger. The complaints seek damages and a court order
enjoining completion of the merger. On August 12, 1999, plaintiffs in the
various actions moved for a preliminary injunction to prevent the
completion of the merger pending a full hearing on the merits. A hearing
in connection with that motion was held on October 20, 1999. By
Memorandum Opinion dated October 27, 1999, the Delaware Court of Chancery
denied plaintiffs' request for a preliminary injunction, finding that
plaintiffs were not likely to succeed on the merits at trial.
o There are certain Equal Employment Opportunity Commission suits pending.
Twenty-two EEOC charges have been filed beginning in September 1999 by
current Eclipse Telecommunications employees located in the Houston
office (formerly Coastal Telephone, acquired May, 1999) alleging sexual
discrimination, race discrimination and retaliation. Discovery is
ongoing.
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<PAGE>
Because this Prospectus Contains Forward-looking Statements, it May
Not Prove to Be Accurate
This prospectus, including the documents we incorporate by reference,
contains forward-looking statements and information relating to our company.
We generally identify forward-looking statements using words like "believe,"
"intend," "expect," "may," "should," "plan," "project," "contemplate,"
"anticipate" or similar statements. We base these statements on our beliefs as
well as assumptions we made using information currently available to us. As
these statements reflect our current views concerning future events, these
statements involve risks, uncertainties and assumptions. Actual results may
differ significantly from the results discussed in these forward-looking
statements. We do not undertake to update our forward-looking statements or
risk factors to reflect future events or circumstances.
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USE OF PROCEEDS
Cincinnati Bell will not receive any proceeds from the sale by the
selling holders of the notes and the common stock into which the notes are
convertible.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is traded on the New York Stock Exchange under the
symbol "CSN." The following table sets forth, for the periods indicated, the
range of high and low closing sales prices for our common stock, as reported
on the New York Stock Exchange Composite Transaction Tape. We have restated
the price data in the table to account for a two-for-one stock split effective
May 2, 1997, and the spin-off of Convergys Corporation on December 31, 1998.
For current price information, you are urged to consult publicly available
sources.
Consistent with maximizing the expanded growth opportunities available to
us following the IXC merger, we have ceased paying dividends on our common
stock after the dividend paid on August 3, 1999.
Cincinnati Bell
Common Stock
Dividends
Calendar Period High Low Declared
1997 ---- --- --------
First Quarter............. $33.75 $28.25 $0.10
Second Quarter............ 33.25 26.06 0.10
Third Quarter............. 32.25 23.06 0.10
Fourth Quarter............ 31.13 25.38 0.10
1998
First Quarter............. 36.31 30.13 0.10
Second Quarter............ 38.63 28.50 0.10
Third Quarter.............. 33.19 22.50 0.10
Fourth Quarter............. 38.13 20.88 0.10
1999
First Quarter.............. 23.44 16.06 0.10
Second Quarter............. 26.50 19.63 0.10
Third Quarter.............. 26.50 16.31 --
Fourth Quarter
(through November 5, 1999). 25.38 18.75 --
On November 8, 1999, the last reported sale price of the common stock on
the New York Stock Exchange was $24 3/4. As of November 8, 1999, there were
approximately 23,088 holders of record of the common stock.
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DESCRIPTION OF NOTES
The notes covered by this prospectus will be our general unsecured
obligations. The notes have been issued under an indenture dated as of July
21, 1999, between us and The Bank of New York, as trustee.
We have summarized selected provisions of the indenture and the notes
below. This summary is not complete. We have filed the indenture and the form
of the notes with the SEC as an exhibit to the registration statement, and you
should read the indenture for provisions that may be important to you. The
terms of the notes include those stated in the indenture and those made part
of the indenture by reference to the Trust Indenture Act of 1939, as amended.
General
The notes represent unsecured general obligations of Cincinnati Bell and
are subordinate in right of payment to all of our existing and future senior
debt, and are convertible into common stock as described under "--Conversion
Rights." The notes are limited to $400,000,000 aggregate principal amount at
issuance, and will mature on July 21, 2009, unless earlier redeemed at our
option or repurchased by us at the option of the holder upon the occurrence of
a change of control. See "--Change of Control Repurchase."
The notes bear interest at the rate of 6 3/4% annually which will be
payable semiannually in cash beginning January 21, 2005, on January 21 and July
21, to holders of record at the close of business on the preceding January 6
and July 6, respectively. Prior to July 21, 2004, interest on the notes will
be paid in kind by increasing the value of the respective note, which will
accrete in value on a daily basis, compounded semi-annually on January 21 and
July 21 of each year, at the annual rate of 6 3/4% of the daily accreted value
of the note. Cash interest on notes will be paid by wire transfer in
immediately available funds to a United States bank account designated by the
note holder. Interest is computed on the basis of a 360-day year comprised of
twelve 30-day months.
Principal is payable, and the notes may be presented for conversion,
registration of transfer and exchange, without service charge, at the office
that we will maintain for such purpose in New York, New York, which initially
is the office or agency of the trustee in New York, New York.
The indenture does not contain any financial covenants or any
restrictions on the payment of dividends on our other securities, the
repurchase of our securities or the incurrence of senior debt or other
indebtedness, other than with regard to adjustments to the conversion price.
The indenture contains no covenants or other provisions to afford protection
to note holders in the event of a highly leveraged transaction or a change in
control of Cincinnati Bell except to the extent described under "--Change of
Control Repurchase" below.
Conversion Rights
A note holder may, at any time (i) after the expiration or early
termination of any applicable waiting period under the HSR Act with respect to
the acquisition of shares of common stock upon conversion of notes or (ii) in
connection with a change of control of Cincinnati Bell, as described under "-
Change of Control Repurchase," convert a note or any portion of a note that is
an integral multiple of $1,000 into shares of common stock and the associated
preferred stock purchase rights initially at a conversion price of $29.89 per
share. This conversion price is initially equivalent to a conversion rate of
33.456 shares per $1,000 principal amount of notes. The right to convert a
note called for redemption will terminate at the close of business on the
business day immediately preceding the date fixed for redemption or the
maturity date, unless we default in making the payment due on that date. For
information as to notices of redemption, see "--Optional Redemption."
The conversion price will be subject to adjustment upon the occurrence of
certain events, including:
o the issuance of capital stock as a dividend or distribution on
common stock, or a dividend or distribution of any Cincinnati
Bell securities on common stock as part of a shareholder rights
plan or poison pill;
o the issuance of capital stock in a reclassification of common
stock;
o the issuance of common stock or rights, warrants or options to
subscribe for or purchase common stock at less than the current
market price per share, which is defined as the average market
price for the 10 trading days prior to that issuance (adjusted
to take into account "ex" dates for events that occur during
these 10 trading days);
o subdivisions and combinations of common stock;
o distributions to all holders of common stock of:
o cash, but not including regular dividends;
o evidences of indebtedness of Cincinnati Bell or another
issuer;
o securities of Cincinnati Bell or another issuer;
o assets; or
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o rights or warrants to purchase Cincinnati Bell securities;
o the completion of a tender or exchange offer made by us or one
of our subsidiaries for the common stock in which we are
required to pay aggregate consideration with a fair market value
that exceeds the current market price per share of common stock,
which is defined as the average market price for the 10 trading
days prior to the day after the expiration of the tender offer.
No adjustment of the conversion price will be required to be made until
cumulative adjustments amount to 1% or more of the conversion price as last
adjusted.
If the holders of 51% or more of the aggregate accreted value of the
notes elect to receive a dividend or distribution declared by Cincinnati Bell
of any
o cash
o capital stock, including options, warrants or other rights to
acquire capital stock
o assets
o dividend or distribution resulting from a redemption or a
triggering event under a shareholder rights plan
Cincinnati Bell will pay this dividend or distribution into an account
maintained by the trustee. This dividend or distribution will be held in such
account, and accrue interest, until the note to which it relates is redeemed
by us or converted into common stock.
If the common stock is converted into the right to receive other
securities, cash or other property as a result a reclassification,
consolidation, merger, sale or transfer of assets or other transactions, each
note then outstanding will also become convertible into the kind and amount of
securities, cash and other property receivable upon the transaction by a
holder of the number of shares of common stock which would have been received
by a note holder immediately prior to such transaction if the note holder had
converted its note.
We will not issue fractional shares of common stock to a holder who
converts a note. In lieu of issuing fractional shares, we will pay a cash
adjustment based upon the market price per share of common stock on the day
preceding the day of the conversion.
Optional Redemption
At any time on or after July 21, 2004, we will be entitled at our option
to redeem all or a portion of the notes, in minimum multiples of at least $100
million of the original issue price, upon at least 30 and not more than 60
days' notice by mail to the holders of the notes, at the following redemption
prices expressed as percentages of the full accreted value of the note on the
redemption date, plus accrued and unpaid interest to, the redemption date
(subject to the rights of holders of record on any relevant record date to
receive interest due on any relevant interest payment date that is on or prior
to such redemption date), if redeemed during the twelve-month periods set
forth below:
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------------------------
July 21, 2004 through July 20, 2005....................103.375%
July 21, 2005 through July 20, 2006....................102.250%
July 21, 2006 through July 20, 2007....................101.125%
July 21, 2007 and thereafter...........................100.000%
Change in Control Repurchase
Upon the occurrence of a change of control, each holder of notes will
have the right to require that we repurchase all or a portion of such holder's
notes at a repurchase price in cash equal to the greater of
o the sum of (x) 101% of the accreted value of the notes to be repurchased
and (y) the product obtained by multiplying (i) the difference between
the full accreted value of the note at a maturity and the accreted value
of the note on the day the change of control occurs by (ii) the
percentage of the total consideration received by our shareholders in the
change of control transaction that is paid in cash, and
o the fair market value of the consideration that such holder would have
received had it converted its notes to be repurchased at the above stated
sum, into shares of common stock immediately prior to the change of
control,
in each case plus any accrued and unpaid cash interest to the date of
repurchase.
In addition, if a change of control occurs on or prior to July 21, 2004,
and all or a portion of the consideration received by our shareholders is in
cash, each holder that elects to have its notes repurchased may also elect to
receive a payment in an amount equal to the product set forth in clause (y)
above.
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Immediately before any change of control transaction occurs, we will at
our option either
o deposit with the trustee for the benefit of the holders of the notes an
amount in cash sufficient to fully satisfy our payment obligations with
respect to the change of control; or
o cause the payment obligations of the company with respect to such change
of control to be assumed by the entity or entities issuing or paying, as
the case may be, the stock, other securities or other property or assets
(including cash) issued or paid with respect to or in exchange for our
common stock in connection with such change in control.
However, we may not repurchase any notes at any time when the
subordination provisions of the indenture otherwise would prohibit us from
making payments of principal in respect of the notes. If we fail to repurchase
the notes when required under the preceding paragraph, such failure will
constitute an event of default (as defined under the caption "-- Events of
Default") under the indenture whether or not such repurchase is permitted by
the subordination provisions of the indenture.
A change of control means the occurrence of any of the following:
o a tender offer shall be made and consummated for the ownership of 30% or
more of the outstanding voting securities of
Cincinnati Bell;
o Cincinnati Bell is merged or consolidated with another corporation and as
a result of such merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting corporation is owned in
the aggregate by the former shareholders of Cincinnati Bell, other than
affiliates (within the meaning of the Exchange Act) of any party to such
merger or consolidation as the same shall have existed immediately prior
to such merger or consolidation;
o We sell substantially all of our assets to another corporation which is
not a wholly owned subsidiary of ours;
o a person within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as
in effect on December 5, 1988) of the Exchange Act acquires 20% or more
of our outstanding voting securities, or a person within the meaning of
Section 3(a)(9) or Section 13(d)(3) (as in effect on December 5, 1988) of
the Exchange Act controls in any manner the election of a majority of our
directors;
o within any period of two consecutive years commencing on or after
December 5, 1988, individuals who at the beginning of such period
constitute our Board of Directors cease for any reason to constitute a
majority of the Board, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in
office who were directors at the beginning of the period (for purposes
hereof, ownership of voting securities shall take into account and shall
include ownership as determined by applying the provisions of Rule
13(d)-3(d)(1)(i) pursuant to the Exchange Act); or
o a merger, consolidation or similar transaction (regardless of whether
Cincinnati Bell is a constituent corporation in such transaction and
other than those transactions of the type referred to above, where less
than 75% of the outstanding voting securities of the surviving or
resulting corporation is owned by the former shareholders of Cincinnati
Bell) with respect to which persons who were beneficial owners of voting
securities immediately prior to that transaction own less than 50% of the
voting securities (including securities of any successor corporation of
Cincinnati Bell having the ordinary power to vote in the election of
directors of such successor corporation) upon the consummation of such
transaction.
Within 30 days following a change in control, we will be required to mail to
the trustee and all holders of record of the notes a notice of the occurrence
of the change in control, stating:
o that an offer is being made and that all notes tendered and not withdrawn
will be accepted for payment;
o the circumstances and relevant facts regarding such change of control
(including information with respect to pro forma historical income, cash
flow and capitalization, each after giving effect to such change of
control);
o the repurchase price and the repurchase date, which shall be not later
than 60 days from the date such notice is mailed;
o that any notes not tendered will continue to accrue accreted value and
interest according to their terms, but holders who do not tender will not
receive the purchase price for those notes;
o that, unless we default in the payment of the change of control payment,
all notes accepted for payment pursuant to the repurchase offer made
pursuant to the change in control repurchase shall cease to accrue
accreted value and interest on and after the repurchase date; and
o the procedures that holders of notes must follow to accept the change of
control offer.
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11
We will leave the change of control repurchase offer open for at least 20
business days or for such longer period as is required by law.
To exercise the repurchase right, the holder of a note will be required
to deliver, on or before the 20th day after the date of the notice, an
irrevocable written notice to us (or an agent designated by us for such
purpose) and the trustee of the holder's exercise of the repurchase right,
together with the certificates evidencing the note or notes to be repurchased,
properly endorsed for transfer.
Under certain circumstances, we may not be permitted to repurchase the notes
or make other payments. If we default on senior indebtedness (as defined under
"-- Subordination" below) and the default is continuing, or in the event of
our insolvency, bankruptcy, reorganization, dissolution or other winding up
where senior indebtedness is not paid in full, under the terms of the
indenture the senior indebtedness is to be paid in full before any payment can
be made to holders of the notes. Our ability to pay cash to holders of notes
following the occurrence of a change in control may be limited by our then
existing financial resources. There can be no assurance that sufficient funds
will be available when necessary to make any required repurchases. See "Risk
Factors -- Because we may be unable to raise the funds necessary to repurchase
your notes in the event of change in control we may default on the notes in
the event of a change in control."
If a change in control occurs and the holders exercise their rights to
require us to repurchase notes, we intend to comply with applicable tender
offer rules under the Exchange Act, including Rules 13e-4 (other than SEC
filing requirements if not then applicable) and 14e-1, as then in effect, with
respect to any such purchase.
Consolidation, Merger and Sale of Assets
We may, without the consent of any of the note holders, consolidate with
or merge into any other person or convey, transfer or lease our properties
substantially as an entirety to, any other person, if:
o the successor, transferee or lessee, if other than us, expressly assumes
our obligations under the indenture and the notes by means of a
supplemental indenture; and
o at the time of the transaction, the other person has not received a
notice of payment default under a material indenture or any other
material indebtedness of the other person that has not been cured within
the applicable period.
Events of Default
Each of the following are events of default under the indenture:
o a default in the payment of the principal of and premium, if any, on any
of the notes when due and payable, whether at maturity or a date fixed
for prepayment or by acceleration or otherwise, and whether or not such
payment is prohibited by the subordination provisions of the indenture;
o a default in the payment of any cash interest upon any of the notes when
due and payable, continued for 20 days, whether or not such payment is
prohibited by the subordination provisions of the indenture;
o a default by us or any of our subsidiaries in the performance, or breach,
of any of our other covenants in the indenture which are not remedied by
the end of a period of 50 days after written notice to us by the trustee
or to us and the trustee by the holders of at least 25% in aggregate
accreted value of the outstanding notes;
o a default by us or any of our subsidiaries on any agreement or condition
relating to our senior indebtedness in excess of $250 million, which
results in the acceleration of that senior indebtedness;
o certain events of bankruptcy, insolvency or reorganization.
If an event of default (other than of certain events of bankruptcy,
insolvency, or reorganization) occurs and is continuing, either the trustee or
the holders of at least 25% of the aggregate accreted value of the outstanding
notes may declare the accreted value of and accrued interest on all notes to
be immediately due and payable. Such declaration may be rescinded by the
holders of a majority of the aggregate accreted value of the outstanding notes
if all existing events of default have been cured or waived, except nonpayment
of principal or interest or other amounts that have become due because of the
declaration, and if the recision would not conflict with any judgment or
decree. If an event of default occurs due to the bankruptcy, insolvency, or
reorganization of Cincinnati Bell, the accreted value of and premium, if any,
and accrued interest on the outstanding notes will automatically become
immediately due and payable.
The holders of not less than a majority in principal amount of the
outstanding notes affected may direct the time, method and place of conducting
any proceedings for any remedy available to the trustee, or exercising any
trust or power conferred on the trustee; provided that such direction does not
conflict with any rule of law or with the indenture. The trustee may take any
other action it thinks proper which is not inconsistent with the direction
given to it by the majority of the holders.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the holders of the notes
unless the holders have offered to the trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due or the
right to convert any note in accordance with the indenture, no holder may
institute any action or proceeding or pursue any remedy with respect to the
indenture or the notes unless:
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o such holder has previously given the trustee notice that an event of
default is continuing;
o holders of at least 25% in principal amount of the outstanding notes
have requested the trustee to pursue the remedy;
o such holders have offered the trustee security or indemnity
satisfactory to the trustee against any loss, liability or expense;
o the trustee has not complied with such request within 60 days after
the receipt thereof and the offer of security or
indemnity; and
o the holders of a majority in principal amount of the outstanding
notes have not given the trustee a direction inconsistent with such
request within such 60-day period.
In addition, we are required to deliver to the trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the
officers signing such certificate know of any default by us in the performance
or observance of any of the terms of the indenture. If such officers do know
of a default, the certificate must specify the status and nature of all such
defaults.
Modification and Waiver
Subject to certain exceptions, any amendment, supplement or modification
to the indenture or waiver or consent to depart from the provisions of the
notes requires the written consent of the holders of at least 51% of the
aggregate accreted value of the notes then outstanding. However, without the
consent of each holder of an outstanding note affected thereby, no amendment
may, among other things:
o change the stated maturity or the principal or accreted value on any
note
o reduce the rate of, or extend the time of payment of interest on,
any note
o change the time of prepayment when, or the currency in which, any
note is payable
o modify the subordination provisions of the indenture in a manner
adverse to the holders of the notes
o make any change in the requirement stated above that the written
consent of 51% of the aggregate accreted value of the notes
outstanding is required for any such modification or amendment of the
indenture or for any waiver of compliance with certain provisions of,
or of any departure by Cincinnati Bell from the provisions of, the
indenture.
Subordination
The payment of the principal of, premium, if any, and interest on the
notes will, to the extent set forth in the indenture, be subordinated in right
of payment to the prior payment in full of all senior indebtedness. When there
is a payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of Cincinnati Bell, the holders of all senior indebtedness will
first be entitled to receive payment in full in respect of the senior
indebtedness of all amounts due or to become due, before the holders of the
notes will be entitled to receive any payment in respect of the principal of,
premium, if any, or interest on the notes. No payments on account of
principal, premium, if any, or interest on the notes or on account of the
purchase or acquisition of notes may be made if a default in any payment with
respect to senior indebtedness has occurred and is continuing or if any
judicial proceeding is pending with respect to any such default.
Our senior indebtedness includes the principal of and premium, if any,
and interest on all our indebtedness for money borrowed, other than the notes,
whether outstanding on the date of the execution of the indenture or
thereafter incurred, created or assumed, except (i) indebtedness or
obligations owed by Cincinnati Bell to any of its direct or indirect
subsidiaries, (ii) indebtedness that by the terms of the instrument or
instruments by which such indebtedness was created or incurred expressly
provides that it is junior in right of payment to the notes or any other
indebtedness of ours or ranks pari passu in right of payment to the notes or
(iii) trade payables or other accrued current liabilities incurred in the
ordinary course of business.
The term "indebtedness for money borrowed," when used with respect to us,
means:
o indebtedness of Cincinnati Bell for money borrowed or evidenced by
bonds, debentures, notes, guarantees, or similar
instruments
o reimbursement, payment, and other obligations of ours with respect to
letters of credit, bankers' acceptances and similar facilities issued
for our account
o every deferred payment obligation of, or any such obligation assumed
by, us for the payment of the purchase price of property or services
purchased by us
o any obligation of, or any such obligation guaranteed by, us for the
payment of rent or other amounts under a lease of property or assets
which obligation is required to be classified and accounted for as a
capitalized lease on our balance sheet under generally accepted
accounting principles.
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o all our obligations with respect to interest rate hedging
arrangements to hedge interest rates relating to our senior
indebtedness
o any obligation of, or any obligation guaranteed by, us or secured by
our property or assets for the repayment of borrowed money, whether
or not the obligation is assumed by us or is non-recourse to our
credit
o any indebtedness arising under a conditional sale or other title
retention agreement with respect to property we acquire
o indebtedness of the kinds described above that we have assumed or
guaranteed, including the dividends and distributions of others.
At June 30, 1999 our senior indebtedness was approximately $366.3
million, all of which was secured. We expect from time to time to incur
additional indebtedness. The indenture does not limit or prohibit us from
incurring additional senior indebtedness or additional indebtedness. On
November 9, 1999 we entered into a $1.8 billion credit agreement among us and
IXC Communication Services, Inc., as borrowers, Citicorp USA, Inc., as
administrative agent, Bank of America, N.A. as syndication agent, and certain
lender parties thereto. See "Risk Factors -- if we are unable to pay all our
debts, then you will receive payments on the notes only if we have funds
remaining after we repaid our existing and future senior indebtedness."
Book-Entry, Delivery and Form
We will issue the notes in the form of one or more global notes except as
described under "-- Certificated Notes" below. The global notes will be
deposited with, or on behalf of, the clearing agency registered under the
Exchange Act that is designated to act as depositary for the notes and
registered in the name of the depositary or its nominee. The Depository Trust
Company will be the initial depositary. Except as described below, the global
notes may be transferred, in whole and not in part, only to the depositary or
another nominee of the depositary. You may hold your beneficial interests in
the global notes directly through the depositary if you have an account with
the depositary or indirectly through organizations which have accounts with
the depositary.
The depositary has advised us that it is:
o a limited-purpose trust company organized under the laws of the State
of New York;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
The depositary was created to hold securities of institutions that have
accounts with the depositary and to facilitate the clearance and settlement of
securities transactions among those institutions through electronic book-entry
changes. This eliminates the need for physical movement of certificates
representing securities. These institutions, known as participants, include
securities brokers and dealers, banks, trust companies, clearing corporations
and other organizations. Access to the depositary's book-entry system is also
available to others that clear through or maintain a custodial relationship
with a participant, whether directly or indirectly.
Ownership of beneficial interests in a global note is limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests in the global notes is shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by the depositary and the participants. The laws of some
jurisdictions may require that purchasers of securities take physical delivery
of securities in definitive form. These limits and laws may impair your
ability to transfer or pledge beneficial interests in a global note.
So long as the depositary or its nominee is the registered holder and
owner of a global note, the depositary or the nominee will be considered the
sole legal owner and holder of the related notes for all purposes. Except as
described below, as an owner of a beneficial interest in a global note, you
will be subject to the following limitations:
o you will not be entitled to have the notes represented by the global
notes registered in your name;
o you will not receive or be entitled to receive physical delivery of
certificated notes; and
o you will not be considered to be the owner or holder of any notes
under the global notes.
We understand that under existing industry practice, in the event an owner of
a beneficial interest in a global note desires to take any action that the
depositary, as the holder of the global notes, is entitled to take, the
depositary would authorize the participants to take the action. The
participants would authorize beneficial owners owning through them to take the
action or would otherwise act upon the instructions of beneficial owners
owning through them.
Payment of principal of, premium, if any, and interest on notes
represented by a global note registered in the name of and held by the
depositary or its nominee will be made to the depositary or its nominee as the
registered owner and holder of the global notes.
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We expect that the depositary or its nominee, upon receipt of any payment
of principal of, premium, if any, or interest on a global note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global notes as
shown on the records of the depositary or its nominee. We also expect that
payments by participants to owners of beneficial interests in a global note
held through the participants will be governed by standing instructions and
customary practices and will be the responsibility of the participants. We
will not have any responsibility or liability:
o for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in the global
notes;
o for maintaining, supervising or reviewing any records relating to
beneficial ownership interests;
o for any other aspect of the relationship between the depositary and
its participants; or
o for any other aspect of the relationship between participants and the
owners of beneficial interests in the global notes owning through
participants.
Unless and until the global notes are exchanged in whole or in part for
certificated notes, the global notes may not be transferred except as a whole
by the depositary to a nominee of the depositary or by a nominee of such
depositary to another nominee of such depositary.
Although the depositary has agreed to these procedures in order to
facilitate transfers of interests in the global notes among participants of
the depositary, it is under no obligation to perform or continue to perform
and may discontinue these procedures at any time. Neither we nor the trustee
will have any responsibility for the performance by the depositary or its
participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
Year 2000 Issues Relating to The Depository Trust Company
We have been advised by The Depository Trust Company that it is aware
that some computer applications, systems and the like for processing dates
that are dependent upon calendar dates, including dates before, on or after
January 1, 2000, may encounter "year 2000 problems." DTC has informed its
participants and other members of the financial community that it has
developed and is implementing a program so that its systems, as the same
relate to the timely payment of distributions, including principal and income
payments, to securityholders, book-entry deliveries and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which DTC expects to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service
providers, among others. DTC has informed the industry that it is contacting,
and will continue to contact, third-party vendors from whom DTC acquired
services to impress upon them the importance of their services being year 2000
compliant and determine the extent of their efforts for year 2000 testing and
remediation of their services. In addition, DTC is in the process of
developing contingency plans that it deems appropriate.
According to DTC, this information with respect to DTC has been provided
to the industry for informational purposes only and is not intended to serve
as a representation, warranty or contract modification of any kind.
Certificated Notes
The notes represented by the global notes are exchangeable for
certificated notes in definitive form of like tenor in denominations of $1,000
in original issue price and integral multiples of $1,000 if:
o the depositary notifies us that it is unwilling or unable to continue
as depositary for the global notes;
o the depositary ceases to be a clearing agency registered under the
Exchange Act or announces an intention permanently to cease business
or in fact ceases business;
o we at any time determine not to have all of the notes represented by
the global notes; or
o an event of default, as described under the caption "-- Events of
Default," has occurred and is continuing.
Any note that becomes exchangeable as described above is exchangeable for
certificated notes issuable in authorized denominations and registered in
whatever names the depositary directs. Subject to the foregoing, the global
notes are not exchangeable, except for global notes of the same aggregate
denomination to be registered in the name of the depositary or its nominee.
Regarding the Trustee
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The Bank of New York is the trustee under the indenture.
Governing Law
The indenture and the notes will be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a general discussion of the material U.S. federal income
tax considerations relevant to purchasing, owning and disposing of the notes
and the common stock into which you may convert the notes. This discussion is
based on currently existing provisions of the Internal Revenue Code of 1986,
as amended, existing and proposed Treasury regulations promulgated under the
Code and administrative and judicial interpretations, all as presently in
effect or proposed and all of which are subject to change, possibly with
retroactive effect, or different interpretations.
This discussion does not deal with all aspects of U.S. federal income
taxation that may be important to holders of the notes or shares of the common
stock received upon conversion, and it does not include any description of the
tax laws of any state, local or foreign government. This discussion is limited
to beneficial owners who hold the notes and the shares of common stock
received upon conversion as capital assets. Moreover, this discussion is for
general information only and does not address all of the U.S. federal income
tax consequences that may be relevant to particular purchasers. Particular
purchasers may be subject to special rules.
For the purpose of this discussion, a "U.S. holder" refers to a
beneficial owner of a note or common stock who or which is:
o a citizen or resident of the U.S. for U.S. federal income
tax purposes;
o a corporation or other entity taxable as a corporation
created or organized in or under the laws of the U.S. or
political subdivision of the U.S.;
o an estate the income of which is subject to U.S. federal
income taxation regardless of its source;
o a trust, if a U.S. court is able to exercise primary
supervision over the administration of the trust and one or
more U.S. fiduciaries have authority to control all
substantial decisions of the trust; or
o otherwise subject to U.S. federal income tax on a net
income basis in respect of its worldwide taxable income.
The term "non-U.S. holder" refers to any beneficial owner of note or
common stock who or which is not a U.S. holder.
Prospective purchasers are urged to consult their own tax advisors as to
the particular federal, state, local and foreign tax consequences to them of
the acquisition, ownership and disposition of the notes, including the
conversion of the notes into shares of common stock, and the effect that their
particular circumstances may have on these tax consequences.
Federal Tax Considerations Applicable to U.S. Holders
Interest and Original Issue Discount
The notes were initially issued with original issue discount, or OID. OID
is the stated redemption price at maturity of a note minus its issue price.
The stated redemption price at maturity of a note is the sum of all
payments provided by the instrument. The issue price of a note is the first
price at which a substantial amount of the notes are sold to the public for
cash (excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity as underwriters, placement agents or
wholesalers).
Because the notes have OID, the following consequences arise:
o A holder must report the total amount of OID as ordinary income over
the life of the note.
o All holders of notes, even those on the cash method of accounting,
are required to report OID income as the OID accrues on the notes.
This means that holders are required to report OID income, and in
some cases pay tax on that income, before they receive the cash that
corresponds to that income.
o OID accrues on a note on a constant yield method. This method takes
into account the compounding of interest. Under this method, the
accrual of OID on a note will result in the holder being taxable at
approximately a constant percentage of the unrecovered investment in
the note.
o In general, the amount of OID that a holder will have to include in
income is the sum of the daily portions of OID for each day during
the taxable year (or portion of the taxable year) in which a holder
held the note. The daily portion is determined by allocating the OID
for an accrual period equally to each day in that accrual period.
The accrual period for a note may be of any length and may vary in
length over the term of the note. However, no accrual period may be
longer than one year and each scheduled payment of principal or
interest must occur either on the first or final day of an accrual
period. The amount of OID for an accrual period is generally equal
to the product of the note's adjusted issue price at the beginning
of such accrual period and its yield to maturity. The adjusted issue
price of a note at the beginning of any accrual period is the sum of
the issue price of the note plus the amount of OID allocable to all
prior accrual periods minus the amount of any prior payments on the
note.
17
<PAGE>
o The accruals of OID on a note will generally be less in the early
years and more in the later years.
o A holder's tax basis in a note is initially its cost. It increases
by any OID (and accrued market discount, if any, as described below)
a holder reports as income. It decreases by any principal payments
and interest payments (and amortized bond premium, if any, as
described below) a holder receives on the note.
Market Discount
The tax treatment of U.S. holders with respect to the notes may be
altered if the notes are purchased at a "market discount". Market discount on
a note will generally equal the amount, if any, by which the revised issue
price of the note exceeds the holder's initial tax basis in the note
(generally the note's acquisition price). The revised issue price of a note
for a particular U.S. holder equals the original issue price of the note plus
the aggregate amount of OID includible in the gross income of all other
holders for periods before the acquisition of the note by such U.S. holder.
Subject to a de minimis exception, a U.S. holder of a note acquired at a
market discount is generally required to treat as ordinary income any gain
recognized on the disposition of such note to the extent of the "accrued
market discount" at the time of disposition. Market discount on a note will be
treated as accruing on a straight-line basis over the term of such note or, at
the election of the holder, under a constant-yield method. A U.S. holder of a
note acquired at a market discount may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to purchase
or carry the note until the note is disposed of in a taxable transaction,
unless the holder elects to include market discount in income as it accrues.
If a note with accrued market discount is converted into common stock, the
amount of such accrued market discount at the time of conversion generally
will be taxable to the U.S. holder as ordinary income upon disposition of the
common stock.
Premium
A U.S. holder that purchases a note at a premium over its stated
principal amount generally may elect to amortize such premium (amortizable
bond premium) from the purchase date to the note's maturity date under a
constant-yield method. Amortizable bond premium, however, will not include any
premium attributable to a note's conversion feature. The premium attributable
to the conversion feature is the excess, if any, of the note's purchase price
over what the note's fair market value would be if there were no conversion
feature. Amortized bond premium is treated as an offset to interest income on
a note and not as a separate deduction. However, since a note may be
optionally redeemed after acquisition at a price in excess of its stated
redemption price at maturity, special rules may apply that could result in a
deferral of the amortization of some bond premium until later in the term of
the note. In general, a U.S. holder's tax basis in the notes will be reduced
by the amount of any bond premium as it is amortized or used to offset
interest income. Such amortization will cease upon conversion of the notes
into common stock.
A U.S. holder that purchases a note for an amount that is greater than
its revised issue price as of the purchase date and less than or equal to the
stated redemption price at maturity will be considered to have purchased the
note at an "acquisition premium." Under the acquisition premium rules, the
amount of OID which such U.S. holder must include in its gross with respect to
such note for any taxable year (or portion of a taxable year during which the
U.S. holder holds the note) will be reduced (but not below zero) by the
portion of the acquisition premium properly allocable to the period.
Constructive Dividends
Some corporate transactions, such as distributions of assets to holders
of common stock, may cause a deemed distribution to the holders of the notes
if the conversion price or conversion ratio of the notes is adjusted to
reflect the corporate transaction. These distributions will be taxable as a
dividend, return of capital or capital gain in accordance with the earnings
and profits rules discussed under "--Dividends on Shares of Common Stock."
Sale of Exchange of Notes or Shares of Common Stock
In general, a U.S. holder of notes will recognize gain or loss upon the
sale, redemption, retirement or other disposition of the notes measured by the
difference between:
o the amount of cash and the fair market value of any property
received, except to the extent attributable to the payment of
accrued interest and
o the U.S. holder's adjusted tax basis in the notes.
In general, each U.S. holder of common stock into which the notes have
been converted will recognize gain or loss upon the sale, exchange,
redemption, or other disposition of the common stock under rules similar to
those applicable to the notes. Special rules may apply to redemptions of the
common stock which may result in the amount paid being treated as a dividend.
Gain or loss on the disposition of the notes or shares of common stock will be
capital gain or loss and will be long-term capital gain or loss if the holding
period of the notes or the common stock that was disposed of exceeded one
year. Net capital gain realized by individual taxpayers is taxable at a
maximum rate of 20%.
Conversion of Notes
A U.S. holder of notes generally will not recognize gain or loss on the
conversion of the notes into shares of common stock, other than with respect
to cash received in lieu of fractional shares. The U.S. holder's tax basis in
the shares of common stock
18
<PAGE>
received upon conversion of the notes will be equal to the holder's aggregate
tax basis in the notes converted, less any portion allocable to cash received
in lieu of a fractional share. The holding period of the shares of common
stock received by the holder upon conversion of notes generally will include
the period during which the holder held the notes prior to the conversion.
Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for the fractional share rather than as a
dividend. Gain or loss recognized on the receipt of cash paid in lieu of
fractional shares generally will equal the difference between the amount of
cash received and the amount of tax basis allocable to the fractional share
exchanged.
Dividends on Shares of Common Stock
Distributions on shares of common stock will constitute dividends for
U.S. federal income tax purposes to the extent of our current or accumulated
earnings and profits as determined under U.S. federal income tax principles.
Dividends paid to holders that are U.S. corporations may qualify for the
dividends-received deduction.
To the extent that a U.S. holder receives distributions on shares of
common stock that would otherwise constitute dividends for U.S. federal income
tax purposes but that exceed the Company's current and accumulated earnings
and profits, the distribution will be treated first as a non-taxable return of
capital reducing the holder's basis in the shares of common stock. Any
distribution in excess of the holder's basis in the shares of common stock
will be treated as capital gain.
Federal Tax Considerations Applicable to Non-U.S. Holders
Interest on Notes
Generally, interest paid on the notes to a non-U.S. holder will not be
subject to U.S. federal income tax if:
o the interest is not effectively connected with the conduct of a
trade or business within the U.S. by the non-U.S. holder;
o the non-U.S. holder does not actually or constructively own 10% or
more of the total voting power of all classes of Company stock
entitled to vote and is not a controlled foreign corporation with
respect to which the Company is a "related person" within the
meaning of the Code; and
o the beneficial owner, under penalty of perjury, certifies that the
owner is not a U.S. person and provides the owner's name and
address.
The certification described in the last clause above may be provided by a
securities clearing organization, a bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business.
Under recently adopted U.S. Treasury regulations, which generally are
effective for payments made after December 31, 2000, the certification may
also be provided by a qualified intermediary on behalf of one or more
beneficial owners, or other intermediaries, provided that the intermediary has
entered into a withholding agreement with the Internal Revenue Service and
other conditions are met. A holder that is not exempt from tax under these
rules will be subject to U.S. federal income tax withholding at a rate of 30%
unless the interest is effectively connected with the conduct of a U.S. trade
or business, in which case the interest will be subject to the U.S. federal
income tax on net income that applies to U.S. persons generally. Corporate
non-U.S. holders that receive interest income that is effectively connected
with the conduct of a trade or business within the U.S. may also be subject to
an additional "branch profits" tax on such income. Non-U.S. holders should
consult applicable income tax treaties, which may provide different rules.
Sales or Exchange of Notes or Shares of Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income
tax on gain recognized upon the sale or other disposition of the notes or
shares of common stock unless:
o the gain is, or is treated as, effectively connected with the
conduct of a trade or business within the U.S. by the non-U.S.
holder;
o in the case of non-U.S. holder who is a nonresident alien individual
and holds the common stock as a capital asset, the holder is present
in the U.S. for 183 or more days in the taxable year; or
o the Company is or has been a "U.S. real property holding
corporation" for U.S. federal income tax purposes and the non-U.S.
holder owned (or, by virtue of the conversion right of the notes,
was treated as owning) more than 5 percent of the Company's common
stock during certain statutory testing periods. The Company is not
certain whether it is currently, has been or will become a "U.S.
real property holding corporation."
Conversion of Notes
A non-U.S. holder generally will not be subject to U.S. federal income
tax on the conversion of a note into shares of common stock. To the extent a
non-U.S. holder receives cash in lieu of a fractional share on conversion, the
cash may give rise to gain that would be subject to the rules described above
with respect to the sale or exchange of a note or common stock.
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<PAGE>
Dividends on Shares of Common Stock
Generally, any distribution on shares of common stock to a non-U.S.
holder will be subject to U.S. federal income tax withholding at a rate of 30%
unless the dividend is effectively connected with the conduct of a trade or
business within the U.S. by the non-U.S. holder, in which case the dividend
will be subject to the U.S. federal income tax on net income that applies to
U.S. persons generally. Corporate non-U.S. holders that receive dividend
income that is effectively connected with the conduct of a trade or business
within the U.S. may also be subject to an additional "branch profits" tax on
such income. Non-U.S. holders should consult any applicable income tax
treaties, which may provide different rules. A non-U.S. holder and any
entities, partners, shareholders or other beneficiaries of non-U.S. holders
may be required to satisfy certification requirements in order to claim a
reduction of or exemption from withholding under the foregoing rules.
Federal Estate Taxes
A note beneficially owned by an individual who is a non-U.S. holder at
the time of his or her death generally will not be subject to U.S. federal
estate tax as a result of the individual's death; provided that:
o the individual does not actually or constructively own 10% or more
of the total combined voting power of all classes of Company stock
entitled to vote within the meaning of Section 871(h)(3) of the
Code; and
o interest payments with respect to such note would not have been, if
received at the time of the individual's death, effectively
connected with the conduct of a U.S. trade or business by the
individual.
Common stock owned or treated as owned by an individual who is a non-U.S.
holder at the time of his or her death will be included in the individual's
estate for U.S. federal estate tax purposes and thus will be subject to U.S.
federal estate tax, unless an applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding
United States Holders
Information reporting and backup withholding may apply to payments of
interest or dividends on or the proceeds of the sale or other disposition of
the notes or shares of common stock made by the Company with respect to
non-corporate U.S. holders. These holders generally will be subject to backup
withholding at a rate of 31% unless the recipient of the payment supplies a
taxpayer identification number and other information, certified under
penalties of perjury, or otherwise establishes, in the manner prescribed by
law, an exemption from backup withholding. Any amount withheld under backup
withholding is allowable as a credit against the U.S. holder's federal income
tax, upon furnishing the required information to the Internal Revenue Service.
Non-United States Holders
Generally, information reporting and backup withholding of U.S. federal
income tax at a rate of 31% may apply to payments of principal, interest,
dividends and premium, if any, to a non-U.S. holder if the holder fails to
certify that the holder is a non-U.S. person or if the Company or its paying
agent has actual knowledge that the holder is a U.S. person.
The payment of the proceeds on the disposition of notes or shares of
common stock to or through the U.S. office of a U.S. or foreign broker will be
subject to information reporting and backup withholding unless the owner
provides the certification described above or otherwise establishes an
exemption. The proceeds of the disposition by a non-U.S. holder of notes or
shares of common stock to or through a foreign office of a broker will not be
subject to backup withholding. However, if the broker is a U.S. person, a
controlled foreign corporation for U.S. tax purposes, or a foreign person 50%
or more of whose gross income from all sources is from activities that are
effectively connected with a U.S. trade or business or, after December 31,
2000, a foreign partnership, if at any time during its tax year, (i) one or
more of its partners are U.S. persons also, in the aggregate, hold more than
50% of the income or capital interest in the partnership or (ii) it is engaged
in the conduct of a trade or business in the United States, information
reporting will apply unless:
o the broker has documentary evidence in its files of the owner's
foreign status; or
o the owner otherwise establishes an exemption.
Both backup withholding and information reporting will apply to the
proceeds from dispositions if the broker has actual knowledge that the holder
is a U.S. holder.
Recently adopted U.S. Treasury regulations, which generally are effective
for payments made after December 31, 2000, alter the rules described above.
Among other things, these regulations provide presumptions under which a
non-U.S. holder is subject to information reporting and backup withholding at
the rate of 31% unless we receive certification from the holder of non-U.S.
status. Depending on the circumstances, this certification will need to be
provided:
o directly by the non-U.S. holder;
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<PAGE>
o in the case of a non-U.S. holder that is treated as a partnership or
other fiscally transparent entity, by the partners, shareholders or
other beneficiaries of the entity; or
o qualified financial institutions or other qualified entities on
behalf of the non-U.S. holder.
The Preceding Discussion of Certain United States Federal Income Tax
Consequences Is for General Information Only and Is Not Tax Advice.
Accordingly, Each Investor Should Consult its Own Tax Adviser as to Particular
Tax Consequences to it of Purchasing, Holding and Disposing of the Notes and
the Common Stock of the Company, Including the Applicability and Effect of Any
State, Local or Foreign Tax Laws, and of Any Proposed Changes in Applicable
Laws.
ERISA CONSIDERATIONS
The United States Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code set forth certain restrictions on (a) employee
benefit plans (as defined in section 3(3) of ERISA), (b) plans described in
Section 4975(e)(1) of the Code, including individual retirement accounts and
Keogh plans, (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in such entity (each of (a), (b) and (c)
hereinafter referred to as a "Plan" or "Benefit Plan") and (d) persons who
have certain specified relationships to such Plans ("Parties in Interest"
under ERISA and "Disqualified Persons" under the Code). The Company will be a
Party in Interest and Disqualified Person with respect to each Plan covering
its employees or the employees of its subsidiaries or affiliates.
ERISA imposes specific requirements on fiduciaries of Benefit Plans
subject to ERISA, namely, that they make prudent investments, that they
diversify investments, and that they make investments in accordance with the
Benefit Plan documents and in the best interests of participants and their
beneficiaries. In accordance with these general fiduciary standards, before
investing in the notes or converting the notes to shares of our common stock,
a Benefit Plan fiduciary should determine whether such an investment or
conversion is permitted under the governing Plan instruments and is
appropriate for the Benefit Plan in view of its overall investment policy and
the composition and diversification of its portfolio.
In addition to imposing fiduciary requirements, ERISA prohibits a Party
in Interest under ERISA and a Disqualified Person under the Code from engaging
in certain transactions with respect to Benefit Plans or their assets
("Prohibited Transactions"). A violation of these Prohibited Transaction rules
may result in a breach of fiduciary duty under ERISA and/or the imposition of
an excise tax or other penalties and liabilities under ERISA and/or the Code
for such persons. If the Company, the Initial Purchaser or any of their
respective affiliates were a Party in Interest or a Disqualified Person with
respect to a Benefit Plan, a Prohibited Transaction could occur upon (i) the
subscription for, acquisition or holding of the notes by a Benefit Plan or
(ii) the conversion of the notes by a Benefit Plan into shares of our common
stock.
However, both ERISA and the Code provide for certain statutory and
administrative exemptions from the Prohibited Transaction rules which could
apply in this case. Further, the U.S. Department of Labor has issued a number
of class exemptions that may apply to otherwise Prohibited Transactions
arising from the acquisition or holding of notes, including: Class Exemption
75-1 (Transactions Involving Employee Benefit Plans and Certain
Broker-Dealers, Reporting Dealers and Banks), Class Exemption 84-14 (Plan
Asset Transactions Determined by Independent Qualified Professional Asset
Managers), Class Exemption 90-1 (Acquisition or Holding of Employer Securities
or Real Property by Insurance Company Pooled Separate Accounts), Class
Exemption 91-38 (Transactions Involving Bank Collective Investment Funds),
Class Exemption 95-60 (Transactions Involving Insurance Company General
Accounts) and Class Exemption 96-23 (Transactions Involving In-House Asset
Managers). The availability of each of these statutory, administrative and
class exemptions is subject to a number of important conditions which each
Benefit Plan investor's fiduciary must consider in determining whether such
exemption applies.
Prior to making an investment in the notes, prospective Benefit Plan
investors should consult with their legal advisers concerning the impact of
ERISA and the Code and the potential consequences of such investment in light
of their specific circumstances. Each Benefit Plan fiduciary must determine
that the subscription for, acquisition and holding of the notes and any
conversion of the notes into shares of our common stock is consistent with its
fiduciary duties under ERISA and does not result in the occurrence of a
non-exempt Prohibited Transaction.
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SELLING HOLDERS
The notes were originally issued and sold by us in a transaction exempt
from the registration requirements of the Securities Act to persons reasonably
believed by us to be institutional accredited investors. Selling holders,
which term includes certain pledgees foreclosing on a pledge of registrable
securities with respect to a bona fide financing transaction with the holder
(as described in the registration rights agreement), may from time to time
offer and sell pursuant to this prospectus any or all of the notes and common
stock into which the notes are convertible.
The selling holders have represented to us that they purchased the notes
and the common stock issuable upon conversion for their own account for
investment only and not with a view toward selling or distributing them,
except through sales registered under the Securities Act or exemptions. We
agreed with the selling holders pursuant to a registration rights agreement to
file this registration statement to register the resale of the notes and the
common stock. We agreed to use our reasonable best efforts to prepare and file
all necessary amendments and supplements to the registration statement to keep
it effective until the date on which the notes and the common stock into which
the notes are convertible no longer qualify as "registrable securities" under
the registration rights agreement. We can suspend the effectiveness of the
registration statement for up to 90 days in any 365-day period, provided that
if certain selling holders have pledged registrable securities pursuant to a
bona fide financing, and have notified us of such arrangements, for so long as
the registrable securities may be transferred or sold by the pledgee
foreclosing on such pledge, the 90-day limitation is reduced to 45 days in any
365-day period. A holder who elects to sell any securities pursuant to this
registration statement:
o will be required to be named as selling security holder;
o will be required to deliver a prospectus to purchasers;
o will be subject to the civil liability provisions under the
Securities Act in connection with any sales; and
o will be bound by the provisions of the registration rights agreement
which are applicable, including indemnification obligations.
If required, additional selling holders may from time to time be
identified and information with respect to such selling holders will be
provided in a supplement to this prospectus.
The following table sets forth information, as of November 9, 1999, with
respect to the selling holders and the respective principal amounts at
issuance of notes and common stock beneficially owned by each selling holder
that may be offered pursuant to this prospectus. The information is based on
information provided by or on behalf of the selling holders. The selling
holders may offer all, some or none of the notes or common stock into which
the notes are convertible. Because the selling holders may offer all or some
portion of the notes or the common stock, no estimate can be given as to the
amount of the notes or the common stock that will be held by the selling
holders upon termination of any such sales. In addition, the selling holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information
regarding their notes in transactions exempt from the registration
requirements of the Securities Act.
<TABLE>
<CAPTION>
Principal Amount of Number of
Notes Shares of
Beneficially Owned Common Stock
Selling Holder and Offered Hereby(1)(2) Beneficially Owned(3)
- -------------- ----------------------- ---------------------
<S> <C> <C>
OHCP Ocean I, LLC 40,441,373.93 0
OHCP Ocean III, LLC 234,200,254.67 0
OHCP Ocean IV, LLC 9,100,000.00 0
OHCP Ocean V, LLC 41,258,371.40 0
Oak Hill Securities Fund L.P. 37,500,000.00 104,880 (4)
Oak Hill Securities Fund II L.P. 37,500,000.00 0
- ------------------
</TABLE>
(1) Interest on the notes will accrete at an annual rate of 6.75% until July
21, 2004 and thus the aggregate principal amount of the notes and the
stock which they are convertible into may include additional accreted
value of the notes until cash payment of interest begins.
(2) Includes notes that the Selling Holder has the right to acquire pursuant
to forward purchase commitments.
(3) Excludes shares of common stock issuable upon conversion of notes.
(4) Represents shares of common stock issuable upon conversion of IXC common
stock in the merger of IXC and Cincinnati Bell.
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Relationship with Selling Holders
On July 21, 1999, Cincinnati Bell entered into an investment agreement
with Oak Hill Capital Partners L.P. and certain related parties of Oak Hill
(collectively, the "purchasers"). Under the investment agreement:
o a designee of an affiliate of Oak Hill was elected to our board of
directors, and that affiliate is entitled to have a designee on our
board of directors as long as the purchasers retain 66 2/3% of the
shares of common stock issued or issuable upon conversion of the
notes (including all notes originally issued to the purchasers, but
excluding any redeemed by us);
o Oak Hill itself is entitled to appoint a non-voting representative
to observe meetings of our board of directors as long as the
purchasers retain 66 2/3% of the shares of common stock issued or
issuable upon conversion of the notes (including all notes
originally issued to the purchasers, but excluding any redeemed by
us);
o until the later of the close of business of July 21, 2004 or one
year after the date on which the purchasers no longer own any notes
or common stock issued upon conversion of the notes, the purchasers
may not:
o advise, assist, or encourage others to buy or otherwise
acquire, or agree to acquire, beneficial ownership of voting
securities of Cincinnati Bell if the purchasers and their
affiliates would beneficially own voting securities
representing more than 1.0% of the total voting power of all
then outstanding voting securities (excluding the beneficial
ownership of securities owned by the purchasers when the
investment agreement was entered into, issued in connection
with the IXC transaction or upon conversion of the notes,
otherwise received or receivable under the terms of the notes,
issued as dividends or as distributions on the converted
shares, and certain other exceptions);
o make or participate in any solicitation of proxies relating to
any shares of our voting securities;
o call, consent to, or participate in a special meeting of our
shareholders;
o request or obtain a list of holders of voting securities;
o initiate, propose or participate in the making of any
shareholder proposal relating to Cincinnati Bell;
o deposit any of our voting securities in a voting trust,
agreement, or irrevocable proxy or otherwise participate in a
group which would make any of the purchasers the beneficial
owner of our voting securities;
o make any proposal for the acquisition of us or any of our
assets or any business combination, change of control,
restructuring, recapitalization or other extraordinary
transaction;
o seek representation on our board of directors, or otherwise
seek to change its composition or size, aside from the designee
described above;
o disclose any intent, plan, or proposal with respect to us that
is inconsistent with the forgoing prohibitions, including any
proposal that would require a change in the forgoing
prohibitions; or
o make any request for us to waive or consent to any action
inconsistent with the forgoing prohibitions, or any action that
would require us to make a public disclosure relating to any
such intent, plan or proposal;
o the purchasers agreed to take any actions required so that all
voting securities they beneficially own will be present for quorum
purposes, in person or represented by proxy, at all of our
shareholder's meetings and will vote at every such meeting for our
nominees to our board of directors, so long as any director that the
Oak Hill affiliate is entitled to designate, if any, is included
among those nominees;
o until the earlier of July 21, 2004 or the date on which the
purchasers and their affiliates own less than 50% of the common
stock issued or issuable upon conversion of the notes (including all
notes originally issued to the purchasers, but excluding any
redeemed by us), the purchasers may not, directly or indirectly,
sell or transfer any notes or other securities having the ordinary
power to vote in the election of our directors without our prior
written consent except:
o to any person who would beneficially own less than 5% of our
outstanding voting securities after such sale or transfer;
o to us;
o to an affiliate of the purchasers;
o in a registered broadly distributed public offering (including
sales pursuant to this prospectus);
o in a tender offer;
23
<PAGE>
o after providing notice to us and a right of first refusal; or
o that any pledgee of the purchaser's notes or shares of common
stock issuable upon conversion of the notes foreclosing on a
pledge in connection with a bona fide financing transaction by
the purchasers may transfer such notes and conversion shares
without such restrictions.
Cincinnati Bell, Oak Hill and certain related parties of Oak Hill also
entered into an agreement, pursuant to which Oak Hill received $5 million on
execution of the Investment Agreement, and $20 million on completion of the
IXC merger. Other alternative transactions would have required payment of a
different amount.
PLAN OF DISTRIBUTION
The selling holders and certain pledgees foreclosing on a pledge of
registrable securities with respect to bona fide financing transactions with
the purchasers (as described in the registration rights agreement) may sell
the notes and the common stock into which the notes are convertible directly
to purchasers or through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, concessions or commissions from
the selling holders or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
The notes and the common stock into which the notes are convertible may
be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at prices related to such prevailing market
prices, at varying prices determined at the time of sale or at negotiated
prices. These sales may be effected in transactions:
o on any national securities exchange or quotation service on which
the notes or the common stock may be listed or quoted at the time of
sale;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services or in
the over-the-counter market;
o through the writing of options, whether listed on an options
exchange or otherwise;
o through the making or covering of short sales;
o through the distribution by a holder to its partners, members or
stockholders;
o through a block trade in which a broker or dealer will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal in order to facilitate the transaction;
o through purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this prospectus;
o through ordinary brokerage transactions and transactions in which
the broker solicits purchasers; or
o through a combination of any of the above.
In connection with the sale of the notes and the common stock into which
the notes are convertible or otherwise, the selling holders may enter into
hedging transactions with broker-dealers or other financial institutions which
may in turn engage in short sales of the notes or the common stock into which
the notes are convertible and deliver these securities to close out such short
positions, or loan or pledge the notes or the common stock into which the
notes are convertible to broker-dealers that in turn may sell these
securities.
The aggregate proceeds to the selling holders from the sale of the notes
or common stock into which the notes are convertible will be the purchase
price of the notes or common stock less discounts and commissions, if any.
Each of the selling holders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of notes or common stock to be made directly or through agents. We
will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the New York Stock
Exchange. We do not intend to list the notes for trading on any national
securities exchange or on the New York Stock Exchange. We cannot assure you
that a trading market for the notes will develop. If a trading market for the
notes fails to develop, the trading price of the notes may decline.
In order to comply with the securities laws of some states, if
applicable, the notes and common stock into which the notes are convertible
may be sold in these jurisdictions only through registered or licensed brokers
or dealers. In addition, in some states the notes and common stock into which
the notes are convertible may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
24
<PAGE>
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling holders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M, and have agreed that they will not
engage in any transaction in violation of such provisions.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A or another exemption from the
requirements of the Securities Act may be sold under Rule 144 or Rule 144A or
such other exemption rather than in connection with this prospectus. A selling
holder may not sell any notes or common stock described in this prospectus and
may not transfer, devise or gift such securities by other means not described
in this prospectus.
To the extent required, the specific notes or common stock to be sold,
the names of the selling holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this
prospectus is a part.
We entered into a registration rights agreement for the benefit of
holders of the notes to register resales of their notes and common stock under
applicable federal and state securities laws. The registration rights
agreement provides for cross-indemnification of the selling holders and
Cincinnati Bell and their directors, officers and controlling persons against
liabilities in connection with the offer and sale of the notes and the common
stock, including liabilities under the Securities Act. We will pay all of our
expenses and substantially all of the expenses incurred by the selling holders
because of the offering and sale of the notes and the common stock, provided
that each selling holder will be responsible for payment of commissions,
concessions and discounts of underwriters, broker-dealers or agents.
LEGAL MATTERS
The legality of the notes and common stock offered by this prospectus
will be passed upon for Cincinnati Bell by Thomas E. Taylor, Esq., General
Counsel and Secretary of Cincinnati Bell. As of November 9, 1999, Mr. Taylor
owned approximately 62,000 shares of Cincinnati Bell common stock (a
substantial majority of which are subject to vesting restrictions) and options
to purchase 158,750 shares of Cincinnati Bell common stock.
EXPERTS
The consolidated balance sheets of Cincinnati Bell as of December 31,
1998, and December 31, 1997, and the consolidated statements of income and
comprehensive income (loss), common shareowners' equity and cash flows for
each of the three fiscal years in the period ended December 31, 1998,
incorporated in this prospectus by reference to Cincinnati Bell's Annual
Report on From 10-K for the fiscal year ended December 31, 1998, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the IXC
consolidated balance sheets as of December 31, 1998 and 1997, and the
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1998, as
set forth in their report, which is incorporated in this prospectus by
reference to Cincinnati Bell's Form 8-K filed November 10, 1999, and, to the
extent set forth below, is based on the reports of other independent auditors.
The IXC financial statements are incorporated by reference in reliance on
Ernst & Young's report, given on their authority as experts in accounting and
auditing.
The consolidated financial statements of Network Long Distance, Inc. as
of March 31, 1998, and for each of the two fiscal years in the period ended
March 31, 1998 and 1997, have been audited by Arthur Andersen LLP, independent
public accountants. In their report, such firm states that with respect to
certain acquired entities, its opinion is based on the reports of other
independent accountants. The report has been incorporated by reference herein
in reliance upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Grupo Marca Tel S.A. de C.V., as
of December 31, 1998 and 1997, and for each of the two fiscal years in the
period ended December 31, 1998 and 1997, have been audited by Arthur Andersen
LLP, independent public accountants. Their report has been incorporated by
reference in this registration statement in reliance upon the authority of
such firm as experts in accounting and auditing. Reference is made to their
report, which includes an explanatory paragraph with respect to the
uncertainty regarding Marca Tel's ability to continue as a going concern.
The consolidated financial statements of National Teleservices, Inc., as
of and for the year ended March 31, 1997 incorporated in this prospectus by
reference to Cincinnati Bell's Form 8-K filed November 10, 1999, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
25
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The Exchange Act file number
for our SEC filings is 001-8519. You may read and copy any reports, statements
or other information that we file with the SEC's public reference rooms at the
following locations:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public
from commercial document retrieval services and at the Internet worldwide web
site maintained by the SEC at "http://www.sec.gov". Reports, proxy statements
and other information concerning Cincinnati Bell may also be inspected at the
offices of the New York Stock Exchange, which is located at 20 Broad Street,
New York, New York 10005. Reports, proxy statements and other information
pertaining to IXC may also be inspected at the offices of The Nasdaq Stock
Market, which is located at 1735 K. Street, N.W., Washington, D.C. 20006.
This prospectus is a part of that registration statement and constitutes
a prospectus of Cincinnati Bell. As allowed by SEC rules, this prospectus does
not contain all the information you can find in Cincinnati Bell's registration
statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that the companies can disclose important information
to you by referring you to other documents filed separately with the SEC. The
information incorporated by reference is considered part of this prospectus,
except for any information superseded by information contained directly in
this prospectus or in later filed documents incorporated by reference in this
prospectus.
This prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC and any filing we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act following
the date of this prospectus. These documents contain important business and
financial information about us that is not included in or delivered with this
prospectus.
Cincinnati Bell Filings (File No. 1-8519) Period
- ---------------------------------------- ------
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999 and
June 30, 1999
Current Reports on Form 8-K Filed January 15, 1999,
February 8, 1999, April 20, 1999,
July 21, 1999, July 23, 1999,
October 14, 1999 and
October 22, 1999
Current Report on Form 8-K which Filed November 10, 1999
includes certain historical financial
statements of IXC
Description of Cincinnati Bell Filed under the Securities Act on
capital stock and unaudited September 13, 1999
pro forma financial information
relating to the Cincinnati Bell/IXC
transaction contained in the Proxy
Statement/Prospectus included in
Cincinnati Bell's Registration Statement
on Form S-4
Proxy Statement Filed March 24, 1999
The description of Cincinnati Bell common Filed under the Securities Act on
stock set forth in the Cincinnati Bell October 8, 1996
Registration Statement on Form S-3
The description of Cincinnati Bell Filed under Section 12 of the
rights to acquire preferred stock Exchange Act on May 1, 1997
set forth in the Cincinnati Bell
Registration Statement on Form 8-A
26
<PAGE>
We will provide a copy of the documents we incorporate by reference, at
no cost, to any person who receives this prospectus. To request a copy of any
or all of these documents, you should write or telephone us at:
Cincinnati Bell Inc.
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
Telephone: (800) 345-6301
Attention: Director of Investor Relations
We furnish our stockholders with annual reports that contain audited
financial statements and quarterly reports for the first three quarters of
each year that contain unaudited interim financial information.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different information. The selling
holders are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of the document.
27
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$400,000,000
(original issue price)
Cincinnati Bell Inc.
6 3/4% Convertible Subordinated
Notes due 2009
---------------------------
PROSPECTUS
, 1999
---------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses to be paid by the
Registrant in connection with the sale and distribution of the securities
being registered, other than underwriting discounts and commissions. All of
the amounts shown are estimated except the SEC registration fee and the New
York Stock Exchange additional listing fee.
SEC registration fee..................................... $111,200.00
NYSE additional listing fee.............................. o
Legal fees and expenses.................................. o
Accounting fees and expenses............................. o
Miscellaneous expenses................................... o
Total................................................... $o
==
Item 15. Indemnification of Directors and Officers.
Section 1701.59(D) of the Ohio Revised Code provides that a director
shall be liable in damages for any action he takes or fails to take as a
director only if it is proved by clear and convincing evidence in a court of
competent jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation
or undertaken with reckless disregard for the best interests of the
corporation. This limitation on the liability of directors does not apply to
liability asserted against a director pursuant to Section 1701.95 of the Ohio
Revised Code concerning unlawful loans, dividends and distributions of assets.
The Ohio Revised Code provides that the Cincinnati Bell amended articles
of incorporation and amended regulations may provide that the limitation on
the liability of directors provided in Section 1701.59(D) described above are
not applicable to Cincinnati Bell, however, the Cincinnati Bell amended
articles of incorporation and amended regulations do not exempt Cincinnati
Bell from this provision.
Section 1701.13(E) of the Ohio Revised Code provides that a corporation
may indemnify or agree to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order, settlement, or conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, that he
had reasonable cause to believe that his conduct was unlawful.
Section 1701.13(E)(2) further specifies that a corporation may indemnify
or agree to indemnify any person who was or is a party, or is threatened to be
made a party, to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor, by reason of
the fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of (a) any claim, issue, or matter as
to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless, and only
to the extent that, the court of common pleas or the court in which such
action or suit was brought determines, upon application, that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
as the court of common pleas or such other court shall deem proper, and (b)
any action or suit in which the only liability asserted against a director is
pursuant to Section 1701.95 of the Ohio Revised Code concerning unlawful
loans, dividends and distributions of assets.
In addition, Section 1701.13(E) requires a corporation to pay any
expenses, including attorney's fees, of a director in defending an action,
suit, or proceeding referred to above as they are incurred, in advance of the
final disposition of the action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the director in which he agrees to both (i)
repay such amount if it is proved by clear and convincing evidence in a court
of competent jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the corporation
or undertaken with reckless disregard for the best interests of the
corporation and (ii) reasonably cooperate with the corporation concerning the
action, suit, or proceeding. The
II-1
<PAGE>
indemnification provided by Section 1701.13(E) shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled
under the Cincinnati Bell articles of incorporation or amended regulations.
The Cincinnati Bell amended regulations provide that Cincinnati Bell will
indemnify directors to the fullest extent permitted by law.
Cincinnati Bell has in effect insurance policies in the amount of (i) $50
million for general officers' and directors' liability insurance for liability
incurred on actions occurring on or after January 1, 1999, (ii) $100 million
for general officers' and directors' liability insurance for liability
incurred on actions that have occurred prior to January 1, 1999 and (iii) $25
million for fiduciary liability insurance covering all of Cincinnati Bell's
directors and officers in certain instances where by law they may not be
indemnified by Cincinnati Bell.
Item 16. Exhibits.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
-----------------------------------------------------------
2.1* Agreement and Plan of Merger dated as of July 20, 1999
among Cincinnati Bell, Ivory Merger Inc. and IXC.
2.2* Agreement Governing the IXC internal Reorganization dated
as of August 16, 1999, between IXC and IXC Merger Sub,
Inc.
4.1 Provisions of the Amended Articles of Incorporation of
Cincinnati Bell effective November 9, 1989, which defined
the rights of security holders of Cincinnati Bell
(incorporated by reference to Exhibit (3)(a) to Cincinnati
Bell's Annual Report on Form 10-K filed March 31, 1999,
SEC File #1-8519).
4.2* Form of Certificate of Amendment by the Board of Directors
to the Amended Articles of Incorporation of Cincinnati
Bell including the description of each of, and a specimen
certificate of each of, the Cincinnati Bell 7 1/4% Junior
Convertible Preferred Stock Due 2007 and the Cincinnati
Bell 6 3/4% Cumulative Convertible Preferred Stock.
4.3 Provisions of the Amended Regulations of Cincinnati Bell
which define the rights of security holders of Cincinnati
Bell (incorporated by reference to Exhibit 3.2 to
Cincinnati Bell's Registration Statement on Form S-3 filed
February 26, 1985, SEC File #2-96054).
4.4* Specimen certificate of Cincinnati Bell common stock, par
value $0.01.
4.5 Rights Agreement dated as of April 29, 1997, as amended,
between Cincinnati Bell and The Fifth Third Bank, as
Rights Agent, including the form of rights certificate
attached as Exhibit B thereto (incorporated by reference
to Exhibit 4.1 to Cincinnati Bell's Registration Statement
on Form 8-A filed May 1, 1997, SEC File #1-8519, Exhibit 1
to Amendment No. 1 to the Registration Statement on Form
8-A/A, filed August 6, 1999, SEC File #1-8519).
4.7 Indenture dated as of April 21, 1998, between IXC and IBJ
Schroder Bank & Trust Company, as Trustee, in respect of
the IXC 9% Senior Subordinated Notes due 2008
(incorporated by reference to Exhibit 4.3 to IXC's Current
Report on Form 8-K filed April 22, 1998, SEC File
#0-20803).
4.8 Indenture dated as of November 30, 1998, among Cincinnati
Bell Telephone Company, as Issuer, Cincinnati Bell, as
Guarantor, and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4-A to Cincinnati
Bell's Current Report on Form 8-K filed November 30, 1998,
SEC File #1-8519).
4.9* Investment Agreement dated as of July 21, 1999, among
Cincinnati Bell, Oak Hill Capital Partners L.P. and
certain related parties of Oak Hill.
4.10 Indenture dated as of July 21, 1999, between Cincinnati
Bell Inc., and The Bank of New York, as Trustee.
5.1 Opinion of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell, regarding the legality of the securities
being registered.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
II-2
<PAGE>
23.2 Consent of Deloitte & Touche LLP.
23.3 Consents of Arthur Andersen LLP.
23.4 Consent of Ernst & Young LLP.
23.5 Consent of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
25.1 Statement of Eligibility of The Bank of New York under the
Trust Indenture Act of 1939, as amended, on Form T-1 in
its capacity as Trustee.
* Incorporated by reference to the Registrant's Form S-4 Filed with the SEC
on September 13, 1999.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made
hereunder, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) will not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Cincinnati Bell has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Cincinnati, State of
Ohio, on November 9, 1999.
CINCINNATI BELL INC.
By:
/s/ Kevin W. Mooney
--------------------
Name: Kevin W. Mooney
Title: Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard G. Ellenberger, Kevin W. Mooney and
Thomas E. Taylor, Esq. and each of them, his true and lawful attorney-in-fact
and agent with full power of substitution for him and in his name, place and
stead, in any and all capacities to sign any and all amendments (including
pre-effective and post-effective amendments) to this Registration Statement,
and to file the same with all exhibits thereto and other documents in
connection therewith, including any Registration Statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, with the SEC, grants unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all that said attorneys-in-fact and
agents or their substitute or substitutes may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Richard G. Ellenberger President, Chief Executive November 9, 1999
- -------------------------- Officer and Director (Chief
Richard G. Ellenberger Executive Officer)
/s/ Kevin W. Mooney Chief Financial Officer November 9, 1999
- -------------------------- (Principal Accounting and
Kevin W. Mooney Financial Officer)
/s/ Phillip R. Cox Director November 9, 1999
- --------------------------
Phillip R. Cox
/s/ J. Taylor Crandall Director November 9, 1999
- --------------------------
J. Taylor Crandall
/s/ William A. Friedlander Director November 9, 1999
- --------------------------
William A. Friedlander
/s/ Karen M. Hoguet Director November 9, 1999
- --------------------------
Karen M. Hoguet
/s/ Daniel J. Meyer Director November 9, 1999
- --------------------------
Daniel J. Meyer
/s/ James D. Kiggen Director November 9, 1999
- --------------------------
James D. Kiggen
II-4
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ John T. LaMacchia Director November 9, 1999
- --------------------------
John T. LaMacchia
/s/ Mary D. Nelson Director November 9, 1999
- --------------------------
Mary D. Nelson
/s/ David B. Sharrock Director November 9, 1999
- --------------------------
David B. Sharrock
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
----------------------------------------------------------------
2.1* Agreement and Plan of Merger dated as of July 20, 1999
among Cincinnati Bell, Ivory Merger Inc. and IXC.
2.2* Agreement Governing the IXC internal Reorganization dated
as of August 16, 1999, between IXC and IXC Merger Sub,
Inc.
4.1 Provisions of the Amended Articles of Incorporation of
Cincinnati Bell effective November 9, 1989, which defined
the rights of security holders of Cincinnati Bell
(incorporated by reference to Exhibit (3)(a) to Cincinnati
Bell's Annual Report on Form 10-K filed March 31, 1999,
SEC File #1-8519).
4.2* Form of Certificate of Amendment by the Board of Directors
to the Amended Articles of Incorporation of Cincinnati
Bell including the description of each of, and a specimen
certificate of each of, the Cincinnati Bell 7 1/4% Junior
Convertible Preferred Stock Due 2007 and the Cincinnati
Bell 6 3/4% Cumulative Convertible Preferred Stock.
4.3 Provisions of the Amended Regulations of Cincinnati Bell
which define the rights of security holders of Cincinnati
Bell (incorporated by reference to Exhibit 3.2 to
Cincinnati Bell's Registration Statement on Form S-3 filed
February 26, 1985, SEC File #2-96054).
4.4* Specimen certificate of Cincinnati Bell common stock, par
value $0.01.
4.5 Rights Agreement dated as of April 29, 1997, as amended,
between Cincinnati Bell and The Fifth Third Bank, as
Rights Agent, including the form of rights certificate
attached as Exhibit B thereto (incorporated by reference
to Exhibit 4.1 to Cincinnati Bell's Registration Statement
on Form 8-A filed May 1, 1997, SEC File #1-8519, Exhibit 1
to Amendment No. 1 to the Registration Statement on Form
8-A/A, filed August 6, 1999, SEC File #1-8519).
4.7 Indenture dated as of April 21, 1998, between IXC and IBJ
Schroder Bank & Trust Company, as Trustee, in respect of
the IXC 9% Senior Subordinated Notes due 2008
(incorporated by reference to Exhibit 4.3 to IXC's Current
Report on Form 8-K filed April 22, 1998, SEC File
#0-20803).
4.8 Indenture dated as of November 30, 1998, among Cincinnati
Bell Telephone Company, as Issuer, Cincinnati Bell, as
Guarantor, and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4-A to Cincinnati
Bell's Current Report on Form 8-K filed November 30, 1998,
SEC File #1-8519).
4.9* Investment Agreement dated as of July 21, 1999, among
Cincinnati Bell, Oak Hill Capital Partners L.P. and
certain related parties of Oak Hill.
4.10 Indenture dated as of July 21, 1999, between Cincinnati
Bell Inc., and The Bank of New York, as Trustee.
5.1 Opinion of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell, regarding the legality of the securities
being registered.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consents of Arthur Andersen LLP.
23.4 Consent of Ernst & Young LLP.
23.5 Consent of Thomas E. Taylor, Esq., General Counsel of
Cincinnati Bell (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
25.1 Statement of Eligibility of The Bank of New York under the
Trust Indenture Act of 1939, as amended, on Form T-1 in
its capacity as Trustee.
* Incorporated by reference to the Registrant's Form S-4 filed with the SEC
on September 13, 1999.
II-6
Exhibit 4.10
EXECUTION COPY
CINCINNATI BELL INC.,
ISSUER
AND
THE BANK OF NEW YORK,
TRUSTEE
------------------------------------
INDENTURE
Dated As Of July 21, 1999
------------------------------------
<PAGE>
Table of Contents */
Page
ARTICLE 1
DEFINITIONS..................................................2
Section 1.1..................................................2
Accelerated Amount...........................................2
Accreted Value...............................................2
Affiliate....................................................3
Authenticating Agent.........................................4
Board of Directors...........................................4
Business Day.................................................4
Cash Percentage..............................................4
Change of Control............................................4
Change of Control Offer......................................5
Change of Control Payment....................................5
Change of Control Payment Date...............................5
Code.........................................................5
Common Stock.................................................5
Company......................................................5
Conversion Price.............................................5
Conversion Ratio.............................................5
Conversion Shares............................................5
Current Market Price.........................................6
Designated Senior Debt.......................................7
Designated Value.............................................7
Event of Default.............................................7
Exchange Act.................................................8
Expiration Time..............................................8
Fair Market Value............................................8
Full Accreted Value..........................................8
Full Accretion Date..........................................8
Full Cash Payment............................................8
GAAP.........................................................8
Governmental Entity..........................................8
Holder, Holder of Notes and Noteholder.......................8
HSR Act......................................................8
Indebtedness.................................................8
Indenture....................................................9
Interest Payment Date........................................9
Investment Agreement.........................................9
- --------------------------
*/ The Table of Contents comprising pages i through vi,
inclusive, is not part of this Indenture.
i
<PAGE>
Page
Issuance Date.................................................9
IXC Transaction...............................................9
Market Price..................................................9
Material Adverse Effect.......................................9
NASDAQ .....................................................9
Note ....................................................10
Notes Register...............................................10
Notice of Default............................................10
NYSE ....................................................10
Officers' Certificate........................................10
Opinion of Counsel...........................................10
Optional Redemption..........................................10
Optional Redemption Date.....................................10
Optional Redemption Notice...................................10
Optional Redemption Price....................................10
Outstanding..................................................10
Payment Blockage Notice......................................11
Person ....................................................11
Principal....................................................11
Principal Corporate Trust Office of the Trustee..............11
Record Date..................................................11
Reference Date...............................................11
Regular Dividend.............................................12
Regular Record Date..........................................12
Responsible Officer..........................................12
SEC ....................................................12
Securities Act...............................................12
Semi-Annual Accrual Date.....................................12
Senior Debt..................................................12
Senior Debt Documents........................................13
Significant Subsidiaries.....................................13
Special Record Date..........................................13
Stated Maturity..............................................13
Subsidiary...................................................13
Trading Days.................................................13
Transaction..................................................14
Trust Indenture Act..........................................14
Trustee ....................................................14
U.S. Government Obligations..................................14
Voting Securities............................................14
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION,
TRANSFER AND EXCHANGE OF NOTES...............................14
Section 2.1 Amount, Authentication and Delivery.............14
Section 2.2 Form of Security; Denominations.................15
Section 2.3 Form of Trustee's Certificate of Authentication.15
Section 2.4 Form of Authenticating Agent's Alternate
Certificate of Authentication...................16
Section 2.5 Notes in Global Form............................16
Section 2.6 Title and Terms.................................17
Section 2.7 Execution and Authentication....................18
Section 2.8 Exchange; Registration; Registration of
Transfer and Exchange...........................18
Section 2.9 Temporary Notes.................................21
Section 2.10 Mutilated, Destroyed, Lost or Stolen Notes......21
Section 2.11 Cancellation of Surrendered Notes...............22
Section 2.12 Provisions of the Indenture and Notes for the
Sole Benefit of the Parties and the Noteholders.23
Section 2.13 CUSIP Numbers...................................23
<PAGE>
Page
ARTICLE 3
[intentionally omitted]......................................23
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY..........................23
Section 4.1 Payment of Principal and Interest on Notes.23
Section 4.2 Maintenance of Office or Agency for Transfer,
Exchange and Payment of Notes...................23
Section 4.3 Appointment to Fill Vacancy in Office of
Trustee.........................................24
Section 4.4 Duties of Paying Agent..........................24
Section 4.5 [intentionally omitted].........................25
Section 4.6 [intentionally omitted].........................25
Section 4.7 Preservation of Corporate Existence.............25
Section 4.8 Payment of Taxes................................25
Section 4.9 Compliance with Laws............................25
Section 4.10 Original Issue Discount Information.............26
Section 4.11 Notices.........................................26
Section 4.12 Reservation of Shares...........................26
Section 4.13 Change of Control...............................26
Section 4.14 Dividends or Distributions......................29
Section 4.15 Maintenance of Properties.......................30
Section 4.16 Forbearance from Restrictions on Rights of
Holders of Notes................................30
ARTICLE 5
NOTEHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE......................................30
Section 5.1 Company to Furnish Trustee Information as
to Names and Addresses of Noteholders...........30
Section 5.2 Compliance with Section 312 of the Trust
Indenture Act...................................30
Section 5.3 Annual and Other Reports to be Filed by the
Company with Trustee............................31
Section 5.4 Trustee Reports to Noteholder...................32
ARTICLE 6
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT..........................................32
Section 6.1 Events of Default Defined.......................32
Section 6.2 Acceleration....................................34
Section 6.3 Application of Moneys Collected by Trustee......36
Section 6.4 Limitation on Suits by Holders..................37
Section 6.5 Remedies Cumulative; Delay or Omission in
Exercise of Rights Not a Waiver of Default......37
Section 6.6 Control by Holders..............................38
Section 6.7 Trustee to Give Notice of Defaults Known to it,
but May Withhold in Certain Circumstances.......38
Section 6.8 Undertaking for Costs...........................38
Section 6.9 Waiver of Usury, Stay or Extension Law..........39
<PAGE>
Page
ARTICLE 7
CONCERNING THE TRUSTEE.......................................39
Section 7.1 Certain Duties and Responsibilities.............39
Section 7.2 Certain Rights of Trustee.......................40
Section 7.3 Trustee Not Liable for Recitals in Indenture
or in Notes.....................................42
Section 7.4 May Hold Notes..................................42
Section 7.5 Moneys Held in Trust; Interest Not Payable
Except by Agreement.............................42
Section 7.6 Compensation, Reimbursement and Indemnity.......42
Section 7.7 Right of Trustee to Rely on Certificate of
Officers of the Company.........................43
Section 7.8 Trustee Acquiring Conflicting Interest..........43
Section 7.9 Requirements for Eligibility of Trustee.........43
Section 7.10 Resignation of Trustee..........................44
Section 7.11 Acceptance by Successor to Trustee..............45
Section 7.12 Successor to Trustee by Merger, Conversion,
Consolidation or Succession to Business.........46
Section 7.13 Preferential Collection of Claims Against the
Company.........................................46
Section 7.14 Appointment and Qualification of Authenticating
Agent...........................................46
ARTICLE 8
CONCERNING THE NOTEHOLDERS...................................47
Section 8.1 Form and Effectiveness of Noteholder Action.....47
Section 8.2 Who May be Deemed Owners of Notes...............48
Section 8.3 Notes Owned by the Company or Controlled
or Controlling Companies Disregarded for
Certain Purposes................................49
Section 8.4 Revocation of Action by Noteholders; Action
by Noteholder Binds Future Holders..............49
ARTICLE 9
SUPPLEMENTAL INDENTURES......................................49
Section 9.1 Supplemental Indentures Without Consent of
Noteholders.....................................49
Section 9.2 Modification of Indenture with Consent of
Note Holders....................................50
Section 9.3 Effect of Supplemental Indentures...............52
Section 9.4 Notes May Bear Notation of Changes by
Supplemental Indentures.........................52
ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE....................53
Section 10.1 Consolidation and Merger of the Company and
Sale or Conveyance Permitted....................53
Section 10.2 Rights and Duties of Successor Corporation......53
Section 10.3 Opinion of Counsel..............................54
ARTICLE 11
SUBORDINATION................................................54
Section 11.1 Notes Subordinate to Senior Debt................54
<PAGE>
Page
Section 11.2 Payment Over of Proceeds Upon Dissolution, Etc.54
Section 11.3 Prior Payment to Senior Debt Upon Acceleration.55
Section 11.4 Payment To Holders.............................56
Section 11.5 Payment Permitted If No Default................57
Section 11.6 Subrogation to Rights of Holders of Senior
Debt...........................................57
Section 11.7 Provisions Solely to Define Relative Rights....57
Section 11.8 No Waiver of Subordination Provisions..........58
Section 11.9 Reliance on Judicial Order or Certificate of
Liquidating Agent..............................58
Section 11.10 Certain Conversions Not Deemed Payment.........59
Section 11.11 Distribution To Be Paid Over...................59
Section 11.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness...................................59
ARTICLE 12
[intentionally omitted]......................................60
ARTICLE 13
OPTIONAL PREPAYMENT..........................................60
Section 13.1 Optional Redemption.............................60
ARTICLE 14
VOLUNTARY CONVERSION.........................................62
Section 14.1 Conversion.....................................62
Section 14.2 Procedure......................................62
Section 14.3 Antidilution...................................63
Section 14.4 No Adjustment..................................67
Section 14.5 Officers' Certificate..........................67
Section 14.6 Fractional Shares..............................67
Section 14.7 Reorganization, Etc............................67
Section 14.8 Notice of Certain Events.......................68
Section 14.9 Taxes..........................................69
Section 14.10 Trustee Adjustment Disclaimer..................69
ARTICLE 15
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.............................................69
Section 15.1 Satisfaction and Discharge of Indenture........69
Section 15.2 [intentionally omitted]........................70
Section 15.3 Repayment of Moneys Held by Paying Agent.......70
Section 15.4 Repayment of Moneys Held by Trustee............70
ARTICLE 16
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES............................70
Section 16.1 Incorporators, Shareholders, Officers,
Directors and Employees of the Company
Exempt from Individual Liability...............70
ARTICLE 17
MISCELLANEOUS PROVISIONS.....................................71
<PAGE>
Page
Section 17.1 Successors and Assigns of the Company
Bound by Indenture.............................71
Section 17.2 Acts of Board, Committee or Officer of
Successor Corporation Valid....................71
Section 17.3 Surrender of Powers by the Company.............71
Section 17.4 Required Notices or Demands May be Served by
Mail...........................................71
Section 17.5 Officers' Certificate and Opinion of Counsel...71
Section 17.6 Payments Due on Non-business Days..............72
Section 17.7 Provisions Required by Trust Indenture Act to
Control........................................72
Section 17.8 Indenture May be Executed in Counterparts......72
Section 17.9 Governing Law..................................72
Section 17.10 Severability...................................73
<PAGE>
CROSS REFERENCE SHEET*
between
the provisions of Sections 310 through 318(a) of the Trust Indenture Act of
1939, as amended, and the Indenture dated as of July 21, 1999, between
Cincinnati Bell Inc., Issuer, and The Bank of New York, Trustee:
Section of Act Section of Indenture
310(a)(1), (2) and (5)....................4.3 and 7.9
310(a)(3) and (4).........................Not Applicable
310(b)....................................4.3, 7.8 and 7.10(b)
310(c)....................................Not Applicable
311(a) and (b)............................Not Applicable
311(c)....................................Not Applicable
312(a)....................................5.1 and 5.2
312(b) and (c)............................5.2
313(a)....................................5.4(a)
313(b)(1).................................5.4(a)
313(b)(2).................................5.4(a)
313(c)....................................5.4(a)
313(d)....................................5.4(b)
314(a)....................................5.3
314(b)....................................Not Applicable
314(c)(1) and (2).........................17.5
314(c)(3).................................Not Applicable
314(d)....................................Not Applicable
314(e)....................................17.5
314(f)....................................Not Applicable
315(a), (c) and (d).......................7.1
315(b)....................................6.7
315(e)....................................6.8
316(a)(1).................................6.1 and 6.6
316(a)(2).................................Not Applicable
316(a) last sentence......................8.3
316(b)....................................6.4
316(c)....................................Not Applicable
317(a)....................................6.2
317(b)....................................4.4
318(a)....................................17.7
*This Cross Reference Sheet is not part of the Indenture.
<PAGE>
THIS INDENTURE, dated as of July 21, 1999, between CINCINNATI BELL
INC., an Ohio corporation (the "Company"), and THE BANK OF NEW YORK, a New
York banking corporation, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has entered
into an Investment Agreement, dated as of July 21, 1999, with Oak Hill Capital
Partners, L.P., a Delaware limited partnership, OHCP Ocean I, LLC, a Delaware
limited liability company, OHCP Ocean III, LLC, a Delaware limited liability
company, OHCP Ocean IV, LLC, a Delaware limited liability company, OHCP Ocean
V, LLC, a Delaware limited liability company, Oak Hill Securities Fund, L.P.,
a Delaware limited partnership, and Oak Hill Securities Fund II, L.P., a
Delaware limited partnership, and OHCP AIV I, L.P., a Delaware limited
partnership (the "Investment Agreement");
WHEREAS, pursuant to the Investment Agreement, the Company has
issued 6 3/4% Convertible Subordinated Notes with a final maturity of July 21,
2009 with an aggregate original issue price of $400 million (together with all
notes issued in connection with the substitution, replacement or transfer
thereof, the "Initial Notes"), upon the terms and subject to the conditions
set forth in the Investment Agreement and in the Initial Notes;
WHEREAS, pursuant to the Investment Agreement, the Company has
agreed to prepare, execute and deliver to a bank or trust company designated
by the Company an indenture providing for the issuance thereunder of notes
(together with all notes issued in connection with the substitution,
replacement or transfer thereof, the "Notes") in an aggregate principal amount
at maturity equal to the aggregate Full Accreted Value (as defined herein) of
the Initial Notes having substantially all the rights, benefits and privileges
carried by the Initial Notes;
WHEREAS, after the execution and delivery of this Indenture, upon
surrender of any Initial Notes to the Company in exchange therefor, the
Company will issue and deliver Notes having an aggregate principal amount at
maturity equal to the Full Accreted Value);
WHEREAS, the Notes and certificates of authentication to be borne by
the Notes are to be substantially in the forms attached as Appendix A;
WHEREAS, this Indenture will be subject to, and shall be governed
by, the provisions of the Trust Indenture Act (as defined herein) that are
required to be part of and to govern indentures qualified under the Trust
Indenture Act;
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by or on behalf of the
Trustee as in this Indenture provided, the valid, binding and legal
obligations of the Company, and to constitute these presents a valid indenture
and agreement according to its terms, have been done and performed; and
WHEREAS, all acts and things necessary to make this Indenture a
valid, binding and legal obligation of the Company, and to constitute these
presents a valid indenture and agreement according to its terms, have been
done and performed;
<PAGE>
NOW, THEREFORE:
In consideration of the premises and the acceptance of the Notes by
the Holders thereof, the Company covenants and agrees with the Trustee, for
the equal and proportionate benefit of the respective holders from time to
time of the Notes, as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 The terms defined in this Section 1.1 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.1. All other terms used in
this Indenture which are defined in the Trust Indenture Act (as defined
herein), or which are by reference therein defined in the Securities Act (as
defined herein), shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such
terms in said Trust Indenture Act and in said Securities Act as in force at
the date of this Indenture as originally executed.
Accelerated Amount has the meaning assigned to that term in Section
4.13.
Accreted Value means, for each $1,000 of original issue price of a
Note and for any specified date, the amount calculated pursuant to clause (i),
(ii), (iii) or (iv) below for the Notes, subject to adjustment in accordance
with Section 4.13:
(i) If the specified date occurs on one or more of the
following dates (each a "Semi-Annual Accrual Date"), the Accreted Value will
equal the amount set forth below for such Semi-Annual Accrual Date:
Semi-Annual Accreted
Accrual Date Value
------------ -----
January 21, 2000 $1,033.75
July 21, 2000 1,068.64
January 21, 2001 1,104.71
July 21, 2001 1,141.99
January 21, 2002 1,180.53
July 21, 2002 1,220.37
January 21, 2003 1,261.56
July 21, 2003 1,304.14
January 21, 2004 1,348.15
July 21, 2004 1,393.65
(ii) If the specified date occurs before the first Semi-Annual
Accrual Date, the Accreted Value will equal the sum of (a) the original issue
<PAGE>
price of each Note and (b) an amount equal to the product of (1) the Accreted
Value for the first Semi-Annual Accrual Date less the original issue price of
such Note multiplied by (2) a fraction, the numerator of which is the number
of days elapsed from July 21, 1999 to the specified date, using a 360-day year
of twelve 30-day months, and the denominator of which is the number of days
from July 21, 1999 to the first Semi-Annual Accrual Date, using a 360-day year
of twelve 30-day months;
(iii) If the specified date occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal the sum of (a) the Accreted Value
for the Semi-Annual Accrual Date immediately preceding such specified date and
(b) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for the
immediately preceding Semi-Annual Accrual Date multiplied by (2) a fraction,
the numerator of which is the number of days elapsed from the immediately
preceding Semi-Annual Accrual Date to the specified date, using a 360-day year
of twelve 30-day months, and the denominator of which is 180; or
(iv) If the specified date occurs on or after the last
Semi-Annual Accrual Date, the Accreted Value will equal the Full Accreted
Value.
Affiliate has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.
Authenticating Agent means the agent of the Trustee, if any, which
at the time shall be appointed and acting pursuant to Section 7.14.
Board of Directors means the Board of Directors or the Executive
Committee thereof of the Company as the context may require.
Business Day means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of New York, New York are authorized
or required by law or executive order to close.
Cash Percentage has the meaning assigned to that term in Section
4.13(a).
Change of Control means the occurrence of any of the following:
(i) a tender offer shall be made and consummated for the
ownership of 30% or more of the outstanding voting securities of the Company;
(ii) the Company shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 75% of
the outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the former shareholders of the Company,
other than Affiliates of any party to such merger or consolidation as the same
shall have existing immediately prior to such merger or consolidation;
(iii) the Company shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary;
(iv) a person within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on December 5, 1988) of the Exchange Act shall
acquire 20% or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record), or a person within
the meaning of Section 3(a)(9) or
<PAGE>
Section 13(d)(3) (as in effect on December 5, 1988) of the Exchange Act
controls in any manner the election of a majority of the directors of the
Company;
(v) within any period of two consecutive years commencing on or
after December 5, 1988, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute a
majority thereof, unless the election of each director who was not a director
at the beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period (for purposes hereof, ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13(d)-3(d)(1)(i) pursuant to the
Exchange Act); or
(vi) a merger, consolidation or similar transaction (regardless
of whether the Company is a constituent corporation in such transaction and
other than those transactions of the type referred to in clause (ii) above)
with respect to which persons who were beneficial owners of voting securities
immediately prior to such transaction own less than 50% of the voting
securities (including securities of any successor corporation of the Company
having the ordinary power to vote in the election of directors of such
successor corporation) upon the consummation of such transaction.
For the avoidance of doubt (x) the terms being used in clauses (i), (ii),
(iii), (iv) and (v) of this definition of "Change of Control" shall have the
respective meanings for such terms as used in the Company's 1989 Stock Option
Plan as of the date hereof and (y) the IXC Transaction shall not be deemed to
be a Change of Control.
Change of Control Offer has the meaning assigned to that term in
Section 4.13.
Change of Control Payment has the meaning assigned to that term in
Section 4.13.
Change of Control Payment Date has the meaning assigned to that term
in Section 4.13.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock means the common stock, par value $.01 per share, of
the Company and any other class of capital stock of the Company into which
such stock is reclassified or reconstituted.
Company means Cincinnati Bell Inc., an Ohio corporation, and,
subject to the provisions of Article Ten, shall also include its successors
and assigns.
Conversion Price has the meaning assigned to that term in Section
14.1.
Conversion Ratio has the meaning assigned to that term in Section
14.1.
Conversion Shares means the shares of Common Stock issued or
issuable upon conversion of the Notes.
Credit Agreement means the Credit Agreement, dated as of November 9,
1999, among the Company and IXC Communications Services, Inc., as Borrowers,
Citicorp USA, Inc., as Administrative Agent, Bank of America, N.A., as
Syndication Agent, and certain Lender Parties thereto.
<PAGE>
Current Market Price per share means, on any date specified herein
for the determination thereof, (a) the average daily Market Price of the
Common Stock for those days during the period of ten consecutive Trading Days
ending on such date, and (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Market Price such date, provided, however, that
(A) if the "ex" date (as hereinafter defined) for any event (other than the
event requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 14.3(a), 14.3(b), 14.3(c) (without regard
to the exceptions in clauses (A) through (C) therein), 14.3(d) or 14.3(e)
shall occur during the ten consecutive Trading Day period referred to in
clause (a) above, then the Market Price for each Trading Day prior to the "ex"
date for such other event shall be adjusted by dividing or multiplying (as the
case may be) such Market Price by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such other event (without
regard to the exceptions in clauses (A) through (C) of Section 14.3(c)), (B)
if the "ex" date for any event (other than the event requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 14.3(a), 14.3(b), 14.3(c) (without regard to the exceptions in clauses
(A) through (C) therein), 14.3(d), or 14.3(e) shall occur on or after the "ex"
date for the event requiring such computation and prior to the day in
question, the Market Price for each Trading Day on and after the "ex" date for
such other event shall be adjusted by dividing or multiplying (as the case may
be) such Market Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such other event
(without regard to the exceptions in clauses (A) through (C) of Section
14.3(c)) and (C) if the "ex" date for the event requiring such computation is
prior to the day in question, after taking into account any adjustment
required pursuant to clause (A) or (B) of this proviso, the Market Price for
each Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value (as determined by the
Board of Directors in a manner consistent with any determination of such value
for purposes of Section 14.3(c)) of the evidences of indebtedness, shares of
capital stock or assets being distributed applicable to one share of Common
Stock as of the close of business on the day before such "ex" date.
For purpose of this definition, the term "ex" date, (1) when used
with respect to any issuance or distribution, means the first date on which
the Common Stock trades, regular way, on the relevant exchange or in the
relevant market from which the Market Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date on
which the Common Stock trades, regular way, on such exchange or in such market
after the time at which such subdivision or combination becomes effective and
(3) when used with respect to any tender or exchange offer means the first
date on which the Common Stock trades, regular way, on such exchange or in
such market after the expiration time of such tender or exchange offer.
Notwithstanding the foregoing, whenever successive adjustments to
the Conversion Price are called for pursuant to Section 14.3 and this
definition, such adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of Section 14.3 and this
definition and to avoid unjust or inequitable results, as determined by the
Board of Directors unless Holders of at least 51% of the aggregate Accreted
Value of the Notes outstanding request that the Company obtain an opinion of
an independent nationally recognized investment banking firm mutually agreed
by the Company and such Holders (the expense of which shall be borne equally
by the Company on the one hand and such Holders on the other), in which case
such adjustments shall be as determined by such investment banking firm.
<PAGE>
Designated Senior Debt means any Senior Debt in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Senior Debt shall be "Designated Senior Debt" for purposes
of this Indenture (provided that such instrument, agreement or other document
may place limitations and conditions on the right of such Senior Debt to
exercise the rights of Designated Senior Debt). If any payment made to any
holder of any Designated Senior Debt or its representative with respect to
such Designated Senior Debt is rescinded or must otherwise be returned by such
holder or representative upon the insolvency, bankruptcy or reorganization of
the Company or otherwise, the reinstated Senior Debt of the Company arising as
a result of such rescission or return shall constitute Designated Senior Debt
effective as of the date of such rescission or return.
Designated Value means, for each $1,000 original issue price of any
Note to be converted (or assumed to be converted) into Common Stock, (i) if
the conversion (or assumed conversion) occurs prior to the Full Accretion
Date, (x) for purposes of Sections 14.3(a), 14.7 and 4.14, (y) in connection
with a Change of Control or (z) on or after a record date and prior to the
related Interest Payment Date, in each case, the Accreted Value for $1,000 of
original issue price of such Note as of the date of determination, (ii) for
all other conversions prior to the Full Accretion Date, the Accreted Value for
$1,000 of original issue price of such Note as of the immediately preceding
Semi-Annual Accrual Date and (iii) at or after the Full Accretion Date, the
Full Accreted Value for $1,000 of original issue price of such Note.
Event of Default means any event specified in Section 6.1.
Exchange Act means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder.
Expiration Time has the meaning assigned to that term in Section
14.3(d).
Fair Market Value means, with respect to any property, the amount
which an informed and willing buyer under no compulsion to buy would pay an
informed and willing seller, under no compulsion to sell in an arm's length
transaction.
Full Accreted Value has the meaning assigned to that term in Section
2.6.
Full Accretion Date means July 21, 2004.
Full Cash Payment has the meaning assigned to that term in Section
4.13(a).
GAAP means generally accepted accounting principles in the United
States in effect from time to time.
Governmental Entity means any Federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory
agency, commission or authority.
Holder, Holder of Notes and Noteholder or other similar terms, mean
any person who is the registered holder of any Note.
<PAGE>
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations of the Federal Trade
Commission thereunder.
Indebtedness of any person means (i) all obligations, whether or not
represented by bonds, debentures, notes or other securities, for the repayment
of money borrowed, (ii) all obligations for the deferred payment of the
purchase price of property or assets purchased, (iii) all guarantees,
endorsements, assumptions and other contingent obligations in respect of, or
to purchase or to otherwise acquire, indebtedness of others and (iv) all
indebtedness secured by any mortgage, pledge or lien existing on property
owned, subject to such mortgage, pledge or lien, whether or not the
indebtedness secured thereby shall have been assumed.
Indenture means this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented and
shall include the forms and terms of the Notes.
Interest Payment Date has the meaning assigned to that term in
Section 2.6.
Investment Agreement has the meaning assigned to that term in the
recitals to this Indenture.
Issuance Date has the meaning assigned to that term in Section 14.3.
IXC Transaction means any merger, consolidation, business
combination or any similar transaction (by asset sale or otherwise) involving
the Company and IXC Communications, Inc., a Delaware corporation, or any of
their respective Subsidiaries.
Market Price means, per share of common stock or any other security
on any date specified herein: (a) if the common stock or such other security
is listed or admitted to trading on any national securities exchange, the
closing price of the common stock or such other security on such specified
date, or if the common stock or such other security is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security, the last trading price of the common stock or
such other security on such specified date; or (b) if there shall have been no
trading on such specified date or if the common stock or such other security
is not so designated, the average of the reported closing bid and asked prices
of the common stock or such other security on such specified date as shown by
NASDAQ and reported by any member firm of the NYSE, selected by the Company.
If neither (a) nor (b) above is applicable, Market Price shall mean the Fair
Market Value per share determined in a manner consistent with the penultimate
sentence of Section 4.13(c).
Material Adverse Effect means, when used in connection with the
Company, any change, effect, event, occurrence, condition, development or
state of facts that is materially adverse to the business, assets, results of
operations, condition (financial or otherwise) or prospects of the Company and
its subsidiaries, taken as a whole, other than any change, effect, event,
occurrence, condition, development or state of facts (i) relating to the
economy or securities markets in general or (ii) relating to the industries in
which the Company operates in general and not specifically relating to the
Company.
NASDAQ means the National Market System of the Nasdaq Stock Market,
Inc. or any successor thereto.
<PAGE>
Note has the meaning assigned that term in the recitals to this
Indenture.
Notes Register means the register or registers kept by the Company
as provided in Section 2.8.
Notice of Default has the meaning assigned to that term in Section
6.1.
NYSE means the New York Stock Exchange, Inc. or any successor
thereto.
Officers' Certificate means a certificate signed (i) by the Chairman
of the Board of Directors or a Vice Chairman of the Board of Directors or the
President or an Executive Vice President or Senior Vice President of the
Company and (ii) by the Chief Financial Officer, Treasurer or any Assistant
Treasurer or the Controller or the Secretary or any Assistant Secretary of the
Company. Each such certificate shall include the statements provided for in
Section 17.5, if and to the extent required by the provisions thereof.
Opinion of Counsel means an opinion in writing signed by legal
counsel, who may be an employee of or of counsel to the Company or the Trustee
or who may be other counsel satisfactory to the Trustee. Each such opinion
shall include the statements provided for in Section 17.5, if and to the
extent required by the provisions thereof.
Optional Redemption has the meaning assigned to that term in Section
13.1.
Optional Redemption Date has the meaning assigned to that term in
Section 13.1.
Optional Redemption Notice has the meaning assigned to that term in
Section 13.1.
Optional Redemption Price has the meaning assigned to that term in
Section 13.1.
Outstanding means, when used with reference to Notes, subject to the
provisions of Section 8.3 and as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment or redemption
of which monies in the necessary amount shall have been deposited in trust
with the Trustee or with any paying agent (other than the Company) or shall
have been set aside, segregated and held in trust by the Company for the
Holders of such Notes (if the Company shall act as its own paying agent);
provided that if such Notes, or portions thereof, are to be redeemed prior to
the maturity thereof, notice of such redemption shall have been given as
herein provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and
(c) Notes in substitution for which other Notes shall have been
authenticated and delivered, or which shall have been paid, pursuant to the
terms of Section 2.8 (except with respect to any such Note as to which proof
satisfactory to the
<PAGE>
Trustee is presented that such Note is held by a person in whose hands such
Note is a legal, valid and binding obligation of the Company).
In determining prior to the Full Accretion Date whether the Holders
of the requisite principal amount of Outstanding Notes of any or all series
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of a Note that shall be deemed to be
Outstanding for such purposes shall be the Accreted Value of such Note.
Payment Blockage Notice has the meaning assigned to that term in
Section 11.4.
Person means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Entity or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
Principal, whenever used with reference to the Notes or any Note or
any portion thereof, shall be deemed to include the Accreted Value of the
Notes and premium, if any, payable on the Notes.
Principal Corporate Trust Office of the Trustee or other similar
term means the principal corporate trust office of the Trustee at which at any
particular time its corporate trust business shall be administered and shall
initially be at 101 Barclay Street, Floor 21 West, New York, New York 10286.
Record Date means, when used with respect to any Interest Payment
Date, shall have the meaning specified in Section 2.6.
Reference Date has the meaning assigned to that term in Section
14.3.
Regular Dividend means any nominal regular quarterly dividend
declared by the Board of Directors on the shares of the Common Stock.
Regular Record Date has the meaning assigned to that term in Section
2.6.
Responsible Officer means, when used with respect to the Trustee,
any vice president, any trust officer, any assistant trust officer, any
assistant secretary, any assistant treasurer or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers, or to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity
with the particular subject and who shall have direct responsibility for the
administration of this Indenture, and when used with respect to any Holder, an
executive officer of such Holder or persons performing functions similar to
those performed by an executive officer.
SEC means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder.
Semi-Annual Accrual Date has the meaning assigned to that term in
the definition of "Accreted Value."
<PAGE>
Senior Debt means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the commencement of
any bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts (including collection expenses, attorney's fees and late
charges) owing with respect to, the following, whether direct or indirect,
absolute or contingent, secured or unsecured, due or to become due,
outstanding at July 21, 1999 or thereafter incurred, created or assumed: (a)
indebtedness of the Company for money borrowed or evidenced by bonds,
debentures, notes, guarantees or similar instruments, (b) reimbursement,
prepayment and other obligations of the Company with respect to letters of
credit, bankers' acceptances and similar facilities issued for the account of
the Company, (c) every obligation of the Company issued or assumed as the
deferred purchase price of property or services purchased by the Company, (d)
obligations of the Company as lessee under leases required to be capitalized
on the balance sheet of the lessee under GAAP or which can be capitalized
under the Code, (e) obligations of the Company under interest rate and
currency swaps, caps, floors, collars or similar arrangements intended to
protect the Company against fluctuations in interest or currency exchange
rates, (f) all indebtedness for borrowed money of the Company secured by any
Lien on any property or asset owned or held by the Company regardless of
whether the indebtedness secured thereby shall have been assumed by the
Company or shall be non-recourse to the credit of the Company, (g) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by the Company (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property),
(h) indebtedness of others of the kinds described in the preceding clauses (a)
through (g) and all dividends and distributions of others in each case that
the Company has assumed, guaranteed or otherwise assured the payment thereof,
directly or indirectly (including guarantees of indebtedness for borrowed
money of any of its Subsidiaries), and/or (i) deferrals, renewals, extensions
and refundings of, or amendments, modifications or supplements to, any
indebtedness or obligation described in the preceding clauses (a) through (h)
whether or not there is any notice to or consent of the Holders; provided,
however, that the following shall not constitute Senior Debt: (i) any
particular indebtedness or obligation that is owed by the Company to any of
its direct and indirect Subsidiaries, (ii) any particular indebtedness,
deferral, renewal, extension or refunding if it is expressly stated in the
governing terms or in the assumption thereof that the indebtedness involved is
pari passu in right of payment with or junior in right of payment to the Notes
and (iii) any trade payables and other accrued current liabilities incurred in
the ordinary course of business.
Senior Debt Documents means, collectively, any and all agreements
relating to any Senior Debt, including, without limitation, the Credit
Agreement.
Significant Subsidiaries has the meaning ascribed to such term in
Rule 1-02(w) of Regulation S-X under the Securities Act and the Exchange Act.
Special Record Date has the meaning assigned to that term in Section
2.6.
Stated Maturity, when used with respect to the Notes or any
installment of Principal thereof or interest thereon, means the date specified
in the Note or this Indenture as the fixed date on which the Principal of such
Note or such installment of interest is due and payable.
Subsidiary of any Person means another Person, an amount of the
voting stock, other voting ownership or voting partnership interests of which
is sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are
<PAGE>
no voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first Person.
Trading Days means, with respect to a security traded on a
securities exchange, automated quotation system or market, a day on which such
exchange, system or market is open for a full day of trading.
Transaction has the meaning assigned to that term in Section 14.7.
Trust Indenture Act means the Trust Indenture Act of 1939, as
amended, as in force at the date of this Indenture as originally executed,
except as provided in Section 9.4 hereof.
Trustee means The Bank of New York, a New York banking corporation,
and, subject to the provisions of Article Seven hereof, shall also include its
successor trustee appointed pursuant to the terms of this Indenture.
U.S. Government Obligations means securities which are (i) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America which, in either case, have a maturity of one year or less.
Voting Securities means, with respect to any Person, securities of
such Person having the ordinary power to vote in the election of the board of
directors or other governing body of such Person.
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION,
TRANSFER AND EXCHANGE OF NOTES
Section 2.1 Amount, Authentication and Delivery
The aggregate original issue price of Notes which may be
authenticated and delivered under this Indenture is $400 million except for
Notes authenticated and delivered upon registration or transfer of, or
exchange for, or in lieu of, other Notes pursuant to Sections 2.8, 2.9, 2.10,
9.4 or 13.1 or in connection with a Change of Control Offer pursuant to
Section 4.13.
Upon the execution of this Indenture, or from time to time
thereafter, the Notes may be executed and registered by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Notes to or upon the written
order of the Company, signed by its Chairman of the Board of Directors or a
Vice Chairman of the Board of Directors or its President or an Executive Vice
President and by its Chief Financial Officer, Treasurer or an Assistant
Treasurer under its corporate seal, without any further action by the Company
hereunder.
Only such Notes as shall bear thereon either a certificate of
authentication substantially in the form recited in Section 2.3, or an
alternate certificate of authentication substantially in the form recited in
Section 2.4, duly executed by the
<PAGE>
Trustee or by the Authenticating Agent on its behalf, respectively, shall be
entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee or by the Authenticating Agent on its
behalf upon any Note executed by the Company shall be conclusive evidence that
the Note so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.
Section 2.2 Form of Security; Denominations. The Notes shall be
substantially in such form as set forth in Appendix A to this Indenture and
may have imprinted or otherwise reproduced thereon such letters, numbers or
other marks of identification or designation and such legend or legends, not
inconsistent with the provisions of this Indenture, as may be required to
comply with any law or with any rules or regulations pursuant thereto, or with
any rules of any securities exchange or to conform to general usage, all as
may be determined by the officers of the Company executing such Notes, as
evidenced by their execution of the Notes.
The Notes shall be issued as registered Notes without coupons in
denominations of $1,000 original issue price.
Each Note shall be dated the date of authentication and shall bear
interest in accordance with Section 2.6.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture, and the Company and
the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
Section 2.3 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Notes shall be in substantially
the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By
----------------------------------
Authorized Signatory
<PAGE>
Section 2.4 Form of Authenticating Agent's Alternate Certificate of
Authentication. The Authenticating Agent's alternative certificate of
authentication on all Notes shall be in substantially the following form:
This is one of the Notes referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By
----------------------------------
Authenticating Agent
By
----------------------------------
Authorized Signature
Section 2.5 Notes in Global Form. The Notes shall be issuable in
global form. Any such Note may provide that it shall represent the aggregate
amount of Outstanding Notes from time to time endorsed thereon and may also
provide that the aggregate amount of Outstanding Notes represented thereby may
from time to time be reduced or increased to reflect exchanges. Any
endorsement of a Note in global form to reflect the amount, or any increase or
decrease in the amount, or changes in the rights of Holders, of Outstanding
Notes represented thereby, shall be made in such manner and by such Person or
Persons as shall be specified therein or in the order of the Company to be
delivered to the Trustee pursuant to Section 2.1. The Trustee shall deliver
and redeliver any Note in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable order of the company. Any instructions by the Company with respect
to endorsement or redelivery of a Note in global form shall be in writing but
need not be accompanied by an Opinion of Counsel.
Any registered Note in global form authenticated and delivered
hereunder shall bear a legend in substantially the following form with such
changes as may be required by the depositary:
This security is in global form within the meaning of the
indenture hereinafter referred to and is registered in the name
of a depositary or a nominee of a depositary. Unless and until
it is exchanged in whole or in part for securities in
certificated form in the limited circumstances described in the
indenture, this security may not be transferred except as a
whole by the depositary or a nominee of the depositary to the
depositary or another nominee of the depositary or by the
depositary or any such nominee to a successor depositary or a
nominee of such successor depositary.
Section 2.6 Title and Terms. The Notes shall be known and designated
as the 6.75% Convertible Subordinated Notes Due 2009 of the Company. The
Company shall pay cash interest on the Notes at the rate and in the manner
specified below. Prior to July 21, 2004 (the "Full Accretion Date"), cash
interest will not accrue or be payable on the Notes, but the Notes will
accrete on a daily basis, compounded semi-annually on January 21 and July 21
of each year, at the rate of 6.75% per annum of the Accreted Value of the
Notes from July 21, 1999 through the Full Accretion Date. On the Full
Accretion Date, the Accreted Value of each $1,000.00 of original issue price
of the Notes will be equal to $1,393.65 (the "Full Accreted Value"). From the
Full Accretion Date, interest on the Notes will accrue on the Full Accreted
Value of the Notes at the rate of
<PAGE>
6.75% per annum from the most recent Interest Payment Date to which interest
has been paid or, if no interest has been paid, from the Full Accretion Date.
The Company will pay, in cash, such interest semiannually in arrears on
January 21 and July 21 of each year (each an "Interest Payment Date"),
commencing on January 21, 2005, or if any such day is not a Business Day on
the next succeeding Business Day, to Holders of record at the close of
business on the January 6 or July 6 immediately preceding the Interest Payment
Date (a "Regular Record Date"), except that interest not so punctually paid or
duly provided for, if any, will be paid to the person in whose name each Note
is registered as of the close of business on a special record date to be fixed
by the Company (a "Special Record Date" and each Regular Record Date and
Special Record Date, a "Record Date"), notwithstanding the subsequent
cancellation of this Note prior to such Interest Payment Date. Upon any
conversion of the Notes or any portion thereof into Common Stock following the
Full Accretion Date, only if such conversion occurs (x) following notice by
the Company of its option to redeem each Note under Section 13.1, (y) in
connection with a Change of Control or (z) on or after a Record Date and prior
to the applicable Interest Payment Date, the Company will pay, in cash, any
accrued and unpaid interest on each Note (or the portion being converted). All
accretions and interest payable with respect to the Notes will be computed on
the basis of a 360-day year consisting of twelve 30-day months.
Payment of the Principal of and interest on the Notes shall be made
by wire transfer in immediately available funds to a bank account in the
United States designated by each Holder in a written notice received by the
Company (a) in the case of a payment of interest (other than any interest
payable in connection with the conversion of any Note into Common Stock),
prior to the Record Date immediately preceding the date on which such payment
is due and (b) in the case of payment of Principal on the final maturity of
the Notes, prior to the Regular Record Date immediately preceding such final
maturity, or in the case of payment of Principal or interest on an earlier
redemption, repurchase or conversion date, no later than the fifteenth day
prior to such earlier redemption, repurchase or conversion date; provided,
that in the case of such payment of Principal, the Notes shall have been
surrendered to the Company for payment on or before the payment date. To the
extent lawful, the Company shall pay interest on overdue Principal, as
applicable, in cash at the rate of 8.75% per annum; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) at the same rate. In addition, if an Event of Default occurs and is
continuing, to the extent lawful, the Company shall pay in cash interest at
the rate of 8.75% per annum on the Accreted Value of the Notes until the date
such Event of Default is cured, waived or otherwise satisfied in full;
provided, that if such cash default interest is paid prior to the Full
Accretion Date, the Accreted Value of the Notes shall be reduced to reflect
such payment in cash.
Section 2.7 Execution and Authentication. The Notes shall be
executed on behalf of the Company (i) by its Chairman of the Board of
Directors or a Vice Chairman of the Board of Directors or its President or an
Executive Vice President, and (ii) by its Chief Financial Officer, Treasurer
or an Assistant Treasurer or its Secretary or an Assistant Secretary. Each
such signature upon the Notes may be in the form of a facsimile signature of
any such officer and may be imprinted or otherwise reproduced on the Notes and
for that purpose the Company may adopt and use the facsimile signature of any
person who has been or is or shall be such officer. In case any such officer
of the Company signing any of the Notes shall cease to be such officer before
such Notes so signed shall have been authenticated and made available for
delivery by the Trustee or by the Authenticating Agent on its behalf, or
disposed of by the Company, such Notes nevertheless may be authenticated and
delivered or disposed of as though such person had not ceased to be such
officer of the Company.
<PAGE>
The Company shall execute and the Trustee shall, in accordance with
this Section and the order of the Company, authenticate and deliver one or
more Notes in global form that (i) shall represent and shall be denominated in
an amount equal to the original issue price of the Outstanding Notes to be
represented by such Note or Notes in global form, (ii) shall be registered, if
a registered Note, in the name of the depositary for such Note or Notes in
global form or the nominee of such depositary, (iii) shall be delivered by the
Trustee to such depositary and (iv) shall bear the legend set forth in Section
2.5 and any other legend permitted under this Indenture.
Each depositary designated by the Company for a registered Note in
global form must, at the time of its designation and at all times while it
serves as depositary, be a clearing agency registered under the Exchange Act
and any other applicable statute or regulation. The Trustee shall have no
responsibility to determine if the depositary is so registered. Each
depositary shall enter into an agreement with the Trustee governing the
respective duties and rights of such depositary and the Trustee with regard to
Notes issued in global form.
Section 2.8 Exchange; Registration; Registration of Transfer and
Exchange. Any Note may be exchanged for a like aggregate original issue price
of any Note of other authorized denominations. Notes to be exchanged shall be
surrendered at the office or agency to be maintained by the Company as
provided in Section 4.2 (or at any of such offices or agencies if more than
one), and the Company shall execute and register and the Trustee or the
Authenticating Agent on its behalf shall authenticate and make available for
delivery in exchange therefor the Note or Notes which the Holder making the
exchange shall be entitled to receive.
The Company shall keep or cause to be kept, at the office or agency
to be maintained by the Company as provided in Section 4.2 (or at least one of
said offices or agencies, if more than one), a register or registers in which,
subject to such reasonable regulations as it may prescribe, the Company shall
register Notes and shall register the transfer of Notes as in this Article Two
provided (the "Notes Register"). Any such register shall be in written form or
in any other form capable of being converted into written form within a
reasonable time. At all reasonable times the information contained in such
register or registers shall be available for inspection by the Trustee. Upon
due presentment for registration of transfer of any Note at such office or
agency, the Company shall execute and register and the Trustee or the
Authenticating Agent on its behalf shall authenticate and make available for
delivery in the name of the transferee or transferees a new Note or Notes for
a like aggregate principal amount. The Company shall give to any Holder of at
least 5% of the aggregate original issue price of Notes promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered Holders of Notes.
All Notes presented for registration of transfer or for exchange or
payment shall (if so required by the Company or the Trustee) be duly endorsed
by, or be accompanied by a written instrument or instruments of transfer in
form satisfactory to the Trustee duly executed by, the Holder or his or her
attorney duly authorized in writing.
The Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
exchange or transfer of Notes. No service charge shall be made for any such
transaction.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Notes for a period of fifteen days preceding the
first mailing of notice of redemption of Notes to be redeemed or (b) to
register the transfer of or exchange any
<PAGE>
Notes selected, called or being called for redemption as a whole or the
portion being redeemed of any such Notes selected, called or being called for
redemption in part.
All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Notes surrendered upon such
transfer or exchange.
Each Note issued in global form authenticated under this Indenture
shall be registered in the name of the depositary designated for such series
or a nominee thereof and delivered to such depositary or a nominee thereof or
custodian therefor, and each such Note issued in global form shall constitute
a single Note for all purposes of this Indenture.
Notwithstanding any other provision (other than the provisions set
forth in the next four succeeding paragraphs of this Section) of this Section,
unless and until it is exchanged in whole or in part for Notes in certificated
form in the circumstances described below, a Note in global form representing
all or a portion of the Notes may not be transferred except as a whole by the
depositary to a nominee of such depositary or by a nominee of such depositary
to such depositary or another nominee of such depositary or by such depositary
or any such nominee to a successor depositary or a nominee of such successor
depositary.
If at any time the depositary for the Notes notifies the Company
that it is unwilling or unable to continue as depositary for the Notes or if
at any time the depositary for the Notes shall no longer be eligible under
Section 2.7, the Company shall appoint a successor depositary with respect to
the Notes. If a successor depositary for the Notes is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, the Company shall execute, and the Trustee, upon
receipt of a order of the Company for the authentication and delivery of
certificated Notes of like tenor, shall authenticate and deliver Notes of like
tenor in certificated form, in authorized denominations and in an aggregate
principal amount equal to the Full Accreted Value of the Note or Notes of like
tenor in global form in exchange for such Note or Notes in global form.
The Company may at any time in its sole discretion determine that
Notes issued in global form shall no longer be represented by such a Note or
Notes in global form. In such event the Company shall execute, and the
Trustee, upon receipt of an order of the Company for the authentication and
delivery of certificated Notes of like tenor, shall authenticate and make
available for delivery, Notes of like tenor in certificated form, in
authorized denominations and in an aggregate principal amount equal to the
Full Accreted Value of Note or Notes of like tenor in global form in exchange
for such Note or Notes in global form.
The depositary for the Notes may surrender a Note in global form in
exchange in whole or in part for Notes in certificated form on such terms as
are acceptable to the Company and such depositary. Thereupon, the Company
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(a) to each Person specified by such depositary a new
certificated Note or Notes of like tenor, of any authorized denomination as
requested by such Person, in aggregate Full Accreted Value equal to and in
exchange for such Person's beneficial interest in the Note in global form; and
<PAGE>
(b) to such depositary a new Note in global form of like tenor
in a denomination equal to the difference, if any, between the original issue
price of the surrendered Note in global form and the aggregate original issue
price of certificated Notes delivered to Holders thereof.
Upon the exchange of a Note in global form for Notes in certificated
form, such Note in global form shall be canceled by the Trustee. Notes in
certificated form issued in exchange for a Note in global form pursuant to
this Section shall be registered in such names and in such authorized
denominations as the depositary for such Note in global form, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall make available for delivery such Notes
to the Persons in whose names such Notes are so registered.
Section 2.9 Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute and register and the Trustee shall authenticate
and make available for delivery temporary Notes, which temporary Notes are
printed, lithographed or typewritten. Temporary Notes may be of any
denomination and substantially in the form of the definitive Notes, but with
such omissions, insertions and variations as may be appropriate for temporary
Notes, all as may be determined by the Company. Temporary Notes may contain
such reference to any provisions of this Indenture as may be appropriate.
Every temporary Note shall be executed and registered by the Company and be
authenticated by the Trustee or by the Authenticating Agent on its behalf upon
the same conditions and in substantially the same manner, and with like
effect, as the definitive Notes. Such temporary Notes may be in global form,
representing all or a portion of the Outstanding Notes. Except in the case of
temporary Notes in global form, each of which shall be exchanged in accordance
with the provisions thereof, without unreasonable delay the Company shall
execute and register and shall furnish definitive Notes and thereupon
temporary Notes may be surrendered in exchange therefor at the office or
agency to be maintained by the Company as provided in Section 4.2 (or at any
of said offices or agencies, if more than one), and the Trustee or the
Authenticating Agent on its behalf shall authenticate and make available for
delivery in exchange for such temporary Notes a like aggregate principal
amount of definitive Notes of authorized denominations. Until so exchanged,
the temporary Notes shall be entitled to the same benefits under this
Indenture as definitive Notes.
Section 2.10 Mutilated, Destroyed, Lost or Stolen Notes. In case any
temporary or definitive Note shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute and register, and upon its
request the Trustee shall authenticate and make available for delivery, a new
Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the Note so mutilated, or in lieu of and in substitution for
the Note so destroyed, lost or stolen. In every case the applicant for a
substituted Note shall furnish to the Company and to the Trustee such note or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and to the Trustee evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof. The
Trustee may authenticate any such substituted Note and make available for
delivery the same upon the written request or authorization of any officer of
the Company. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
connected therewith. In case any Note which has matured or is about to mature
shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Note, pay or authorize the payment of such
Note (without surrender thereof except in the case of a mutilated Note) if the
applicant for such payment shall furnish to
<PAGE>
the Company and to the Trustee such Note or indemnity as may be required by
them to save each of them harmless and, in case of destruction, loss or theft,
evidence to the satisfaction of the Company and the Trustee of the
destruction, loss or theft of such Note and of the ownership thereof.
Every substituted Note issued pursuant to the provisions of this
Section 2.10 by virtue of the fact that any such Note is destroyed, lost or
stolen shall, with respect to such Note, constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall at any time be enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued under this Indenture. All Notes shall be held and owned upon
the express condition that (to the extent lawful) the foregoing provisions
shall be exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies, notwithstanding any law or statute now existing or hereafter enacted
to the contrary with respect to the replacement or payment of negotiable
instruments or other notes without their surrender.
Section 2.11 Cancellation of Surrendered Notes. All Notes
surrendered for payment, exchange or registration of transfer shall, if
surrendered to the Company, the Authenticating Agent or any paying agent, be
canceled and delivered to the Trustee or, if surrendered to the Trustee, be
cancelled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. On written
request of the Company, the Trustee shall deliver to the Company cancelled
Notes held by the Trustee. With the consent of the Company, the Trustee may
but shall not be required to destroy cancelled Notes. If the Company shall
acquire any of the Notes, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes
unless and until the same are cancelled and delivered to the Trustee or
surrendered to the Trustee for cancellation.
Section 2.12 Provisions of the Indenture and Notes for the Sole
Benefit of the Parties and the Noteholders. Nothing in this Indenture or in
any Note, expressed or implied, shall give or be construed to give to any
person other than the parties hereto and their successors and the Holders of
the Notes any legal or equitable right, remedy or claim under or in respect of
this Indenture, or under any covenant, condition or provision herein
contained, all the covenants, conditions and provisions hereof being for the
sole benefit of the parties hereto and their successors and of the Holders of
the Notes.
Section 2.13 CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on such Notes, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers used with
respect to the Notes.
<PAGE>
ARTICLE 3
[intentionally omitted]
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 Payment of Principal and Interest on Notes. The Company
will duly and punctually pay or cause to be paid the Principal of and interest
on each of the Notes, at the place or places, at the respective times and in
the manner provided in the Notes and in this Indenture.
Section 4.2 Maintenance of Office or Agency for Transfer, Exchange
and Payment of Notes. As long as any of the Notes remain Outstanding, the
Company will maintain an office or agency in the Borough of Manhattan, the
City of New York, State of New York (and at such other place, if any, as shall
be specified in the form of such Note as a place for payment of Principal and
interest) where the Notes may be presented for registration of transfer and
for exchange as in this Indenture provided, where notices and demands to or
upon the Company in respect of the Notes or of this Indenture may be served
and where the Notes may be presented for payment. The Company will give to the
Trustee notice of the location of each such office or agency and of any change
in the location thereof. In case the Company shall fail to maintain any such
office or agency or shall fail to give such notice of the location or of any
change in the location thereof, presentations may be made and notices and
demands may be served at the Principal Corporate Trust Office of the Trustee.
Section 4.3 Appointment to Fill Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
Section 4.4 Duties of Paying Agent. (a) Whenever the Company shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provisions of this Section 4.4,
(1) that it will hold all sums held by it as such agent for the
payment of the Principal of and interest on the Notes (whether such sums
have been paid to it by the Company or by any other obligor on the Notes)
or the distributions described in Section 4.14 in trust for the benefit
of the respective Holders of the Notes entitled thereto and will notify
the Trustee of the receipt of sums to be so held,
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of the
Principal of or interest on the Notes when the same shall be due and
payable, and
(3) at any time during the continuance of such failure, immediately
pay to the Trustee all sums so held in trust by the paying agent.
<PAGE>
(b) Company as Paying Agent. If the Company shall act as its
own paying agent, it will, on or before each due date of the Principal of,
premium, if any, or interest on the Notes, set aside, segregate and hold in
trust for the benefit of the respective Holders of the Notes entitled thereto
a sum sufficient to pay such Principal of or interest, if any, so becoming
due. The Company will promptly notify the Trustee of any failure to take such
action.
(c) Turnover to Trustee by Paying Agent of Company. Anything in
this Section 4.4 to the contrary notwithstanding, the Company may, at any
time, pay or cause to be paid to the Trustee all sums held in trust by it or
any paying agent hereunder as required by this Section 4.4, such sums to be
held by the Trustee upon the trusts herein contained.
(d) Holding Sums in Trust. Anything in this Section 4.4 to the
contrary notwithstanding, the agreement to hold sums in trust as provided in
this Section 4.4 is subject to the provisions of Sections 15.3 and 15.4.
Section 4.5 [intentionally omitted]
Section 4.6 [intentionally omitted]
Section 4.7 Preservation of Corporate Existence. Except in the event
of a transaction permitted under Section 10.1 or a Change of Control, the
Company shall do or cause to be done all things necessary to: (i) preserve and
maintain in full force and effect its corporate existence and good standing
under the laws of its jurisdiction of incorporation or organization; and (ii)
preserve and maintain in full force and effect all material rights,
privileges, qualifications, licenses and franchises necessary in the normal
conduct of its business, provided, however, that the Company shall not be
required to preserve any such right, privilege, qualification, license, or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to
the Holders.
Section 4.8 Payment of Taxes. The Company shall, or shall cause its
Subsidiaries to, pay or discharge before the same shall become delinquent, all
tax assessments and governmental charges or levies upon it or its properties
or assets, unless the same are being contested in good faith by appropriate
proceedings.
Section 4.9 Compliance with Laws. The Company shall comply, and
shall cause each Subsidiary to comply, in all material respects with (i) its
articles or certificate of incorporation and by-laws or other organizational
or governing documents, (ii) any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Entity, in
each case applicable to or binding upon the Company or any of its property or
to which the Company or any of its property is subject and (iii) the
directions of any Governmental Entity having jurisdiction over it or its
business, except any such failure to comply which would not have a Material
Adverse Effect.
Section 4.10 Original Issue Discount Information. The Company shall
file with the Trustee promptly at the end of each calendar year (i) a written
notice specifying the amount of original issue discount (including daily rates
and amounts of original issue discount (including daily rates and accrual
periods) accrued on Outstanding Notes as of the end of such year and (ii) such
other specific information relating to such original issue discount as may
then be relevant under the Code.
<PAGE>
Section 4.11 Notices. Upon knowledge of the Chief Executive Officer,
the President, any Executive Vice President or the Chief Financial Officer of
the Company of the events described below, the Company shall give prompt
written notice (but in any event within 20 days) to the Trustee and to each
Holder of Notes:
(a) of the occurrence of any default under, or breach of, any
of the provisions of the Notes; and
(b) of any acceleration prior to stated maturity under the
Senior Debt.
Each notice pursuant to this Section 4.11 shall be accompanied by a
certificate of the Company setting forth details of the occurrence referred to
therein and stating what action the Company proposes to take with respect
thereto.
Section 4.12 Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue upon conversion of Outstanding Notes as provided herein and
therein, such number of shares of Common Stock as shall then be issuable upon
the conversion of Outstanding Notes. The Company shall issue the Common Stock
into which the Notes are convertible upon the proper surrender of the Notes in
accordance with the provisions hereof and shall otherwise comply with the
terms thereof.
Section 4.13 Change of Control.
(a) If, on or prior to July 21, 2004, a Change of Control
occurs in which all or a portion of the consideration received by the
Company's shareholders is in cash then, notwithstanding any other provision of
this Indenture or the Notes, a Holder of a Note may elect to receive in
connection with the Change of Control Payment pursuant to Section 4.13(b) an
amount equal to the product of (x) the Cash Percentage and (y) the difference
between the Full Accreted Value of such Note and the Accreted Value of such
Note on the date such Change of Control occurs (the "Full Cash Payment");
provided, however, that if the Holder of a Note elects not to have the Company
purchase all or any portion of its Note pursuant to Section 4.13(b), such
Holder shall not be entitled to the Full Cash Payment. The "Cash Percentage"
means the ratio (expressed as a percentage) of cash received by the Company's
shareholders in a Change of Control described in the first sentence of this
Section 4.13(a) to the Fair Market Value of all consideration (including,
without limitation, such cash portion) received by the Company's shareholders
in such Change of Control. The Fair Market Value shall be determined in
accordance with Section 4.13(c).
(b) Upon the occurrence of a Change of Control (whether the
consideration is cash, securities or other property, or a combination
thereof), the Company shall offer, and each Holder of the Notes shall have the
right to require the Company, to repurchase all, or a portion (equal to the
Cash Percentage multiplied by the Accreted Value) of such Holder's Notes at a
cash price (the "Change of Control Payment") equal to the greater of (i) the
sum of 101% of the Accreted Value of the Notes to be repurchased and the Full
Cash Payment (together, the "Accelerated Amount") and (ii) the Fair Market
Value (as determined in accordance with Section 4.13(c)) of the consideration
(whether such consideration is cash, securities or other property, or a
combination thereof) that such Holder would have received had it converted its
Notes to be repurchased at the Accelerated Amount into shares of Common Stock
immediately prior to such Change of Control, in each case plus any accrued and
unpaid cash interest thereon to the date of repurchase.
<PAGE>
(i) Within 30 days following any Change of Control, the Company
shall mail a notice to the Trustee and the Holders of the Notes, at the
Holders' addresses as they appear on the Notes Register, stating:
(A) that an offer is being made pursuant to this Section
4.13(b) and that all Notes tendered and not withdrawn will be
accepted for payment;
(B) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization, each after giving
effect to such Change of Control);
(C) the purchase price and the purchase date (which shall
be a Business Day), which shall be not later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date");
(D) that any Notes not tendered will continue to accrue
Accreted Value and interest pursuant to their terms; provided, that
the Full Cash Payment provided in Section 4.13(a) shall not be made;
(E) that, unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment
pursuant to the repurchase offer made pursuant to this Section
4.13(b) (the "Change of Control Offer") shall cease to accrue
Accreted Value and interest on and after the Change of Control
Payment Date; and
(F) the procedures that Holders must follow to accept the
Change of Control Offer.
(ii) The Company shall cause the Change of Control Offer to
remain open for at least 20 Business Days or for such longer period as is
required by law.
(iii) On the Change of Control Payment Date, the Company shall:
(A) accept for payment all Notes or portions thereof
validly tendered and not withdrawn pursuant to the Change of Control
Offer;
(B) pay to each Holder of Notes so accepted the Change of
Control Payment in accordance with the terms of this Section in cash
in immediately available funds.
(iv) If any of the Notes are partially tendered to the extent
permitted under Section 4.13(b), the Company shall execute and register
and the Trustee or Authenticating Agent on its behalf shall authenticate
and make available for delivery, at the expense of the Company, a new
Note or Notes with a Full Accreted Value equal to that of any unpurchased
portion of the Notes surrendered.
<PAGE>
(c) The Fair Market Value of the cash, securities and other
property received in a Change of Control by the Company's shareholders shall
be determined in good faith by the Board of Directors and the value of any
securities shall be determined by reference to the Market Price of such
securities. The Fair Market Value determined by the Board of Directors shall
be conclusive and binding unless the Holders of at least 51% of the aggregate
Accreted Value of the Notes Outstanding request that the Company obtain an
opinion of an independent nationally recognized investment banking firm
mutually acceptable to the Company and such Holders (the expense of which is
to be borne equally by the Company on the one hand and such Holders on the
other), in which event the Fair Market Value of such cash, securities and
other property shall be determined by such investment banking firm.
(d) Any Notes not tendered pursuant to Section 4.13(b) will (i)
continue to accrue Accreted Value and interest pursuant to their terms;
provided that the Full Cash Payment for such Notes shall not be made and (ii)
thereafter be convertible in the manner provided in Section 14.7.
(e) Immediately prior to the occurrence of any Change of
Control, the Company shall at its option either (i) deposit with the Trustee
for the benefit of the Holders of the Notes, an amount in cash sufficient to
fully satisfy the Company's payment obligations under Section 4.13(b) with
respect to such Change of Control or (ii) cause the payment obligations of the
Company under Section 4.13(b) with respect to such Change of Control to be
assumed by the entity or entities issuing or paying, as the case may be, the
stock, other securities or other property or assets (including cash) issued or
paid with respect to or in exchange for the Common Stock in connection with
such Change of Control.
Section 4.14 Dividends or Distributions. In addition to the interest
on the Notes described in Article Two of this Indenture, in the event that the
Company shall declare a dividend or make any other distribution (including,
without limitation, in cash, in capital stock (which shall include, without
limitation, any options, warrants or other rights to acquire capital stock) of
the Company, a redemption pursuant to, or a triggering event under, a
shareholder rights plan, "poison pill" or similar arrangement, or in other
property or assets and including a Regular Dividend) to holders of Common
Stock, then, at the option of Holders of the Notes (which shall be determined
by at least 51% of the aggregate Accreted Value of the Notes Outstanding), (i)
the Board of Directors shall declare, and the Company shall pay to the
Trustee, on behalf of the Holders, a distribution in an amount equal to the
amount of such dividend or distribution received by a holder of the number of
shares of Common Stock into which such Note is convertible on the record date
for such dividend or distribution at the Designated Value as of such date or
(ii) except in the case of Regular Dividends, the Conversion Price of the
Notes shall be adjusted pursuant to Section 14.3 hereof. Promptly after the
Company's declaration of a dividend or making of any other distribution (but
not later than 10 Business Days thereafter), the Company shall deliver a
notice of such dividend or distribution to the Trustee and the Holders of the
Notes. Within 10 Business Days of such notice, the Trustee shall notify the
Company of the Holders' election under this Section 4.14 (which shall be
evidenced by a written resolution by at least 51% of the aggregate Accreted
Value of the Notes outstanding). If the Holders of the Notes elect to receive
such dividends or distributions in the manner set forth in clause (i) above,
the Company shall pay all such distributions to the Trustee for the benefit of
the Holders of the Notes until the earlier of (i) such time as such Notes are
converted into Common Stock and (ii) the redemption of Notes under Section
4.13. Upon conversion of any Note, the portion of each such distribution
relating to the Note so converted (together with any interest or other income
thereon) shall be distributed to the Holder of such Note
<PAGE>
at the time of conversion. In the event of a repurchase of any Note under
Section 4.13(b), the portion of each such distribution relating to the Note so
repurchased (together with any interest or other income thereon) shall be
distributed to the Holder of such Note at the time of such repurchase. In the
event of any Change of Control, the Cash Percentage of each such distribution
held by the Trustee shall be distributed to the Holders of the Notes upon such
Change of Control. During the time that any such distribution is held by the
Trustee on behalf of the Holders, the Trustee shall invest distributions for
the benefit of the respective Holders in U.S. Government Obligations as
provided in Section 7.5 hereof.
Section 4.15 Maintenance of Properties. The Company shall maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted, except for
such failures to maintain and preserve which would not have a Material Adverse
Effect.
Section 4.16 Forbearance from Restrictions on Rights of Holders of
Notes. The Company will not enter into any agreement or instrument or
otherwise agree to any covenant that would in any way limit the right of the
Holders of the Notes to convert the Notes into Common Stock.
ARTICLE 5
NOTEHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
Section 5.1 Company to Furnish Trustee Information as to Names and
Addresses of Noteholders. The Company covenants and agrees that it will
furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes:
(a) semiannually, not more than fifteen days after each Record
Date for the payment of semiannual interest on the Notes, as of such Record
Date, and
(b) at such other times as the Trustee may request in writing,
within thirty days after receipt by the Company of any such request, as of a
date not more than fifteen days prior to the time such information is
furnished,
excluding from any such list names and addresses received by the Trustee in
the capacity of Notes registrar, if so acting.
Section 5.2 Compliance with Section 312 of the Trust Indenture Act
The Company agrees to provide information relating to the Holders of the Notes
to the Trustee pursuant to the requirements of Section 312 of the Trust
Indenture Act. The Trustee agrees to furnish information to the Holders of the
Notes pursuant to the requirements of Section 312 of the Trust Indenture Act.
Section 5.3 Annual and Other Reports to be Filed by the Company with
Trustee. The Company covenants:
(a) to file with the Trustee, within fifteen days after the
Company is required to file the same with the SEC, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the
<PAGE>
foregoing as the SEC may from time to time by rules and regulations prescribe)
which the Company may be required to file with the SEC pursuant to Section 13
or Section 15(d) of the Exchange Act; or, if the Company is not required to
file information, documents or reports pursuant to either of such sections,
then to file with the Trustee and the SEC, in accordance with rules and
regulations prescribed from time to time by the SEC, such of the supplementary
and periodic information, documents and reports which may be required pursuant
to Section 13 of the Exchange Act in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations;
(b) to file with the Trustee and the SEC, in accordance with
the rules and regulations prescribed from time to time by the SEC, such
additional information, documents, and reports with respect to compliance by
the Company with the conditions and covenants provided for in this Indenture
as may be required from time to time by such rules and regulations;
(c) to transmit by mail to all Holders of Notes, as the names
and addresses of such holders appear on the Notes Register, within thirty days
after the filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 5.3 as may be required by rules and
regulations prescribed from time to time by the SEC; delivery of such reports,
information and documents to the Trustee is for informational purposes only
and the Trustee's receipt of such shall not constitute constructive notice of
any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on
Officers' Certificates);
(d) to deliver to the Trustee within 120 days after the end of
each fiscal year of the Company (beginning with the fiscal year ending
December 31, 1999), a certificate from its principal executive officer,
principal financial officer or principal accounting officer, stating whether
to the best knowledge of the signer thereof, the Company is in compliance
(without regard to periods of grace or notice requirements) with all
conditions and covenants under this Indenture, and if the Company shall not be
in compliance, specifying such non-compliance and the nature and status
thereof of which such signer may have knowledge; and
(e) to deliver to the Trustee, as soon as possible and in any
event within five days after the Company becomes aware of the occurrence of
any Event of Default or an event which, with notice of the lapse of time or
both, would constitute an Event of Default, an Officers' Certificate setting
forth the details of such Event of Default or default and the action which the
Company proposes to take with respect thereto.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 5.4 Trustee Reports to Noteholder. (a) The Trustee shall
transmit to Holders such reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the Trust Indenture Act at the
times and in the
<PAGE>
manner provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within sixty days after each May 15, comply
with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange, if
any, upon which the Notes are listed, with the SEC and with the Company. The
Company will promptly notify the Trustee when the Notes are listed on any
stock exchange and of any delisting thereof.
ARTICLE 6
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT
Section 6.1 Events of Default Defined. An Event of Default shall
occur (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation of
any administrative or Governmental Entity), if:
(a) the Company shall default in the payment of the Principal
of any Notes, when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or otherwise,
whether or not such payment is prohibited by the provisions of Article Eleven;
or
(b) the Company shall default in the payment of any installment
of cash interest on any Note according to the terms thereof, when and as the
same shall become due and payable and such default shall continue for a period
of 20 days, whether or not such payment is prohibited by the provisions of
Article Eleven; or
(c) the Company or any of its Subsidiaries, as the case may be,
shall default in the due observance or performance of any other covenant,
condition or agreement on the part of the Company or any of its Subsidiaries
to be observed or performed pursuant to the terms of this Indenture, and such
default shall continue for 50 days after written notice thereof, by registered
or certified mail, which shall have been given to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% of the
aggregate Accreted Value of the Notes Outstanding specifying such default and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(d) [Intentionally Omitted]
(e) any default in the observance or performance of any
agreement or condition relating to Senior Debt in an amount in excess of
$250,000,000 or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition has resulted in the
acceleration of such Senior Debt prior to its stated maturity; or
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in
<PAGE>
respect of the Company or any of its Significant Subsidiaries, or of a
substantial part of their property or assets, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any of its Significant Subsidiaries, or
for a substantial part of their property or assets or (iii) the winding up or
liquidation of the Company or any of its Significant Subsidiaries; and such
proceeding or petition shall continue undismissed for 60 days, or an order or
decree approving or ordering any of the foregoing shall be entered; or
(g) the Company or any Significant Subsidiary thereof shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended,
or any other Federal or state bankruptcy, insolvency, receivership or similar
law, (ii) consent to the institution of or the entry of an order for relief
against it, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in paragraph (f) of this
Section 6.1, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any of its Significant Subsidiaries, or for a substantial part of
their property or assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due or
(vii) take any corporate action for the purpose of effecting any of the
foregoing.
Section 6.2 Acceleration. If an Event of Default occurs under
clauses (f) or (g) of Section 6.1, then the Accreted Value of, premium, if
any, and all accrued interest on the Notes and all other amounts owing under
this Indenture and the Notes shall automatically become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are expressly waived. If any other Event of Default (other than an Event
of Default specified under clauses (f) or (g) of Section 6.1) occurs and is
continuing, either the Trustee or the Holders of 25% of the aggregate Accreted
Value of the Notes Outstanding, by written notice to the Company, may declare
the Accreted Value of, premium, if any, and accrued interest on the Notes and
all other amounts owing under this Indenture to be due and payable
immediately. Upon such declaration, such Accreted Value, premium and interest
and other amounts shall become immediately due and payable. The Holders of a
majority of the aggregate Accreted Value of the Notes Outstanding may rescind
and annul an acceleration and its consequences if all existing Events of
Default have been cured or waived, except nonpayment of Principal or interest
or other amounts that have become due solely because of the acceleration, and
if the rescission would not conflict with any judgment or decree. Any notice
or rescission shall be given in the manner specified in Section 17.4 hereof.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Company, the Trustee and the Holders of the Notes shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the Holders of the Notes
shall continue as though no such proceedings had been taken.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled
<PAGE>
and empowered to institute any action or proceedings at law or in equity for
the collection of the sums so due and unpaid, and may prosecute any such
action or proceedings to judgment or final decree and may enforce any such
judgment or final decree against the Company or other obligor upon the Notes
and collect in the manner provided by law out of the property of the Company
or other obligor upon the Notes wherever situated the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor upon the Notes under
Title 11 of the United States Code or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or other obligor, or in case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property
of the Company or such other obligor, the Trustee, irrespective of whether the
Principal of the Notes shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 6.2, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
Principal and interest owing and unpaid in respect of the Notes, and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee, its agents and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the Trustee,
its agents and counsel except as a result of its negligence or bad faith) and
of the Holders allowed in any judicial proceedings relative to the Company or
other obligor upon the Notes, or to the creditors or property of the Company
or such other obligor; and
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Notes in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person performing similar functions in
comparable proceedings; and
(c) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Holders and of the Trustee on their behalf; and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Holders to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of payments directly to the
Holders, to pay to the Trustee such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee, its
agents and counsel except as a result of its negligence or bad faith.
All rights of action and to assert claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof on any trial or other
proceedings relative thereto, any such action or proceedings instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable benefit of the Holders of
the Notes.
In case of a default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by the Indenture by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific
<PAGE>
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or otherwise, and the
Trustee may enforce any other legal or equitable right vested in the Trustee
by this Indenture or by law.
Section 6.3 Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 6.2 shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of Principal or interest, upon
presentation of the several Notes and stamping thereon the payment if only
partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection,
reasonable compensation to the Trustee, its agents and counsel, and all
other expenses and liabilities incurred, and all advances made, by the
Trustee except as a result of its negligence or bad faith;
SECOND: In case the Principal of the Notes in respect of which
moneys have been collected shall not have become and be then due and
payable, to the payment of interest on the Notes in default, in the order
of the maturity of the installments of such interest, with interest (to
the extent that such interest has been collected by the Trustee) upon the
overdue installments of interest at 8.75% per annum such payments to be
made ratably to the persons entitled thereto, without discrimination or
preference;
THIRD: In case the Principal of the Notes in respect of which moneys
have been collected shall have become and shall be then due by
declaration or otherwise, to the payment of the whole amount then owing
and unpaid upon the Notes for Principal and interest, with interest upon
the overdue Principal and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest, at 8.75%
per annum and in case such moneys shall be insufficient to pay in full
the whole amount so due and unpaid upon Notes, then to the payment of
such Principal and interest without preference or priority of Principal
over interest, or of interest over Principal or of any installment of
interest over any other installment of interest, or of any Note over any
other Note, ratably to the aggregate of such Principal and interest.
Section 6.4 Limitation on Suits by Holders. No Holder of any Note
shall have any right by virtue or by availing of any provision of this
Indenture to institute any action or proceedings at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or
for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee
written notice of any Event of Default and unless also the Holders of not less
than twenty-five percent in aggregate Principal amount of the Notes then
outstanding shall have made written request upon the Trustee to institute such
action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such indemnity satisfactory to it against the costs,
expenses and liabilities to be incurred therein or thereby and the Trustee,
for sixty days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action or proceedings and
no direction inconsistent with such written request shall have been given to
the Trustee pursuant to Section 6.6; it being understood and intended and
being expressly covenanted by the taker and Holder of every Note with every
other taker and Holder and the Trustee that no one or more Holders of Notes
shall have any right in any manner whatever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder of Notes, or to obtain or seek to obtain priority over or
preference to
<PAGE>
any other such Holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of
all Holders of Notes of the applicable series. For the protection and
enforcement of the provisions of this Section 6.4, each and every Holder and
the Trustee shall be entitled to such relief as can be given either at law or
in equity.
Notwithstanding any other provision in this Indenture, however, the
right of any Holder of any Note to receive payment of the Principal of and
interest on such Note, on or after the respective due dates expressed in such
Note, or to institute suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent
of such Holder.
Section 6.5 Remedies Cumulative; Delay or Omission in Exercise of
Rights Not a Waiver of Default. All powers and remedies given by this Article
Six to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the
Trustee or of any Holder of any of the Notes in exercising any right or power
accruing upon any default occurring and continuing as aforesaid shall impair
any such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein; and, subject to the provisions of Section
6.4, every power and remedy given by this Article Six or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Holders.
Section 6.6 Control by Holders. The Holders of a majority in
aggregate Principal amount of the Notes affected at the time outstanding shall
have the right to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Notes by this Indenture and
(ii) waive any default or Event of Default occurring and continuing under this
Indenture and its consequences but only in the specific instance and for the
specific purpose for which made or given.
In the case of any such waiver, the Company, the Trustee and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.
Section 6.7 Trustee to Give Notice of Defaults Known to it, but May
Withhold in Certain Circumstances. The Trustee shall, within ninety days after
the occurrence of a default, give to all Holders, as the names and addresses
of such Holders appear on the Notes Register, notice by mail of all defaults
known to the Trustee, which have occurred with respect to the Notes, unless
such defaults shall have been cured before the giving of such notice (the term
"default" or "defaults" for the purposes of this Section 6.7 being hereby
defined to be any event or events, as the case may be, specified in clauses
(a), (b), (c), (d), (e), (f) and (g) of Section 6.1, not including periods of
grace, if any, provided for therein and irrespective of the giving of written
notice specified in clause (c) of Section 6.1; provided, that, except in the
case of a default in the payment of
<PAGE>
the Principal of or interest on any of the Notes, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers, of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of Notes. The Trustee shall not be
deemed to have knowledge of any default hereunder unless a Responsible Officer
of the Trustee has actual knowledge of the default or the Trustee receives
written notice thereof.
Section 6.8 Undertaking for Costs. All parties to this Indenture
agree, and each holder of any Note by his or her acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees and expenses, against
any party litigant in such suit, having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but the
provisions of this Section 6.8 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders of Notes,
holding in the aggregate more than ten percent in Principal amount of the
Notes Outstanding, to any suit instituted by any Holder for the enforcement of
the payment of the Principal of or interest on any Note on or after the due
date of such payment or to any suit instituted by any Holder for the
enforcement of the right to convert Notes pursuant to Article Fourteen.
Section 6.9 Waiver of Usury, Stay or Extension Law. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenant that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
ARTICLE 7
CONCERNING THE TRUSTEE
Section 7.1 Certain Duties and Responsibilities. With respect to the
Holders, the Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been
cured), the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
<PAGE>
(a) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate Principal
amount of the Notes at the time Outstanding (determined as provided in Section
8.3) relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
Section 7.2 Certain Rights of Trustee. Except as otherwise provided
in Section 7.1:
(a) the Trustee may rely conclusively and shall be protected in
acting or refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request, direction, order, demand, notice or other
communication of the Company mentioned herein shall be sufficiently evidenced
by an instrument signed in the name of the Company by the Chairman of the
Board of Directors or a Vice Chairman of the Board of Directors or the
President or an Executive Vice President and the Secretary or an Assistant
Secretary or the Chief Financial Officer, the Treasurer or Assistant Treasurer
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee
by a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
<PAGE>
(c) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such Opinion
of Counsel;
(d) the Trustee shall be under no obligation to exercise any
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders, pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee security
or indemnity satisfactory to it against the costs, expenses and liabilities
which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further inquiry
or investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder; and
(h) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian or other Person
employed to act hereunder.
Section 7.3 Trustee Not Liable for Recitals in Indenture or in
Notes. The recitals contained herein and in the Notes (except in the
certificates of authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Notes. The Trustee shall not be accountable for
the use or application by the Company of any of the Notes or of the proceeds
thereof.
Section 7.4 May Hold Notes. The Trustee or the Authenticating Agent
or any paying agent or Note registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent or Note
registrar, subject to Sections 7.8 and 7.13 of this Article Seven.
Section 7.5 Moneys Held in Trust; Interest Not Payable Except by
Agreement. Subject to the provisions of Section 15.4 hereof, all moneys
received by the Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any moneys received by it
hereunder; provided, however, that the Trustee shall invest distributions held
by it pursuant to Section 4.14, pursuant to written instruction from the
<PAGE>
Company, which instruction shall specify the particular investment to be made.
So long as no Event of Default shall have occurred and be continuing, all
interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company, signed by its Chairman of the Board of Directors
or a Vice Chairman of the Board of Directors or its President or an Executive
Vice President or its Chief Financial Officer, Treasurer or Assistant
Treasurer.
Section 7.6 Compensation, Reimbursement and Indemnity. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as shall be agreed to by the Company
and the Trustee in writing (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust) and, except as
otherwise expressly provided, the Company will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Indenture (including the compensation and the expenses and disbursements
of its counsel and its agents) except any such expense, disbursement or
advance as may arise from its negligence or bad faith. If any property other
than cash shall at any time be subject to the lien of this Indenture, the
Trustee, if and to the extent authorized by a receivership or bankruptcy court
of competent jurisdiction or by the supplemental instrument subjecting such
property to such lien, shall be entitled but not required to make advances for
the purpose of preserving such property or of discharging tax liens or other
prior liens or encumbrances thereon and the Trustee shall be entitled to
reimbursement thereof. The Company also covenants to indemnify the Trustee
for, and to hold it harmless against, any and all damage, claims, loss,
liability or expense, including taxes, incurred without gross negligence or
bad faith on the part of the Trustee, arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim (whether asserted by the Company, a
Noteholder or any other Person) or liability in connection with the exercise
or performance of any of its duties hereunder. The obligations of the Company
under this Section 7.6 shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Notes upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 6.1(f) or Section 6.1(g), the
expenses (including the reasonable charges and expenses of its counsel) and
the compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 7.7 Right of Trustee to Rely on Certificate of Officers of
the Company. Except as otherwise provided in Section 7.1, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, such matter (unless other evidence
in respect thereof be herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board of Directors or a Vice Chairman of the Board of Directors or the
President or an Executive Vice President and by the Chief Financial Officer,
Treasurer or Assistant Treasurer of the Company and delivered to the Trustee
and such certificate, in the absence of negligence or bad faith on the part of
the Trustee, shall be full warrant to
<PAGE>
the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 7.8 Trustee Acquiring Conflicting Interest. If the Trustee
has or shall acquire any conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall eliminate such interest or resign to the
extent and in the manner provided by and subject to the provisions of the
Trust Indenture Act.
Section 7.9 Requirements for Eligibility of Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States or of any State or Territory or of the
District of Columbia authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least one hundred million
dollars and being subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 7.9 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 7.9, the
Trustee shall resign immediately in the manner and with the effect specified
in Section 7.10.
Section 7.10 Resignation of Trustee. (a) The Trustee may at any time
resign by giving written notice of resignation to the Company. Upon receiving
such notice of resignation the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within thirty days after
the giving of such notice of resignation, the resigning Trustee may, at the
expense of the Company, petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Noteholder who has been a bona fide
Holder of a Note or Notes for at least six months may, subject to the
provisions of Section 6.8, on behalf of himself or herself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur
(1) the Trustee shall fail to comply with the provisions
of Section 7.8 after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at
least six months, or
(2) such Trustee shall cease to be eligible in accordance
with the provisions of Section 7.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder, or
(3) such Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
<PAGE>
then, in any such case, (i) the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, (ii) subject to the
provisions of Section 6.8, any Noteholder who has been a bona fide Holder of
such series of Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee, or
(iii) such Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The holders of a majority in aggregate Principal amount of
the Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed (subject to its
compliance with Section 7.11) as successor trustee unless within ten days
after such nomination the Company objects thereto, in which case the Trustee
so removed or any Noteholder, upon the terms and conditions and otherwise as
in subdivision (a) of this Section 7.10 provided, may petition, at the expense
of the Company, any court of competent jurisdiction for an appointment of a
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within sixty days after the giving of such notice of
removal, the Trustee being removed may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the provisions of this
Section 7.10 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 7.11.
Section 7.11 Acceptance by Successor to Trustee. Any successor
trustee appointed as provided in Section 7.10 shall execute, acknowledge and
deliver to the Company, and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect
as if originally named as trustee herein; but, nevertheless, on the written
request of the Company or of the successor trustee, the trustee ceasing to act
shall, upon payment of any amounts then due it pursuant to the provisions of
Section 7.6, execute and deliver an instrument transferring to such successor
trustee all of the rights and powers of the trustee so ceasing to act and
shall duly assign, transfer and deliver to such successor trustee all property
and money held by such Trustee ceasing to act. Upon request of any such
successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such
successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 7.6.
No successor trustee shall accept appointment as provided in this
Section 7.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 7.8 and eligible under the
provisions of Section 7.9.
Upon acceptance of appointment by a successor trustee as provided in
this Section 7.11, the Company shall mail notice of the succession of such
trustee hereunder to all Holders of Notes as the names and addresses of such
Holders appear upon the Note Register. If the Company fails to mail such
notice in the prescribed manner within ten
<PAGE>
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be so mailed at the expense of the Company.
Section 7.12 Successor to Trustee by Merger, Conversion,
Consolidation or Succession to Business. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of such Trustee hereunder, provided such corporation shall be
qualified under the provisions of Section 7.8 and eligible under the
provisions of Section 7.9, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 7.13 Preferential Collection of Claims Against the Company.
If and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Notes), the Trustee shall be subject to the provisions
of the Trust Indenture Act regarding the collection of claims against the
Company (or any such other obligor).
Section 7.14 Appointment and Qualification of Authenticating Agent.
As long as any of the Notes remain outstanding, there may be one or more
Authenticating Agents appointed by the Trustee to act on its behalf and
subject to its direction in connection with the authentication of the Notes as
set forth in Articles Two and Three. For all purposes of this Indenture, the
authentication and delivery of Notes by any Authenticating Agent pursuant to
this Section shall be deemed to be authentication and delivery of such Notes
"by the Trustee." Each such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
or of any State or Territory or of the District of Columbia authorized under
such laws to act as Authenticating Agent, having a combined capital and
surplus of at least $10 million, and being subject to supervision or
examination by Federal, State, Territorial, or District of Columbia authority
and shall be satisfactory to the Company. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 7.14, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all
the corporate agency or corporate trust business of any Authenticating Agent,
shall continue to be the Authenticating Agent without the execution or filing
of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. Such Trustee may at
any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 7.14, the Trustee promptly shall appoint a
successor Authenticating Agent, if the terms of this Section 7.14 require that
there shall be an Authenticating Agent, shall give written notice of such
appointment to the Company and shall mail notice of such appointment to all
Holders of Notes as the names and addresses of such Holders appear upon the
Notes
<PAGE>
Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent herein. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section
7.14.
The Company agrees to pay to the Authenticating Agent from time to
time reasonable compensation for its services.
ARTICLE 8
CONCERNING THE NOTEHOLDERS
Section 8.1 Form and Effectiveness of Noteholder Action. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in Principal amount of the Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such specified percentage of Noteholders in person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to
the Trustee, and, where it is hereby expressly required, to the Company. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
7.1 and 7.2) conclusive in favor of the Trustee and the Company, if made in
the manner provided in this section.
(b) Subject to the provisions of Sections 7.1 and 7.2, the
execution of any instrument by a Noteholder or his or her agent or proxy may
be proved in accordance with such reasonable rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee.
(c) The holding of Notes shall be proved by the Notes Register
or by a certificate of the registrar thereof.
Section 8.2 Who May be Deemed Owners of Notes. The Company, the
Trustee, any Authenticating Agent, any paying agent and any Notes registrar
may deem and treat the person in whose name any Note shall be registered upon
the Notes Register as the absolute owner of such Note (whether or not such
Note shall be overdue and notwithstanding any notation of ownership or other
writing thereon) for the purpose of receiving payment of or on account of the
Principal of and, subject to the provisions of this Indenture, interest on
such Note and for all other purposes; and neither the Company nor the Trustee
nor any Authenticating Agent nor any paying agent nor any Note registrar shall
be affected by any notice to the contrary. All such payments so made to any
such person, or upon his order, shall be valid, and, to the extent of the sum
or sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Note.
None of the Company, the Trustee or any agent of the Company 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 of a Note in global form, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Note in global form,
nothing herein shall prevent the Company or the Trustee, or any agent of the
<PAGE>
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by any Depositary (or its nominee) as a
Holder, with respect to such Note in global form or impair, as between such
Depositary and owners of beneficial interests in such Note in global form, the
operation of customary practices governing the exercise of the rights of such
Depositary (or its nominee) as Holder of such Note in global form.
Section 8.3 Notes Owned by the Company or Controlled or Controlling
Companies Disregarded for Certain Purposes. In determining whether the Holders
of the requisite aggregate Principal amount of Notes have concurred in any
demand or request, the giving of any notice, direction, consent or waiver or
the taking of any other action under this Indenture, Notes which are owned by
the Company or any other obligor on the Notes or by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination except that for the purpose of determining whether the Trustee
shall be protected in relying on any such demand, request, notice, direction,
consent or waiver only Notes which a Responsible Officer of the Trustee
actually knows are so owned shall be so disregarded.
Section 8.4 Revocation of Action by Noteholders; Action by
Noteholder Binds Future Holders. At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 8.1, of the taking of any
action by the Holders of the percentage in aggregate Principal amount of the
Notes specified in this Indenture in connection with such action, any holder
of a Note the serial number of which is shown by the evidence to be included
in the Notes the Holders of which have joined in such action may, by filing
written notice with the Trustee at its office and upon proof of ownership as
provided in Section 8.1, revoke such action so far as concerns such Note.
Except as aforesaid any such action taken by the Holder of any Note shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Note and of any Note issued upon the transfer thereof or in exchange
or substitution therefor, irrespective of whether or not any notation in
regard thereto is made upon such Note. Any action taken by the Holders of the
percentage in aggregate Principal amount of the Notes specified in this
Indenture in connection with such action shall be conclusively binding upon
the Company, the Trustee and the Holders of all the Notes affected by such
action.
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Noteholders.
The Company, when authorized by the resolutions of its Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) for one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Ten hereof;
<PAGE>
(b) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as the Board of Directors of
the Company and the Trustee shall consider to be for the protection of the
Holders of Notes, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants, restrictions,
conditions or provisions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture;
provided, however, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may provide
for a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the holders of a
majority in aggregate Principal amount of the Notes to waive such default;
(c) to comply with any requirement of the SEC in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act; and
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee or to make such other provisions in regard to
matters or questions arising under this Indenture as shall not adversely
affect the interests of the Holders of the Notes.
The Trustee is hereby authorized to join with the Company in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage or pledge of any
property thereunder, but the Trustee shall not be obligated to enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 9.1 may be executed by the Company and the Trustee without the consent
of the Holders of any of the Notes at the time outstanding.
Section 9.2 Modification of Indenture with Consent of Note Holders.
With the consent (evidenced as provided in Section 8.1) of the Holders of not
less than 51% in aggregate Accreted Value of the Notes at the time
Outstanding, the Company, when authorized by resolutions of its Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of execution of
such supplemental indenture) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
or of any supplemental indenture; provided, however, that without the consent
of the Holder of each Outstanding Note affected thereby, a supplemental
indenture under this Section may not:
(a) change the stated maturity of the Principal of, or any
installment of Principal of, or rate of interest on, any Note, or reduce the
Principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption, repurchase or repayment thereof, or change the
manner in which the amount of any Principal thereof or rate of interest
thereon is determined or reduce the amount of the Principal that would be due
and payable upon a Change of Control or declaration of acceleration of the
maturity thereof pursuant to Section 6.2, or change the place of
<PAGE>
payment where, or impair the right to institute suit for the enforcement of
any such payment on or after the stated maturity thereof (or, in the case of
redemption or offer to repurchase, on or after the redemption date or
repurchase date, as the case may be);
(b) reduce the percentage in Principal amount of the
Outstanding Notes affected thereby, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided for
in this Indenture;
(c) change any obligation of the Company to maintain an office
or agency in the places and for the purposes specified in Section 4.2;
(d) make any change in this Section 9.2 except to increase any
percentage or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holders of the
Outstanding Notes affected thereby, except in circumstances beneficial to the
Holders; or
(e) modify any of the provisions of this Indenture relating to
the subordination of the Securities in a manner adverse to the Holders.
Upon the request of the Company, accompanied by a copy of
resolutions of its Board of Directors certified by the Secretary or an
Assistant Secretary authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Noteholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion but shall not be
obligated to enter into such supplemental indenture.
It shall not be necessary for the Noteholders under this Section 9.2
to consent to the particular form of any proposed supplemental indenture, but
it shall be sufficient if they consent to the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 9.2, the
Company shall mail a notice, setting forth in general terms the substance of
such supplemental indenture, to all Holders of Notes as the names and
addresses of such holders appear upon the Notes Register. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 9.3 Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture pursuant to the provisions of this Article Nine,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the
Holders of Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and
all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
<PAGE>
The Trustee, subject to the provisions of Sections 7.1 and 7.2,
shall receive an Opinion of Counsel as conclusive evidence that any such
supplemental indenture complies with the provisions of this Article Nine.
Section 9.4 Notes May Bear Notation of Changes by Supplemental
Indentures. Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article Nine may
bear a notation in form approved by the Trustee for such series as to any
matter provided for in such supplemental indenture. New Notes so modified as
to conform, in the opinion of the Trustee and the Board of Directors, to any
modification or amendment of this Indenture contained in any such supplemental
indenture may be prepared and executed by the Company, authenticated by the
Trustee or by the Authenticating Agent on its behalf and delivered in exchange
for the Notes then outstanding.
Every amendment to this Indenture or the Notes shall be set forth in
an Officers' Certificate or supplemental indenture that complies with the
Trust Indenture Act as then in effect.
ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.1 Consolidation and Merger of the Company and Sale or
Conveyance Permitted. Nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation of the Company with, or merger of the
Company into, any other corporation or corporations (whether or not affiliated
with the Company), or successive consolidations or mergers to which the
Company or its successor or successors shall be a party or parties, or shall
prevent any sale or conveyance of the property of the Company as an entirety
or substantially as an entirety to any other corporation (whether or not
affiliated with the Company) authorized to acquire and operate the same;
provided, however, and the Company hereby covenants and agrees, that:
(a) upon any such consolidation, merger, sale or conveyance,
the due and punctual payment of the Principal of and interest on all of the
Notes according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed or observed by the Company, shall be expressly assumed, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee by the corporation formed by such consolidation, or
into which the Company shall have been merged, or which shall have acquired
such property; and
(b) the Company will not merge or consolidate with any other
Person if at the time of such merger or consolidation such other Person has
received a notice of payment default under a material indenture or any other
material Indebtedness of such Person that has not been cured within the period
specified therein.
Section 10.2 Rights and Duties of Successor Corporation. In case of
any such consolidation, merger, sale or conveyance, and following such an
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it
had been named herein.
<PAGE>
Such successor corporation may cause to be signed, and may issue
either in its own name or in the name of the Company prior to such succession,
any or all of the Notes issuable pursuant to this Indenture which theretofore
shall not have been signed by the Company and delivered to the Trustee; and,
upon the order of such successor corporation instead of the Company and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Notes which
previously shall have been signed by the officers of the Company and delivered
to the Trustee for authentication pursuant to such provisions and any Notes
which such successor corporation thereafter shall cause to be signed and such
successor corporation shall cause to be delivered to the Trustee on its behalf
for that purpose pursuant to such provisions. All the Notes so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Notes theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Notes had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale or conveyance, such
changes in phraseology and form may be made in the Notes thereafter to be
issued as may be appropriate.
Nothing contained in this Indenture or in any of the Notes shall
prevent the Company from merging into itself any other corporation (whether or
not affiliated with the Company) or acquiring by purchase or otherwise all or
any part of the property of any other corporation (whether or not affiliated
with the Company).
Section 10.3 Opinion of Counsel. The Trustee, subject to the
provisions of Sections 7.1 and 7.2, shall receive an Opinion of Counsel as
conclusive evidence that any consolidation, merger, sale or conveyance and any
such assumption complied with the provisions of this Article Ten.
ARTICLE 11
SUBORDINATION
Section 11.1 Notes Subordinate to Senior Debt. The Company covenants
and agrees, and each Holder of a Note, by its acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article Eleven, the Indebtedness represented by the Notes and
the payment of the Principal of and interest on each and all of the Notes and
any Change of Control Payment are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior Debt.
Section 11.2 Payment Over of Proceeds Upon Dissolution, Etc. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relating to the Company or to its assets, or (b) any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company, then and in any such
event the holders of Senior Debt shall be entitled to receive payment in full
in cash or other payment satisfactory to the holders of Senior Debt (in their
sole discretion) of all amounts due or to become due on or in respect of all
Senior Debt before the Holders of the Notes are entitled to receive any
payment on account of Principal of or interest on the
<PAGE>
Notes or on account of the purchase, redemption or other retirement of Notes
(including any Change of Control Payment), and to that end the holders of
Senior Debt shall be entitled to receive, for application to the payment
thereof, any payment or distribution of any kind or character, whether in
cash, property or securities, which may be payable or deliverable in respect
of the Notes in any such case, proceeding, receivership, dissolution,
liquidation, reorganization or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section 11.2, the Holder of any Note shall have received any payment or
distribution of assets of the Company of any kind or character, whether in
cash, securities or other property, before all Senior Debt is paid in full,
then such payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the Company
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all Senior Debt in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
For purposes of this Article Eleven only, the words "cash,
securities or other property" shall not be deemed to include shares of stock
of the Company as reorganized or readjusted, or securities of the Company or
any other corporation provided for by a plan of reorganization or readjustment
which shares of stock are subordinated in right of payment to all then
outstanding Senior Debt at least to the same extent as the Notes are so
subordinated as provided in this Article Eleven. The consolidation of the
Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of its properties and assets substantially as an entirety to another Person
upon the terms and conditions set forth in Section 10.1 shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the
benefit of creditors or marshaling of assets and liabilities of the Company
for the purposes of this Section 11.2 if the Person formed by such
consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Section 10.1.
Section 11.3 Prior Payment to Senior Debt Upon Acceleration. In the
event that any Notes are declared due and payable before their Stated Maturity
pursuant to Article Six, then and in such event the holders of the Senior Debt
outstanding at the time such Notes so become due and payable shall be entitled
to receive payment in full of all amounts due or to become due as a result of
such acceleration of the Notes on or in respect of all Senior Debt before the
Holders of the Notes are entitled to receive any payment by the Company on
account of the Principal of or interest on the Notes or on account of the
purchase, redemption or other retirement of Notes (including any Change of
Control Payment).
The provisions of this Section 11.3 shall not apply to any payment
with respect to which Section 11.2 would be applicable.
Section 11.4 Payment To Holders
No payments shall be made with respect to the Principal of or
interest on the Notes by the Company (including, but not limited to, the
Change of Control Payment), except payments and distributions made as
permitted by Section 11.5, if:
<PAGE>
(i) a default in the payment of principal, premium,
interest, or rent or other obligations due on any Senior Debt of the
Company has occurred and is continuing Senior Debt (including upon
acceleration of such Senior Debt) or a default in payment of any other
obligation with respect to the Senior Debt continues beyond the period of
grace, if any, specified in the instrument or lease evidencing such
Senior Debt, unless and until such default shall have been cured or
waived or shall have ceased to exist; or
(ii) a default (other than a default described in clause
(i) of this Section 11.4) on Designated Senior Debt occurs and is
continuing that permits holders of such Designated Senior Debt to
accelerate its maturity and the Trustee receives a notice of the default
(a "Payment Blockage Notice") from a representative of Designated Senior
Debt or the Company.
If the Trustee receives any Payment Blockage Notice pursuant to
clause (ii) above, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section 11.4 unless and until at least 360 days shall
have elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice. No default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee (unless such default
was waived, cured or otherwise ceased to exist and thereafter subsequently
reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:
(1) in the case of a default described in clause (i) of
this Section 11.4, the date upon which the default is cured or waived or
ceased to exist, or
(2) in the case of a default referred to in clause (ii) of
this Section 11.4 above, the earlier of the date on which such default is
cured or waived or ceases to exist or 179 days after the date on which
the applicable Payment Blockage Notice is received if the maturity of
such Senior Debt has not been accelerated, unless this Article Eleven
otherwise prohibits the payment or distribution at the time of such
payment or distribution.
Section 11.5 Payment Permitted If No Default. Nothing contained in
this Article Eleven or elsewhere in this Indenture or in any of the Notes
shall prevent (a) the Company, at any time except during the pendency of any
case, proceeding, dissolution, liquidation or other winding up, assignment for
the benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 11.2 or under the conditions described in
Section 11.3 or 11.4, from making payments at any time of Principal of or
interest on the Notes or a Change of Control Payment, or (b) the application
by the Trustee of any money deposited with it hereunder to the payment of or
on account of the Principal of or interest on the Notes or a Change of Control
Payment or the retention of such payment by the Holders if, at the time of
such application by the trustee or retention, as applicable, a Responsible
Officer did not have actual knowledge that such payment would have been
prohibited by the provisions of this Article Eleven.
<PAGE>
Section 11.6 Subrogation to Rights of Holders of Senior Debt. After
the payment in full of all Senior Debt, the Holders of the Notes shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior Debt pursuant to the provisions of this Article Eleven to the
rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the Principal of and interest on the Notes or Change of Control Payment
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the Holders of the Notes would be entitled except for the
provisions of this Article Eleven and no payments over pursuant to the
provisions of this Article Eleven to the holders of Senior Debt by Holders of
the Notes, shall, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Debt.
Section 11.7 Provisions Solely to Define Relative Rights. The
provisions of this Article Eleven are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and
the holders of Senior Debt on the other hand. Nothing contained in this
Article Eleven or elsewhere in this Indenture or in the Notes is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Notes, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Notes the
Principal of and interest on the Notes and any Change of Control Payment as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Holders of the
Notes and creditors of the Company other than the holders of Senior Debt; or
(c) prevent the Holder of any Notes from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Eleven of the holders of Senior Debt to
receive cash, property and securities otherwise payable or deliverable to such
Holder.
Section 11.8 No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder of any Senior Debt, or by any non-compliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or written notice to the Holders of the Notes, without
incurring responsibility to the Holders of the Notes and without impairing or
releasing the subordination provided in this Article Eleven or the obligations
hereunder of the Holders of the Notes to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or reduce or extend the time of payment of, or renew or alter, Senior Debt, or
otherwise amend or supplement in any manner (including the interest rate
thereof) Senior Debt or any instrument evidencing the same or any agreement
under which Senior Debt is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Debt; (iii) release any Person liable in any manner for the collection
of Senior Debt; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
<PAGE>
Section 11.9 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Company
referred to in this Article Eleven, the Holders of the Notes shall be entitled
to conclusively rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of credi
tors, agent or other Person making such payment or distribution, delivered to
the Holders of Notes, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt
and other Indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Eleven.
Section 11.10 Certain Conversions Not Deemed Payment. For the
purposes of this Article Eleven only, (1) the issuance and delivery of junior
securities upon conversion of Notes in accordance with Article Fourteen shall
not be deemed to constitute a payment or distribution on account of the
Principal of or interest on Notes or on account of the purchase or other
acquisition of Notes, and (2) the payment, issuance or delivery of cash,
property or securities upon conversion of a Note or pursuant to Section 4.14
shall not be deemed to constitute payment on account of the Principal of such
Note. For the purposes of this Section 11.10, the term "junior securities"
means (a) shares of any stock of any class of the Company into which the Notes
are convertible pursuant to Article Fourteen and (b) securities of the Company
which are subordinated in right of payment to all Senior Debt which may be
outstanding at the time of issuance or delivery of such securities to at least
the same extent as the Notes are so subordinated as provided in this Article
Eleven. Nothing contained in this Article Eleven or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the
Company, its creditors (other than holders of Senior Debt) and the Holders of
the Notes, the right, which is absolute and unconditional, of the Holder of
any Notes to convert such Notes in accordance with Article Fourteen.
Section 11.11 Distribution To Be Paid Over. Subject to Section 11.5,
in the event that a distribution is made to the Holder of any Note that is
prohibited by this Article Eleven then each such Holder shall hold such
distribution in trust for the holders of Senior Debt and shall promptly pay it
over to the Company.
Section 11.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Notes or to the Company or to any other person cash, property or securities to
which any holders of Senior Debt shall be entitled by virtue of this Article
Eleven or otherwise. With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants or obligations
as are specifically set forth in this Article Eleven and no implied covenants
or obligations with respect to holders of Senior Debt shall be read into this
Indenture against the Trustee.
<PAGE>
ARTICLE 12
[intentionally omitted]
ARTICLE 13
OPTIONAL PREPAYMENT
Section 13.1 Optional Redemption.
(a) The Company may redeem (the "Optional Redemption") all of
the Notes, or any portion of the Notes in minimum multiples of $100,000,000 of
original issue price, at any time on or after July 21, 2004, at the following
redemption prices (each, an "Optional Redemption Price") expressed in
percentages of the Full Accreted Value of the Note on the redemption date,
plus accrued and unpaid interest to the date of redemption, subject to the
right of the Holder of the Note of record on the relevant record date to
receive interest on the relevant Interest Payment Date:
Period Redemption Price
From July 21, 2004 through
July 20, 2005....................................... 103.375%
From July 21, 2005 through
July 20, 2006....................................... 102.250%
From July 21, 2006 through
July 20, 2007....................................... 101.125%
July 21, 2007 and thereafter........................ 100.000%
(b) Notice of an Optional Redemption (the "Optional Redemption
Notice") pursuant to this Section 13.1 shall be mailed at least 30, but not
more than 60, days prior to the redemption date fixed in the Optional
Redemption Notice, which must be a Business Day (any such date an "Optional
Redemption Date"), to the Holders of the Notes, at such Holders' address as
they appear in the Notes Register. In order to facilitate the Optional
Redemption of the Notes, the Board of Directors may fix a record date for the
determination of the Notes to be redeemed, or may cause the transfer books of
the Company for the Notes to be closed, not more than 60 days or less than 30
days prior to the Optional Redemption Date.
Each Optional Redemption Notice shall identify the Notes to be
redeemed (including the CUSIP number), shall specify the Optional Redemption
Date and the Redemption Price at which the Notes are to be redeemed and shall
state that payment of the Optional Redemption Price of the Notes or portions
thereof to be redeemed will be made at the office or agency to be maintained
by the Company as provided in Section 4.2 (or any of said offices or agencies,
if more than one) upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in said
notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Notes are to
be redeemed, each Optional Redemption Notice shall identify which of such
Notes are to be redeemed. In case any Note is to be redeemed in part only, the
Optional Redemption Notice shall state the portion of the Principal amount
thereof to be redeemed and shall state that on and after the Optional
Redemption Date, upon presentation and
<PAGE>
surrender of such Note, a new Note or Notes in Principal amount equal to the
unredeemed portion thereof will be issued.
If any Notes are to be redeemed, the Company shall give the
Trustee forty-five days' written notice (or such lesser period of time as
approved by the Trustee) in advance as to the aggregate Principal amount of
such Notes to be redeemed, and if less than all the Notes are to be redeemed,
thereupon the Trustee shall select, by lot, pro rata or in such other manner
as in its sole discretion it shall deem appropriate and fair, the Notes or
portions thereof to be redeemed and shall thereafter promptly notify the
Company in writing which of the Notes or portions thereof are to be redeemed.
(c) On the Optional Redemption Date, the Holders of the Notes
shall surrender the Notes subject to the Optional Redemption to the Company at
the place designated in the Optional Redemption Notice, and the Company shall
pay to each Holder of the Notes subject to the Optional Redemption the
Optional Redemption Price in accordance with the terms of the Notes. From and
after the Optional Redemption Date (i) the Notes subject to the Optional
Redemption shall no longer be deemed Outstanding, (ii) the right to receive
interest thereon shall cease to accrue and (iii) all rights of the Holders of
the Notes subject to the Optional Redemption shall cease and terminate,
excepting only the right to receive the Optional Redemption Price therefor and
the right to convert such Notes into shares of Common Stock until the close of
business on one Business Day immediately preceding the date of redemption, in
accordance with Article Fourteen; provided, however, that if the Company shall
default in the payment of the Optional Redemption Price, the Notes shall
thereafter be deemed to be Outstanding and the Holder thereof shall have all
of the rights of a Holder of the Notes until such time as such default shall
no longer be continuing or shall have been waived by the Holders of the Notes.
Upon presentation and surrender of any Note which is redeemed in
part only, the Company shall execute and register and the Trustee or the
Authenticating Agent on its behalf shall authenticate and make available for
delivery, at the expense of the Company, a new Note or Notes of authorized
denominations, in Principal amount equal to the unredeemed portion of the Note
so presented.
ARTICLE 14
VOLUNTARY CONVERSION
Section 14.1 Conversion. Each Holder shall have the right, at its
option, at any time (i) after the expiration or early termination of any
applicable waiting period under the HSR Act with respect to the acquisition of
shares of Common Stock upon conversion of Notes by such Holder or (ii) in
connection with a Change of Control, to convert, subject to the terms and
provisions of this Article Fourteen, such Note (or any portion thereof of the
original issue price that is an integral multiple of $1,000) into such number
of fully paid and non-assessable shares of Common Stock at the Conversion
Ratio (as defined below) then in effect, except that if such Notes have been
called for redemption pursuant to Article Thirteen or come due at their final
maturity, such right shall terminate at the close of business on the Business
Day immediately preceding the date of redemption or final maturity for such
Notes, unless in any such case, the Company shall default in performance or
payment due upon redemption or final maturity thereof. The "Conversion Ratio"
shall mean, as of the close of business on any date, the ratio obtained by
dividing the Designated Value by the Conversion Price. The "Conversion Price"
shall initially be $29.89 and shall be subject to adjustment as set forth
<PAGE>
in Section 14.3. Such conversion right shall be exercised by the surrender of
a Note (or a portion thereof) to be converted to the Company at any time
during usual business hours at its principal place of business to be
maintained by it, accompanied by written notice that the Holder elects to
convert such Note (or any portion thereof) and specifying the Accreted Value
of such Note to be converted, the name or names (with address) in which a
certificate or certificates for shares of Common Stock are to be issued and
(if so required by the Company) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company duly executed by the
Holder or its duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 14.9. Any Note (or portion
thereof) surrendered for conversion shall be delivered to the Company for
cancellation and canceled by it. Except to the extent expressly provided for
in Section 2 in the Notes, no interest shall be payable upon conversion of any
Note (or portion thereof).
Section 14.2 Procedure. As promptly as practicable after the
surrender of any Note (or portion thereof) for conversion pursuant to Section
14.1, the Company shall deliver to or upon the written order of the Holder of
such Note so surrendered a certificate or certificates representing the number
of fully paid and non-assessable shares of Common Stock into which such Note
(or portion thereof) may be or have been converted in accordance with the
provisions of this Article Fourteen. Subject to the following provisions of
this paragraph and of Section 14.3, such conversion shall be deemed to have
been made immediately prior to the close of business on the date that such
Note (or portion thereof) shall have been surrendered in satisfactory form for
conversion, and the Person or Persons entitled to receive the Common Stock
deliverable upon conversion of such Note (or portion thereof) shall be treated
for all purposes as having become the record holder or holders of such Common
Stock at such time, and such conversion shall be at the Conversion Ratio in
effect at such time; provided, however, that any such surrender on any date
when the share transfer books of the Company shall be closed (but not for any
period in excess of five days), shall be effective on the day of such
surrender to constitute the Person or Persons entitled to receive such Common
Stock as the record holder or holders thereof for all purposes immediately
prior to the close of business on the next succeeding day on which such share
transfer books are open, and such conversion shall be deemed to have been made
at, and shall be made at the Conversion Price in effect on the day such Note
was surrendered. If a Note is converted in part only, upon such conversion,
the Company shall execute and deliver to the Holder, at the expense of the
Company, a new Note with an aggregate original purchase price equal to that of
the unconverted portion of the Principal amount at maturity of such Note. The
Company's delivery upon conversion of the shares of Common Stock into which
the Notes are convertible shall be deemed to satisfy the Company's obligation
to pay the Principal amount at maturity of the portion of Notes so converted
and any unpaid interest accrued on such Notes at the time of such conversion.
Section 14.3 Antidilution. The Conversion Price shall be subject to
adjustment as follows:
(a) In case the Company shall at any time or from time to time
(A) pay or make a dividend or make a distribution (other than a dividend or
distribution paid to the Trustee in the manner provided in Section 4.14) on
the outstanding shares of Common Stock in capital stock (which, for purposes
of this Section 14.3(a) shall include, without limitation, any options,
warrants or other rights to acquire capital stock) of the Company, (B)
subdivide the outstanding shares of Common Stock into a larger number of
shares, (C) combine the outstanding shares of Common Stock into a smaller
number of shares, (D) issue any shares of its capital stock in a
reclassification of the Common Stock or (E) pay a dividend or make a
distribution (other than a dividend or distribution
<PAGE>
paid or made to the escrow account in the manner provided in Section 4.14 of
this Indenture) on the outstanding shares of Common Stock in securities of the
Company as a redemption pursuant to or trigger of a shareholder rights plan,
"poison pill" or similar arrangement, then, and in each such case, the
Conversion Price in effect immediately prior to such event shall be adjusted
(and any other appropriate actions shall be taken by the Company) so that the
Holder of Notes thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock or other securities of the
Company that such Holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such Note
been converted immediately prior to the occurrence of such event at the
Designated Value as of such date. An adjustment made pursuant to this Section
14.3(a) shall become effective retroactively (1) in the case of any such
dividend or distribution, to a date immediately following the close of
business on the record date for the determination of Holders of Common Stock
entitled to receive such dividend or distribution or (2) in the case of any
such subdivision, combination or reclassification, to the close of business on
the day upon which such corporate action becomes effective.
(b) In case the Company shall at any time or from time to time
issue shares of Common Stock (or securities convertible into or exchangeable
for Common Stock, or any options, warrants or other rights to acquire shares
of Common Stock other than rights issued in connection with a shareholders'
rights plan, "poison pill" or similar arrangement) for a consideration per
share less than the Current Market Price per share of Common Stock then in
effect on the issuance date (the "Reference Date") referred to in the
following sentence (treating the price per share of any security convertible
or exchangeable or exercisable into Common Stock as equal to (A) the sum of
the price for such security convertible, exchangeable or exercisable into
Common Stock plus any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion, exchange or exercise of such
security into Common Stock divided by (B) the number of shares of Common Stock
initially underlying such convertible, exchangeable or exercisable security),
then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day immediately
prior to the Reference Date by a fraction (x) the numerator of which shall be
the sum of the number of shares of Common Stock outstanding on the Reference
Date plus the number of additional shares of Common Stock issued or to be
issued (or the maximum number into which such convertible or exchangeable
securities initially may convert or exchange or for which such options,
warrants or other rights initially may be exercised) and (y) the denominator
of which shall be the sum of the number of shares of Common Stock outstanding
on the Reference Date plus the number of shares of Common Stock which the
aggregate consideration for the total number of such additional shares of
Common Stock so issued or be issued upon the conversion, exchange or exercise
of such convertible or exchangeable securities or options, warrants or other
rights (plus the aggregate amount of any additional consideration initially
payable upon such conversion, exchange or exercise of such security) would
purchase at the Current Market Price per share of Common Stock on the
Reference Date. Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are issued other than rights
issued in connection with a shareholders' rights plan, "poison pill" or
similar arrangement, and shall become effective retroactively to a date
immediately following the close of business (1) in the case of issuance to
shareholders of the Company, as such, on the record date for the determination
of shareholders entitled to receive such shares, securities, options, warrants
or other rights and (2) in all other cases, on the date ("issuance date") of
such issuance; provided that:
(i) the determination as to whether an adjustment is
required to be made pursuant to this Section 14.3(b) shall be made upon
the
<PAGE>
issuance of such shares or such convertible or exchangeable securities,
options, warrants or other rights;
(ii) no adjustment in the Conversion Price shall be made
pursuant to this Section 14.3(b) as a result of any issuance of
securities by the Company in respect of which an adjustment to the
Conversion Price is made pursuant to Section 14.3(a).
(c) In case the Company shall at any time or from time to time
distribute to all holders of shares of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the resulting or surviving corporation and the Common Stock is not
changed or exchanged), cash, evidences of indebtedness of the Company or
another issuer, securities of the Company or another issuer or other assets
(excluding (A) dividends or distributions paid on behalf of noteholders to the
Trustee in the manner provided in Section 4.14 hereof, (B) Regular Dividends,
and (C) dividends payable in shares of Common Stock for which adjustment is
made under Section 14.3(a)) or rights or warrants to subscribe for or purchase
securities of the Company (excluding those referred to in Section 14.3(b) or
those in respect of which an adjustment in the Conversion Price is made
pursuant to Section 14.3(a) and (b) and excluding any rights issued in
connection with a shareholders' rights plan, "poison pill" or similar
arrangement), then, and in each such case, the Conversion Price then in effect
shall be adjusted by dividing the Conversion Price in effect immediately prior
to the date of such distribution by a fraction (x) the numerator of which
shall be the Current Market Price of the Common Stock on the record date
referred to below and (y) the denominator of which shall be such Current
Market Price of the Common Stock less the then Fair Market Value (as
determined by the Board of Directors unless Holders of at least 51% of the
aggregate Accreted Value of the Notes outstanding request that the Company
obtain an opinion of an independent nationally recognized investment banking
firm mutually agreed by the Company and such Holders (the expense of which
shall be borne equally by the Company on the one hand and such Holders on the
other), in which event Fair Market Value shall be as determined by such
investment banking firm) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock (but
such denominator not to be less than one). Such adjustment shall be made
whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of shareholders entitled to receive such
distribution.
(d) In case a tender or exchange offer made by the Company or
any Subsidiary for all or any portion of the Common Stock shall expire and
such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to stockholders of consideration per share of Common Stock
having a Fair Market Value (as determined in a manner consistent with Section
4.13(c)) that as of the last time (the "Expiration Time") tenders or exchanges
may be made pursuant to such tender or exchange offer (as it may be amended)
exceeds the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price
in effect immediately prior to the Expiration Time by a fraction the numerator
of which shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time multiplied by the
Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator of which shall be the sum of (x) the
Fair Market Value (determined in a manner consistent with Section 4.13(c)) of
the aggregate consideration payable to stockholders based on the acceptance
(up to any maximum
<PAGE>
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) on the Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the event
that the Company is obligated to purchase shares pursuant to any such tender
or exchange offer, but the Company is permanently prevented by applicable law
from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such tender or exchange offer had not been made.
(e) In the case the Company, at any time or from time to time,
shall take any action affecting its Common Stock similar to or having an
effect similar to any of the actions described in any of Section 14.3(a)
through Section 14.3(c), inclusive, or Section 14.7 (but not including any
action described in any such Section) and the Board of Directors in good faith
determines that it would be equitable in the circumstances to adjust the
Conversion Price as a result of such action, then, and in each such case, the
Conversion Price shall be adjusted in such manner and at such time as the
Board of Directors in good faith determines would be equitable in the
circumstances (such determination to be evidenced in a resolution, a certified
copy of which shall be mailed to the Holders of the Notes).
(f) Notwithstanding anything herein to the contrary, no
adjustment under this Section 14.3 need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1% of such
Conversion Price.
Section 14.4 No Adjustment. If the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the
distribution to shareholders thereof legally abandon its plan to pay or
deliver such dividend or distribution, then thereafter no adjustment in the
Conversion Price then in effect shall be required by reason of the taking of
such record.
Section 14.5 Officers' Certificate. Upon any increase or decrease in
the Conversion Price, then, and in each such case, the Company promptly shall
deliver to each registered Holder at least 10 Business Days after effecting
any of the foregoing transactions an Officers' Certificate setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
Section 14.6 Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of a Note
or any portion thereof. If more than one Note shall be surrendered for
conversion at one time by the same Holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate Accreted Value of the Notes so surrendered. If the conversion of any
Note (or any portion thereof) results in a fraction, an amount equal to such
fraction multiplied by the Market Price of the Common
<PAGE>
Stock on the Business Day preceding the day of conversion shall be paid to
such Holder in cash by the Company.
Section 14.7 Reorganization, Etc. In case of any capital
reorganization or reclassification or other change of outstanding shares of
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value), or in case of any consolidation or
merger of the Company with or into another Person (other than a consolidation
or merger in which the Company is the resulting or surviving Person and which
does not result in any reclassification or cancellation or conversion of
shares of Capital Stock) or any sale or conveyance of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, as a result of which holders of Common Stock shall be entitled to
receive stock, other securities or other property or assets (including cash)
with respect to or in exchange for such Common Stock, (any of the foregoing, a
"Transaction"), the Company, or such successor or purchasing Person, as the
case may be, shall execute and deliver to each Holder of a Note at least 10
Business Days prior to effecting a Transaction, a certificate that the Holder
of each Note then outstanding shall have the right thereafter to convert such
Note into the kind and amount of shares of stock or other securities (of the
Company or another issuer) or property or cash receivable upon such
Transaction by a holder of the number of shares of Common Stock into which
such Note could have been converted immediately prior to such Transaction.
Such certificate shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article Fourteen. If, in the case of any such Transaction, the stock, other
securities, cash or property receivable thereupon by a holder of Common Stock
includes shares of stock or other securities of a Person other than the
successor or purchasing Person and other than the Company, which controls or
is controlled by the successor or purchasing Person or which, in connection
with such Transaction, issues stock, securities, other property or cash to
holders of Common Stock, then such certificate also shall be executed by such
Person, and such Person shall, in such certificate, specifically acknowledge
the obligations of such successor or purchasing Person and acknowledge its
obligations to issue such stock, securities, other property or cash to the
Holders of Notes upon conversion of the Notes as provided above. The
provisions of this Section 14.7 and any equivalent thereof in any such
certificate similarly shall apply to successive Transactions.
Section 14.8 Notice of Certain Events. In case at any time or from
time to time:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock;
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or of any other rights or warrants;
(c) there shall be any reclassification of the Common Stock, or
any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or any sale or other
disposition of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
<PAGE>
then the Company shall mail to each Holder of the Notes at such Holder's
address as it appears in the Notes Register, as promptly as possible but in
any event at least 10 days prior to the applicable date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution or rights or warrants or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y)
the date on which such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up is expected to become
effective. Such notice also shall specify the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
Common Stock for shares of stock or other securities or property or cash
deliverable upon such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.
Section 14.9 Taxes. The issuance or delivery of certificates for
Common Stock upon the conversion of Notes pursuant to Section 14.1, shall be
made without charge to the converting Holder of Notes for such certificates or
for any tax (except for any tax levied under foreign laws) in respect of the
issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities laws) in such names as may be directed by, the Holders of
the Note so converted; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name other
than that of the Holder of the Notes so converted, and the Company shall not
be required to issue or deliver such certificate unless or until the Person or
Persons requesting the issuance or delivery thereof shall have paid to the
Company the amount of such tax or shall have established to the reasonable
satisfaction of the Company that such tax has been paid.
Section 14.10 Trustee Adjustment Disclaimer. The Trustee has no duty
to determine when an adjustment under this Article Fourteen should be made,
how it should be made or what it should be. The Trustee has no duty to
determine whether a supplemental indenture need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Notes. The Trustee shall not be
responsible for the Company's failure to comply with this Article Fourteen.
Each conversion agent (other than the Company or an Affiliate of the Company)
shall have the same protection under this Section 14.10 as the Trustee.
ARTICLE 15
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 15.1 Satisfaction and Discharge of Indenture. If at any time
the Company shall have delivered to the Trustee canceled or for cancellation
all Notes theretofore authenticated (other than any Notes which shall have
been destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.10) and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture
shall cease to be of further effect and the Trustee, on demand of and at the
cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture. The Company
agrees to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection with this
Indenture or the Notes.
<PAGE>
Section 15.2 [intentionally omitted]
Section 15.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture all moneys then held by
any paying agent under the provisions of this Indenture shall, upon demand of
the Company, be repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such
moneys.
Section 15.4 Repayment of Moneys Held by Trustee. Any moneys
deposited with or paid to the Trustee or any paying agent pursuant to any
provision of this Indenture for payment of the Principal of or interest on any
Note, or distributions and interest called for by Section 4.14, and not
applied but remaining unclaimed by the Holders of the Notes for two years
after the date upon which the Principal of, interest on such Notes or
distributions and interest called for by Section 4.14, as the case may be,
shall have become due and payable, shall be repaid to the Company by the
Trustee or such paying agent on written demand; and the Holder of any of the
Notes shall thereafter look only to the Company for any payment which such
Holder may be entitled to collect.
ARTICLE 16
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES
Section 16.1 Incorporators, Shareholders, Officers, Directors and
Employees of the Company Exempt from Individual Liability. No recourse under
or upon any obligation, covenant or agreement of this Indenture, or of any
Note, or for any claim based thereon or otherwise in respect thereof, shall be
had against any incorporator, shareholder, officer, director or employee, as
such, past, present or future, of the Company or any successor corporation,
either directly or through the Company or any successor corporation, whether
by virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Indenture and the issue of the
Notes.
ARTICLE 17
MISCELLANEOUS PROVISIONS
Section 17.1 Successors and Assigns of the Company Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company shall bind its successors
and assigns, whether so expressed or not.
Section 17.2 Acts of Board, Committee or Officer of Successor
Corporation Valid. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall
at the time be the lawful sole successor of the Company.
Section 17.3 Surrender of Powers by the Company. The Company by
instrument in writing executed by authority of two-thirds of its Board of
Directors and
<PAGE>
delivered to the Trustee may surrender any of the powers or rights reserved to
the Company and thereupon such power or right so surrendered shall terminate
as to the Company and as to any successor corporations.
Section 17.4 Required Notices or Demands May be Served by Mail. Any
notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Notes to
or on the Company may be given or served by being deposited postage prepaid in
a post office letter box addressed as follows: Chief Financial Officer,
Cincinnati Bell Inc., 201 East Fourth Street, Cincinnati, Ohio 45202. Any
notice, direction, request or demand by any Noteholder to or upon the Trustee
shall be deemed to have been sufficiently given or made for all purposes if
given or made in writing at the Principal Corporate Trust Office of the
Trustee.
Section 17.5 Officers' Certificate and Opinion of Counsel. Upon any
application or demand by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
document is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include: (1) a statement that
the person making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
person, he or she has made such examination or investigation as is necessary
to enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to
whether or not, in the opinion of such person, such condition or covenant has
been complied with.
Section 17.6 Payments Due on Non-business Days. If the date of
maturity of interest on or Principal of the Notes shall not be a Business Day,
then payment of interest or Principal need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as
if made on the date of maturity, and no interest shall accrue for the period
after such date.
Section 17.7 Provisions Required by Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with any provision included in this Indenture which is required to
be included in this Indenture by any of Section 310 to 317, inclusive, of the
Trust Indenture Act, such required provision shall control.
Section 17.8 Indenture May be Executed in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall
be an original; but such counterparts shall together constitute but one and
the same instrument.
Section 17.9 Governing Law. This Indenture and each Note shall be
governed by and construed in accordance with the laws of the State of New York
without regard to conflicts of law principles thereof. This Indenture is
subject to the Trust
<PAGE>
Indenture Act and if any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act, which is required under such Act to
be a part of and govern this Indenture, the latter provision shall control. If
any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded,
as the case may be. Whether or not this Indenture is required to be qualified
under the Trust Indenture Act, the provisions of the Trust Indenture Act
required to be included in an indenture in order for such indenture to be so
qualified shall be deemed to be included in this Indenture with the same
effect as if such provisions were set forth herein and any provisions hereof
that may not be included in an indenture that is so qualified shall be deemed
to be deleted or modified to the extent such provisions would be required to
be deleted or modified in an indenture so qualified.
Section 17.10 Severability. In case any provision of this Indenture
or the Notes 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.
The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
<PAGE>
IN WITNESS WHEREOF, CINCINNATI BELL INC. has caused this Indenture
to be signed and acknowledged by its Chairman, its President, one of its
Executive Vice Presidents or its Chief Financial Officer or its Treasurer, and
THE BANK OF NEW YORK has caused this Indenture to be signed and acknowledged
by one of its Vice Presidents. Executed and delivered as of the day and year
first written above.
CINCINNATI BELL INC.
By /s/ Mark Peterson
----------------------------------
Name: Mark Peterson
Title: Vice President, Treasurer
THE BANK OF NEW YORK
By /s/ Mary Jane Schmalzel
----------------------------------
Name: Mary Jane Schmalzel
Title: Vice President
<PAGE>
APPENDIX A
[FORM OF NOTE]
[FACE]
[DTC Legend]
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,393.65 PRINCIPAL AMOUNT OF THIS NOTE AT MATURITY, THE ISSUE PRICE
IS $1,000, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $864.01, THE ISSUE DATE IS
[JULY 21, 1999] AND THE YIELD TO MATURITY IS 6.75% PER ANNUM, COMPOUNDED,
SEMI-ANNUALLY.
NO. $
--------------------------- -----------------
CINCINNATI BELL INC.
CUSIP NO.
---------
6.75% CONVERTIBLE SUBORDINATED NOTE
DUE 2009
CINCINNATI BELL INC., an Ohio corporation (herein referred to as the
"Company"), for value received, hereby promises to pay to [ ], or registered
assigns, at the office or agency of the Company in the City of Cincinnati,
State of Ohio, or at the option of the registered holder, at the office or
agency of the Company in the Borough of Manhattan, The City of New York, State
of New York, the Full Accreted Value (as defined herein) of this Note on July
21, 2009 in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay or accrete interest, at the rate per annum specified in the
title of this Note as more fully described on the reverse hereof, until
payment of said principal sum has been made or duly provided for; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the address of the person entitled thereto at such address as
it shall appear on the Note Register. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the appropriate certificate of authentication hereon shall have been
executed by or on behalf of the Trustee under the Indenture referred to on the
reverse hereof.
<PAGE>
IN WITNESS WHEREOF, Cincinnati Bell Inc. has caused this Instrument
to be signed by its duly authorized officers, by a facsimile of each of their
signatures.
CINCINNATI BELL INC.
By
----------------------------------
Name:
Title:
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Notes of the issue designated herein and referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee,
By
----------------------------------
Authorized Signatory
Date:
---------------
[FORM OF ALTERNATE CERTIFICATE OF AUTHENTICATION]
This is one of the Notes of the issue designated herein and referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee,
By
----------------------------------
Authenticating Agent
By
----------------------------------
Authorized Signature
Date:
---------------
<PAGE>
[FORM OF NOTE]
[REVERSE]
CINCINNATI BELL INC.
6.75% CONVERTIBLE SUBORDINATED NOTE
DUE 2009
This Note is one of a duly authorized issue of Notes of the Company,
designated as set forth on the face hereof (herein referred to as the
"Notes"), limited to the aggregate original issue amount of $ ,
all issued or to be issued under and pursuant to an indenture dated as of
(herein referred to as the "Indenture"), duly executed and
delivered by the Company and The Bank of New York, as Trustee (herein referred
to as the "Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Notes.
Capitalized terms not otherwise defined in this Note shall have the
meanings ascribed to them in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the Accreted Value hereof may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture permits, subject to the exceptions therein provided,
that the Company and the Trustee, with the consent of the holders of not less
than 51% in aggregate Accreted Value of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the holders of the Notes. It is also provided in the
Indenture that the holders of a majority in aggregate principal amount of the
Notes at the time outstanding may on behalf of the holders of all of the Notes
waive any past default under the Indenture and its consequences. Any such
consent or waiver by the holder of any Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of such Note and of any Note issued upon the
transfer thereof or in exchange or substitution therefor, irrespective of
whether or not any notation of such consent or waiver is made upon such Note
or such other Note.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal or Accreted Value of (and
premium, if any) and interest on this Note at the places, at the respective
times, at the rate and in the coin or currency herein prescribed.
The Notes are issuable as registered Notes without coupons in
denominations of $1,000 in original issue price and any integral multiple of
$1,000. At
<PAGE>
either of the offices or agencies of the Company referred to on the face
hereof and in the manner and subject to the limitations provided in the
Indenture, Notes may be exchanged without a service charge for a like
aggregate principal amount of Notes of other authorized denominations.
The Company promises to pay cash interest on this Note at the rate
and in the manner specified below. Prior to July 21, 2004 (the "Full Accretion
Date"), cash interest will not accrue or be payable on this Note, but this
Note will accrete on a daily basis, compounded semi-annually on January 21 and
July 21 of each year, at the rate of 6.75% per annum of the Accreted Value of
this Note from the date of issuance of this Note through the Full Accretion
Date. On the Full Accretion Date, the Accreted Value of each $1,000 of
original issue amount of this Note will be equal to $1,395.65 (the "Full
Accreted Value"). From the Full Accretion Date, interest on this Note will
accrue on the Full Accreted Value of this Note at the rate of 6.75% per annum
from the most recent Interest Payment Date to which interest has been paid or,
if no interest has been paid, from the Full Accretion Date. The Company will
pay, in cash, such interest semiannually in arrears on January 21 and July 21
of each year (each an "Interest Payment Date"), commencing on January 21,
2005, or if any such day is not a Business Day on the next succeeding Business
Day, to holders of record at the close of business on the January 6 or July 6
immediately preceding the Interest Payment Date (a "Regular Record Date"),
except that interest not so punctually paid or duly provided for, if any, will
be paid to the person in whose name this Note is registered as of the close of
business on a special record date to be fixed by the Company (a "Special
Record Date" and each Regular Record Date and Special Record Date, a "Record
Date"), notwithstanding the subsequent cancellation of this Note prior to such
Interest Payment Date. Upon any conversion of this Note or any portion thereof
into Common Stock following the Full Accretion Date, only if such conversion
occurs (x) following notice by the Company of its option to redeem this Note
under Section 13.1 of the Indenture, (y) in connection with a Change of
Control or (z) on or after the Record Date and prior to the applicable
Interest Payment Date, the Company will pay, in cash, any accrued and unpaid
interest on this Note (or the portion being converted). Accretions and
interest will be computed on the basis of a 360-day year consisting of twelve
30-day months.
The Notes may be represented by one or more global Notes deposited
with the Depository Trust Company ("DTC") and registered in the name of the
nominee of DTC, with certain limited exceptions. So long as DTC or any
successor depository or its nominee is the registered Holder of a global Note,
DTC, such depository or such nominee, as the case may be, will be considered
to be the sole Holder of the Notes for all purposes of the Indenture. Except
as provided below, an owner of a beneficial interest in a global Note will not
be entitled to have Notes represented by such global Note registered in such
owner's name, will not receive or be entitled to receive physical delivery of
the Notes in certificated form and will not be considered the owner or Holder
thereof under the Indenture. Each person owning a beneficial interest in a
global Note must rely on DTC's procedures and, if such person is not a
participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a Holder under the Indenture. If
the Company requests any action of Holders or if an owner of a beneficial
interest in a global Note desires to take any action that a Holder is entitled
to take under the Indenture, DTC will authorize the participants holding the
relevant beneficial interests to give or take such action, and such
participants will otherwise act upon the instructions of beneficial owners
holding through them.
If at any time DTC notifies the Company that it is unwilling or
unable to continue as depository for the global Note or Notes or if at any
time DTC ceases to be a clearing agency registered under the Security Exchange
Act of 1934, as amended, if so
<PAGE>
required by applicable law or regulation, the Company shall appoint a
successor depository with respect to such global Note or Notes. If a successor
depository for such global Note or Notes is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
unwillingness, inability or ineligibility or the Company, in its sole
discretion, determines at any time that all Outstanding Notes (but not less
than all) issued or issuable in the form of one or more global Notes shall no
longer be represented by such global Notes, then the Company shall execute,
and the Trustee shall authenticate and deliver, definitive Notes of like
series, rank, tenor and terms in definitive form in an aggregate principal
amount equal to the principal amount of such global Note or Notes. If any
beneficial owner of an interest in a permanent global Note is otherwise
entitled to exchange such interest for Notes of such series and of like tenor
and principal amount of another authorized form and denomination, as
contemplated by the Indenture and provided that any applicable notice provided
in the permanent global Note shall have been given then the Company shall
execute, and the Trustee shall authenticate and deliver, definitive Notes in
aggregate principal amount equal to the principal amount of such beneficial
owner's interest in such permanent global Note.
Upon the exchange of a Note in global form for Notes in certificated
form, such Note in global form shall be canceled by the Trustee. Notes in
certificated form issued in exchange for a Note in global form shall be
registered in such names and in such authorized denominations as the
Depositary for such Note in global form, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Notes to the Persons in whose names such Notes are
so registered.
This Note shall be subject to the provisions regarding redemption
and repurchase set forth in Article Thirteen of the Indenture.
This Note shall be convertible into shares of Common Stock in
accordance with Article Fourteen of the Indenture.
This Note is subordinated to all Senior Debt. To the extent provided
in Article Eleven of the Indenture, Senior Debt must be paid before principal
or Accreted Value, premium, if any, or interest on, this Note may be paid. The
Company and the Holder of this Note, by accepting this Note, agree to the
subordination provisions contained in Article Eleven of the Indenture.
None of the Company, the Trustee, any Paying Agent or the Note
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in this Note in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by any
depository, as a Holder, with respect to this Note in global form or impair,
as between such depository and owners of beneficial interests in such global
Note, the operation of customary practices governing the exercise of the
rights of such depository (or its nominee) as Holder of such global Note.
No recourse shall be had for the payment of the principal of (or
premium, if any) or the interest on this Note or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture or
any indenture supplemental thereto, against any incorporator, shareholder,
officer, director or employee, as such, past, present
<PAGE>
or future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly waived and
released.
This Note shall be deemed a contract made under the laws of the
State of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State.
[END OF FORM OF NOTE]
EXHIBIT 5.1
November 9, 1999
Board of Directors of
Cincinnati Bell Inc.
201 East Fourth Street
Cincinnati, Ohio 45201-2301
Ladies and Gentlemen:
I have acted as counsel for Cincinnati Bell Inc., an Ohio
corporation ("Cincinnati Bell"), in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") which is
being filed on the date hereof by Cincinnati Bell with the Securities and
Exchange Commission under the Securities Act of 1933 (the "Act"). The
Registration Statement relates to $400,000,000 aggregate principal amount at
issuance of 6 3/4% Convertible Subordinated Notes due 2009 of Cincinnati Bell
("Cincinnati Bell Convertible Notes"), and 18,650,385 shares of Cincinnati
Bell's common stock, par value $0.01 per share ("Cincinnati Bell Common
Stock"), into which the Cincinnati Bell Convertible Notes are convertible, to
be offered for resale by the Selling Holders identified therein.
In that connection, I have examined originals, or copies certified
or otherwise identified to my satisfaction, of such documents, corporate
records and other instruments as I have deemed necessary or appropriate for
the purposes of this opinion, including: (a) the Registration Statement and
(b) the prospectus that forms a part of the Registration Statement. In such
examination, I have assumed the genuineness of all signatures and the
authenticity of all documents submitted to me as copies. In examining
agreements executed by parties other than Cincinnati Bell I have assumed that
such parties had the power, corporate or other, to enter into and perform all
obligations thereunder and also have assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents, and the validity and binding effect thereof. As to
any facts material to the opinion expressed herein which I have not
independently verified or established, I have relied upon statements and
representations of officers and representatives of Cincinnati Bell and others.
Based upon and subject to the foregoing, and assuming that the
Registration Statement becomes and remains effective and that applicable state
securities laws are complied with, the undersigned is of the opinion that the
<PAGE>
2
Cincinnati Bell Convertible Notes and the shares of Cincinnati Bell Common
Stock have been, and upon the resale thereof by the Selling Holders named in
the prospectus included in the Registration Statement will be, validly issued,
fully paid and nonassessable.
I am admitted to practice in the State of Ohio, and I express no
opinion as to any matters governed by any law other than the law of the State
of Ohio and the Federal law of the United States of America.
I hereby consent to the inclusion of this opinion as an exhibit to
the Registration Statement and to the reference to me under the heading "Legal
Matters" in the prospectus that forms a part of the Registration Statement. In
giving such consent, I do not hereby admit that I am in the category of
persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Thomas E. Taylor
_____________________________
Thomas E. Taylor
General Counsel and Secretary
Cincinnati Bell Inc.
EXHIBIT 12.1
Cincinnati Bell Inc.
Computation of Ratio of Earnings to
Fixed Charges
(Dollars in millions)
<TABLE>
<CAPTION>
Pro Forma
--------------------
Six Six
months Months
ended Year Ended Ended
Year Ended December 31, June 30, December 31, June 30,
1998 1997 1996 1995 1994 1999 1998 1999
---- ---- ---- ---- ---- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income (loss) from continuing
operations before minority interests in
consolidated subsidiaries and income or
loss from equity investees.............. $126.1 $158.6 $153.2 $(45.1) $ 67.4 $53.0 $ 3.1 $(90.6)
Fixed charges:
Interest expense, including
amortization......................... 24.2 30.1 27.9 45.4 40.1 18.0 95.0 58.5
Interest portion of rental expense..... 3.9 3.9 3.0 4.0 4.2 2.7 48.0 27.1
----- ----- ----- ----- ------ ----- ------ ----
28.1 34.0 30.9 49.4 44.3 20.7 143.0 85.6
Pre-tax income (loss) from continuing
operations before minority interests in
consolidated subsidiaries and income
or loss from equity investees plus
fixed charges.......................... $154.2 $192.6 $184.1 $ 4.3 $111.7 $73.7 $146.1 $ (5.0)
====== ====== ====== ====== ====== ===== ====== ========
Fixed Charges
Interest expensed and capitalized...... 24.2 30.1 27.9 45.4 40.1 18.0 107.5 68.1
Interest portion of rental expense..... 3.9 3.9 3.0 4.0 4.2 2.7 48.0 27.1
Preferred stock dividend requirements of
majority owned subsidiaries.......... - - - - - - 48.8 26.7
Total fixed charges....................... $ 28.1 $ 34.0 $ 30.9 $49.4 $ 44.3 $20.7 $204.3 $121.9
======= ======= ====== ====== ====== ===== ====== ======
Ratio of earnings to fixed charges........ 5.5 5.7 6.0 - 2.5 3.6 - -
Deficiency of earnings to fixed charges... - - - $45.1 - - $ 58.2 $126.9
</TABLE>
II-7
EXHIBIT 23.1
Consent of PricewaterhouseCoopers LLP
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of Cincinnati Bell Inc. of our report
dated March 12, 1999, relating to the financial statements, which appears
in Cincinnati Bell Inc.'s 1998 Annual Report to Shareholders, which is
incorporated by reference in its Annual Report on Form 10-K for the year
ended December 31, 1998. We also consent to the incorporation by reference
of our report dated March 29, 1999, relating to the financial statement
schedule, which appears in such Annual Report on Form 10-K. We also consent
to the references to us under the heading "Experts" in such Registration
Statement.
/s/PricewaterhouseCoopers LLP
Cincinnati, Ohio
November 9, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Cincinnati Bell, Inc. on Form S-3 of our report on National
Teleservices, Inc. dated July 28, 1997, which is incorporated by reference
to the Current Report on Form 8-K of Cincinnati Bell, Inc. dated November
8, 1999. We also consent to the reference to us under the heading "Experts"
in this Registration Statement.
/s/Deloitte & Touche LLP
Minneapolis, Minnesota
November 8, 1999
<PAGE>
EXHIBIT 23.3
Consent of Independent Public Accountants
The consolidated financial statement of Grupo Marcatel, S.A. de C.V.
and subsidiaries as of December 31, 1998 and for the year then ended, have
been audited by Arthur Andersen, independent public accountants. Their reports
have been incorporated by reference in this registration statement in reliance
upon the authority of such firm as experts in accounting and auditing.
Reference is made to their report, which includes an explanatory paragraph
with respect to the uncertainty to continue as a going concern.
/s/ Arthur Andersen
Monterrey, Nuevo Leon
November 10, 1999.
<PAGE>
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
May 18, 1998 included in Cincinnati Bell Inc.'s Form 8-K dated November 8,
1999 and to all references to our Firm included in this Registration
Statement.
/s/Arthur Andersen LLP
Jackson, Mississippi
November 8, 1999.
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation of our report dated February 28, 1999, with respect to
the financial statements of IXC Communications, Inc. in the Registration
Statement (Form S-3) and related Prospectus of Cincinnati Bell Inc. for the
registration of $400 million of 6 3/4% Convertible Subordinated Notes and
shares of its common stock issuable upon conversion of the 6 3/4%
Convertible Subordinated Notes by reference to the Form 8-K filed by
Cincinnati Bell Inc. on November 8, 1999.
/s/Ernst & Young LLP
Austin, Texas
November 8, 1999
EXHIBIT 25.1
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------
CINCINNATI BELL INC.
(Exact name of obligor as specified in its charter)
Ohio 31-1056105
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
201 East Fourth Street, 102-760
P.O. Box 2301
Cincinnati, Ohio 45201-2301
(Address of principal executive offices) (Zip code)
------------------
6.75% Convertible Subordinated Notes due 2009
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- ------------------------------------------------------------
Name Address
- ------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 1st day of November, 1999.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
--------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 1st day of November, 1999.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
--------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
<PAGE>
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the
Federal Reserve System, at the close of business June 30, 1999,
published in accordance with a call made by the Federal Reserve
Bank of this District pursuant to the provisions of the Federal
Reserve Act.
Dollar Amounts
ASSETS In Thousands
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin................................................$ 5,597,807
Interest-bearing balances......................................... 4,075,775
Securities:
Held-to-maturity securities....................................... 785,167
Available-for-sale securities..................................... 4,159,891
Federal Funds sold and Securities
purchased under agreement to
resell............................................................ 2,476,963
Loans and lease financing
receivables:
Loans and leases, net of unearned
income............................................................ 38,028,772
LESS: Allowance for loan and lease losses ........................ 568,617
LESS: Allocated transfer risk
reserve........................................................... 16,352
Loans and leases, net of unearned
income, allowance, and reserve.................................... 37,443,803
Trading Asets...................................................... 1,563,671
Premises and fixed assets (including
capitalized leases)............................................... 683,587
Other real estate owned............................................ 10,995
Investments in uncosolidated sub-
sidiaries and associated com-
panies............................................................ 184,561
Customers' liability to this bank on
acceptances outstanding........................................... 812,015
Intangible assets.................................................. 1,135,572
Other assets....................................................... 5,607,019
----------
Total assets.......................................................$54,536,926
==========
LIABILITIES
Deposits:
In domestic offices..............................................$ 26,488,980
Noninterest-bearing.............................................. 10,626,811
Interest-bearing................................................. 15,862,169
In foreign offices, Edge and
and Agreement subsidiaries and
IBFs............................................................. 20,655,414
Noninterest-bearing.............................................. 156,471
Interest-bearing................................................. 20,498,943
Federal funds purchased and Secu-
rities sold under agreement to re-
purchase......................................................... 3,729,439
Demand notes issues to the U.S.
Treasury......................................................... 257,860
Trading Liabilities............................................... 1,987,450
Other borrowed money:
With remaining maturity of one
year or less..................................................... 496,235
With remaining maturity of more
than one year through three
years............................................................ 465
With remaining maturity of more
than three years................................................. 31,080
Bank's liability on acceptances exe-
cuted and outstanding............................................ 822,455
Subordinated notes and debentures................................. 1,308,000
Other liabilities................................................. 2,846,649
----------
Total Liabilites.................................................. 58,624,027
----------
EQUITY CAPITAL
Common Stock...................................................... 1,135,284
Surplus........................................................... 815,314
Undivided profits and capital
reserves......................................................... 4,001,767
Net unrealized holding gains
(losses) on available-for-sale
securities....................................................... ( 7,956)
Cumulative foreign currency
translation adjustments.......................................... ( 31,510)
-----------
Total equity capital.............................................. 5,912,899
----------
Total liablities and equity capital...............................$ 64,536,926
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to the
best of our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
Thomas A. Renyi
Alan R. Griffith Directors
Gerald L. Hassell
