<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
LEVEL 3 COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 47-0210602
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
---------------
3555 FARNAM STREET
OMAHA, NEBRASKA 68131
(402) 536-3677
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THOMAS C. STORTZ, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
3555 FARNAM STREET
OMAHA, NEBRASKA 68131
(402) 536-3677
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
JOHN S. D'ALIMONTE, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019-6099
(212) 728-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time, after the effective date of this Registration Statement.
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, 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. [_]
(Cover continued on following page)
---------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
(Cover continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED(1) REGISTERED(2) PER SHARE(3) OFFERING PRICE(2)(3) FEE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(4).....
- -----------------------------------------------------------------------------------------
Preferred Stock, par
value $.01 per
share(5)..............
- -----------------------------------------------------------------------------------------
Depositary Shares
representing Preferred
Stock(6)..............
- -----------------------------------------------------------------------------------------
Common Stock, par value
$.01 per share(7).....
- -----------------------------------------------------------------------------------------
Total.................. $3,500,000,000 100% $3,500,000,000 $973,000(8)
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Securities registered hereunder may be sold separately, together or as
units with other securities registered hereunder.
(2) In U.S. Dollars or the equivalent thereof denominated in foreign
currencies or units of two or more foreign currencies or composite
currencies (such as European Currency Units). In no event will the
aggregate maximum offering price of all securities issued pursuant to this
Registration Statement exceed $3,500,000,000, or, if any Debt Securities
are issued with original issue discount, such greater amount as shall
result in an aggregate offering price of $3,500,000,000.
(3) Estimated solely for purposes of calculating the registration fee. The
aggregate public offering price of securities sold will not exceed
$3,500,000,000 (see Note (2) above). No separate consideration will be
received for Common Stock, Preferred Stock or Debt Securities that are
issued upon conversion or exchange of Debt Securities, Preferred Stock or
Depositary Shares registered hereunder.
(4) Subject to Note (2), such indeterminate principal amount of Debt
Securities (which may be senior or subordinated).
(5) Subject to Note (2), such indeterminate number of shares of Preferred
Stock as may from time to time be issued at indeterminate prices or
issuable upon conversion of Debt Securities.
(6) To be represented by Depositary Receipts representing an interest in all
or a specified portion of a share of Preferred Stock.
(7) Subject to Note (2), such indeterminate number of shares of Common Stock
as may from time to time be issued at indeterminate prices or issuable
upon conversion or exchange of Debt Securities or Preferred Stock
registered hereunder. Each share of Common Stock includes a right to
purchase certain shares of Preferred Stock which, prior to the occurrence
of certain events, will not be exercisable or evidenced separately from
the Common Stock.
(8) Calculated pursuant to Rule 457(o) under the Securities Act, and
represents the registration fee under Section 6(b) of the Securities Act,
covering the $3,500,000,000 in maximum aggregate public offering price of
securities newly registered hereunder.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 14, 1998
PROSPECTUS
LEVEL 3 COMMUNICATIONS, INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
-----------
We will provide specific terms of these securities in supplements to this
Prospectus.
You should read this Prospectus and any prospectus supplement carefully
before you invest.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is , 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THIS PROSPECTUS...................................................... 1
WHERE YOU CAN FIND MORE INFORMATION........................................ 1
THE COMPANY................................................................ 2
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS........... 2
APPLICATION OF PROCEEDS.................................................... 2
DESCRIPTION OF DEBT SECURITIES............................................. 3
General Terms of Debt Securities......................................... 3
Certificated Securities.................................................. 4
Book-Entry Debt Securities............................................... 4
Merger................................................................... 5
Events of Default, Notice and Waiver..................................... 6
Modification of the Indentures........................................... 8
Defeasance and Covenant Defeasance....................................... 9
Senior Debt Securities................................................... 10
Subordination of Subordinated Securities................................. 10
Definition of Senior Indebtedness........................................ 11
Convertible Debt Securities.............................................. 11
DESCRIPTION OF PREFERRED STOCK............................................. 12
General.................................................................. 12
Dividends................................................................ 13
Redemption............................................................... 14
Conversion or Exchange Rights............................................ 15
Rights Upon Liquidation.................................................. 15
Voting Rights............................................................ 16
DESCRIPTION OF DEPOSITARY SHARES........................................... 17
General.................................................................. 17
Dividends and Other Distributions........................................ 17
Withdrawal of Stock...................................................... 17
Redemption of Depositary Shares.......................................... 18
Voting the Preferred Stock............................................... 18
Exchange of Preferred Stock.............................................. 18
Conversion of Preferred Stock............................................ 18
Amendment and Termination of the Deposit Agreement....................... 19
Charges of Preferred Stock Depositary.................................... 19
Resignation and Removal of Depositary.................................... 19
Miscellaneous............................................................ 19
DESCRIPTION OF COMMON STOCK................................................ 20
DESCRIPTION OF OUTSTANDING CAPITAL STOCK................................... 20
Common Stock............................................................. 20
Preferred Stock.......................................................... 20
Anti-Takeover Provisions................................................. 21
PLAN OF DISTRIBUTION....................................................... 21
By Agents................................................................ 21
By Underwriters.......................................................... 21
Direct Sales............................................................. 21
General Information...................................................... 22
LEGAL OPINIONS............................................................. 22
EXPERTS.................................................................... 22
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This Prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we
may, over the next two years, sell any combination of the securities described
in this Prospectus in one or more offerings up to a total dollar amount of
$3,500,000,000 or the equivalent denominated in foreign currencies or units of
two or more foreign currencies. This Prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add,
update or change information contained in this Prospectus. You should read
both this Prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the public reference room. Our SEC filings are also
available at the offices of the Nasdaq National Market, in Washington, D.C.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference our documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities.
. Annual Report on Form 10-K/A for the fiscal year ended December 27,
1997;
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
. Current Reports on Form 8-K, filed June 9, 1998, September 1, 1998,
October 1, 1998, October 5, 1998 and December 7, 1998 and on Form 8-K/A,
filed April 30, 1998; and
. Registration Statements on Forms 8-A/A filed March 31, 1998 and June 10,
1998.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Vice President, Investor Relations
Level 3 Communications, Inc.
1450 Infinite Drive
Louisville, CO 80022
303-926-3000
You should rely only on the information incorporated by reference or
provided in this Prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We 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 those documents.
<PAGE>
THE COMPANY
We engage in the information services, communications and coal mining
businesses through ownership of operating subsidiaries and substantial equity
positions in public companies. In late 1997, we announced a business plan to
increase substantially our information services business and to expand the
range of services we offer. We will implement our business plan by building an
advanced, international, facilities-based communications network based on
Internet Protocol, or IP, technology.
Since late 1997, we have substantially increased the emphasis we place on
and the resources devoted to our communications and information services
business. We intend to become a facilities-based provider of a broad range of
integrated communications services. A facilities-based provider is one that
owns or leases a substantial portion of the plant, property and equipment
necessary to provide its services. To reach this goal, we plan to expand
substantially the business of our subsidiary PKS Information Services, Inc.
and to create, through a combination of construction, purchase and leasing of
facilities and other assets, an international, end-to-end, facilities-based
communications network. We are designing our network based on IP technology in
order to leverage the efficiencies of this technology to provide lower cost
communications services.
Our network will combine both local and long distance networks and will
connect customers end-to-end across the U.S. and in Europe and Asia. We expect
to complete the U.S. intercity portion of the network during the first quarter
of 2001. In the interim, we have signed an agreement to lease a national
network over which we began to offer services in the third quarter of 1998. We
intend to provide a full range of communications services-- including local,
long distance, international and Internet services.
Our principal executive offices are located at 3555 Farnam Street, Omaha,
Nebraska 68131 and our telephone number is (402) 536-3677.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, FISCAL YEAR ENDED
--------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ------------ ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
-- 7.29 5.73 3.87 -- -- 20.94
</TABLE>
For this ratio, earnings consist of earnings (loss) before income taxes,
minority interest and discontinued operations plus fixed charges excluding
capitalized interest. Fixed charges consist of interest expensed and
capitalized, plus the portion of rent expense under operating leases deemed by
us to be representative of the interest factor, plus, prior to September 30,
1995, preferred stock dividends on preferred stock of its former subsidiary,
MFS Communications Company, Inc. We had deficiencies of earnings to fixed
charges of $106 million for the nine months ended September 30, 1998, $32
million for 1995 and $42 million for 1994.
APPLICATION OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of the offered securities will be used for working
capital, capital expenditures, acquisitions and other general corporate
purposes. Until we use the net proceeds in this manner, we may temporarily use
them to make short-term investments or reduce short-term borrowings.
2
<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the Debt
Securities (as defined below). The applicable prospectus supplement will
describe the specific terms of the Debt Securities offered through that
prospectus supplement as well as any general terms described in this section
that will not apply to those Debt Securities.
The Debt Securities will be our direct unsecured general obligations and may
include debentures, notes, bonds and/or other evidences of indebtedness. The
Debt Securities will be either senior debt securities ("Senior Debt
Securities") or subordinated debt securities ("Subordinated Debt Securities").
The Debt Securities will be issued under one or more separate indentures
between us and IBJ Schroder Bank & Trust Company, as trustee (the "Trustee").
Senior Debt Securities will be issued under a "Senior Indenture" and
Subordinated Debt Securities will be issued under a "Subordinated Indenture."
Together the Senior Indentures and the Subordinated Indentures are called
"Indentures".
We have summarized selected provisions of the Indentures below. The summary
is not complete. We have also filed the forms of the Indentures as exhibits to
the registration statement. You should read the Indentures for provisions that
may be important to you before you buy any Debt Securities. In the summary
below, we have included references to section numbers of the applicable
Indentures so that you can easily locate these provisions. Capitalized terms
used in the summary have the meanings specified in the Indentures.
GENERAL TERMS OF DEBT SECURITIES
The Debt Securities issued under each Indenture may be issued without limit
as to aggregate principal amount, in one or more series (Section 301 of the
Indentures). Each Indenture provides that there may be more than one Trustee
under such Indenture, each with respect to one or more series of Debt
Securities. Any Trustee under either Indenture may resign or be removed with
respect to one or more series of Debt Securities issued under that Indenture,
and a successor Trustee may be appointed to act with respect to such series
(Section 608 of the Indentures).
If two or more persons are acting as Trustee with respect to different
series of Debt Securities issued under the same Indenture, each of those
Trustees will be a trustee of a trust under that Indenture separate and apart
from the trust administered by any other Trustee (Section 609 of the
Indentures). In such a case, except as otherwise indicated in this Prospectus,
any action described in this Prospectus to be taken by the Trustee may be
taken by each of those Trustees only with respect to the one or more series of
Debt Securities for which it is Trustee.
A prospectus supplement relating to a series of Debt Securities being
offered will include specific terms relating to the offering and that series.
These terms will contain some or all of the following:
. the title of the Debt Securities;
. any limit on the aggregate principal amount of the Debt Securities;
. the purchase price of the Debt Securities (expressed as a percentage of
the principal amount);
. the date or dates on which the principal of and any premium on the Debt
Securities will be payable or the method for determining the date or
dates;
. if the Debt Securities will bear interest, the interest rate or rates
(which may be fixed or variable) or the method by which the rate or
rates will be determined;
. if the Debt Securities will bear interest, the date or dates from which
any interest will accrue, the Interest Payment Dates on which any
interest will be payable, the Regular Record Dates for such Interest
Payment Dates and the basis upon which interest shall be calculated if
other than that of a 360 day year of twelve 30-day months;
. the place or places where the principal of (and premium, if any) or
interest, if any, on the Debt Securities will be payable and the Debt
Securities may be surrendered for registration of transfer or exchange;
3
<PAGE>
. if we will have the option to redeem all or any portion of the Debt
Securities, the period or periods within which, the price or prices at
which and the terms and conditions upon which the Debt Securities may be
redeemed;
. any sinking fund or other similar provisions obligating us to redeem or
purchase all or any portion of the Debt Securities prior to final
maturity or permitting a Holder to require us to make such a purchase or
redemption, and the period or periods within which, the price or prices
at which and the terms and conditions upon which the Debt Securities
will be redeemed or purchased;
. the currency or currencies in which the Debt Securities are denominated
and payable if other than U.S. dollars;
. whether the amount of payments of principal of (and premium, if any) or
interest, if any, on the Debt Securities may be determined with
reference to an index, formula or other method and the manner in which
such amounts are to be determined;
. any additions or changes to the Events of Default in the respective
Indentures;
. any additions or changes with respect to the other covenants in the
respective Indentures;
. the terms and conditions, if any, upon which the Debt Securities may be
convertible into Common Stock or Preferred Stock, including the initial
conversion price or rate and the conversion period;
. whether the Debt Securities will be issued in certificated or book-entry
form;
. whether the Debt Securities will be in registered or bearer form and, if
in registered form, the denominations of the Debt Securities if other
than $1,000 and any integral multiple of $1,000;
. the applicability of the defeasance and covenant defeasance provisions
of the applicable Indenture; and
. any other terms of the Debt Securities consistent with the provisions of
the applicable Indenture (Section 301 of the Indentures).
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount from
their stated principal amount. Special U.S. federal income tax, accounting and
other considerations applicable to Original Issue Discount Securities will be
described in the applicable prospectus supplement.
Unless otherwise provided with respect to a series of Debt Securities, the
Debt Securities will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000 (Section 302 of the
Indentures).
CERTIFICATED SECURITIES
Except as otherwise stated in the applicable prospectus supplement, Debt
Securities will not be issued in certificated form. If, however, Debt
Securities are to be issued in certificated form, no service charge will be
made for any transfer or exchange of any of those Debt Securities, but we may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with the transfer or exchange of those Debt
Securities (Section 305 of the Indentures).
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each, a "Global Security") that will be
deposited with the depositary identified in the applicable prospectus
supplement (the "Depositary"). Unless it is exchanged in whole or in part for
Debt Securities in definitive form, a Global Security may not be transferred
except as a whole to a nominee of the Depositary for that Global Security, or
by a nominee of such Depositary to such Depositary, or to a successor of such
Depositary or a nominee of such successor.
4
<PAGE>
Unless otherwise stated, The Depository Trust Company, New York, New York
("DTC") will act as Depositary for each series of Global Securities. Beneficial
interests in Global Securities will be shown on, and transfers of Global
Securities will be effected only through, records maintained by DTC and its
participants.
DTC has provided the following information to us: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act
of 1934. DTC holds securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in such Direct
Participant's accounts, eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to DTC's book-entry
system is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Direct and
Indirect Participants are on file with the SEC.
Principal and interest payments on Global Securities registered in the name
of DTC's nominee will be made in immediately available funds to DTC's nominee
as the registered owner of the Global Securities. We and the Trustee will treat
DTC's nominee as the owner of the Global Securities for all other purposes as
well. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the Global Securities to
owners of beneficial interests in the Global Securities. It is DTC's current
practice, upon receipt of any payment of principal or interest, to credit
Direct Participants' accounts on the payment date according to their respective
holdings of beneficial interests in the Global Securities as shown on DTC's
records. Payments by Direct and Indirect Participants to owners of beneficial
interests in the Global Securities will be governed by standing instructions
and customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name". Such payments will be
the responsibility of such Direct and Indirect Participants and not of DTC, the
Trustee or us.
Debt Securities represented by a Global Security will be exchangeable for
Debt Securities in definitive form of like tenor in authorized denominations
only if:
. DTC notifies us that it is unwilling or unable to continue as
Depositary;
. DTC ceases to be a clearing agency registered under applicable law and a
successor depositary is not appointed by us within 90 days; or
. we, in our discretion, determine not to require all of the Debt
Securities of a series to be represented by a Global Security and notify
the Trustee of our decision.
MERGER
We generally may consolidate with, or sell, lease or convey all or
substantially all of our assets to, or merge with or into, any other
corporation if certain conditions are met. These conditions are that:
. either (1) we are the continuing corporation, or (2) the successor
corporation (if other than us) formed by or resulting from any such
consolidation or merger or which receives the transfer of such assets
expressly assumes payment of the principal of (and premium, if any) and
interest on all the Debt Securities and the performance and observance
of all the covenants and conditions of the applicable Indenture; and
. neither we nor the successor corporation is in default immediately after
the transaction under the applicable Indenture (Section 801 of the
Indentures).
5
<PAGE>
EVENTS OF DEFAULT, NOTICE AND WAIVER
Senior Indenture. The Senior Indenture provides that the following are
Events of Default with respect to any series of Senior Debt Securities:
. default for 30 days in the payment of any installment of interest on any
Debt Security of that series;
. default in the payment of the principal of (or premium, if any, on) any
Debt Security of that series at its Maturity;
. default in making a sinking fund payment required for any Debt Security
of that series;
. default in the performance of any of our other covenants in the Senior
Indenture (other than a covenant included in the Senior Indenture solely
for the benefit of another series of Senior Debt Securities), continued
for 60 days after written notice;
. the acceleration of the maturity of more than $25,000,000 in the
aggregate of any of our other indebtedness, where such indebtedness is
not discharged or such acceleration is not rescinded or annulled;
. certain events of bankruptcy, insolvency or reorganization of us or our
property; and
. any other Event of Default provided with respect to a particular series
of Debt Securities (Section 501 of the Senior Indenture).
The Senior Trustee generally may withhold notice to the Holders of any
series of Debt Securities of any default with respect to that series if it
considers such withholding to be in the interest of those Holders. However,
the Senior Trustee may not withhold notice of any default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of that
series or in the payment of any sinking fund installment in respect of any
Debt Security of that series (Section 601 of the Senior Indenture).
If an Event of Default with respect to any series of Senior Debt Securities
occurs and is continuing, the Senior Trustee or the Holders of not less than
25% in principal amount of the Outstanding Debt Securities of that series may
declare the principal amount of all of the Debt Securities of that series to
be due and payable immediately by written notice. Subject to certain
conditions, the Holders of a majority in principal amount of Outstanding Debt
Securities of that series may rescind and annul that acceleration if all
Events of Default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of that series
have been cured or waived (Section 502 of the Senior Indenture). The Senior
Indenture also provides that Holders of not less than a majority in principal
amount of any series of Outstanding Senior Debt Securities may, subject to
certain limitations, waive any past default with respect to such series and
the consequences of that default (Section 513 of the Senior Indenture). The
prospectus supplement relating to any series of Senior Debt Securities which
are Original Issue Discount Securities will describe the particular provisions
relating to acceleration of a portion of the principal amount of those
Original Issue Discount Securities upon the occurrence and continuation of an
Event of Default. Within 120 days after the close of each fiscal year, we must
file with the Senior Trustee a statement, signed by specified of our officers,
stating whether or not those officers have knowledge of any default under the
Senior Indenture (Section 1004 of the Senior Indenture).
Subject to provisions in the Senior Indenture relating to its duties in case
of default, the Senior Trustee is not obligated to exercise any of its rights
or powers under the Senior Indenture at the request or direction of any
Holders of any series of Senior Debt Securities then Outstanding, unless those
Holders have offered the Senior Trustee reasonable security or indemnity
(Section 602 of the Senior Indenture). Subject to those indemnification
provisions and certain limitations contained in the Senior Indenture, the
Holders of not less than a majority in principal amount of any series of the
Outstanding Debt Securities issued thereunder will have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Senior Trustee, or of exercising any trust or power conferred
upon the Senior Trustee (Section 512 of the Senior Indenture).
6
<PAGE>
Subordinated Indenture. The Subordinated Indenture provides that the
following are Events of Default with respect to any series of Subordinated
Debt Securities:
. default for 30 days in the payment of any installment of interest on any
Debt Security of that series;
. default in the payment of the principal of (or premium, if any, on) any
Debt Security of that series at its Maturity;
. default in making a sinking fund payment required for any Debt Security
of that series;
. any default in the performance of any of our other covenants in the
Subordinated Indenture (other than a covenant included in the
Subordinated Indenture solely for the benefit of another series of
Subordinated Debt Securities), continued for 60 days after written
notice;
. the acceleration of more than $25,000,000, where such indebtedness is
not discharged or such acceleration is not rescinded or annulled;
. certain events relating to the bankruptcy, insolvency or reorganization
of us or our property; and
. any other Event of Default provided with respect to a particular series
of Debt Securities (Section 501 of the Subordinated Indenture).
As with the Senior Indenture, the Subordinated Trustee generally may
withhold notice to the Holders of any series of Subordinated Debt Securities
of any default with respect to that series if it considers such withholding to
be in the interest of the Holders. However, the Subordinated Trustee may not
withhold notice of any default in the payment of the principal of (or premium,
if any) or interest on any Debt Security of that series or in the payment of
any sinking fund installment in respect of any Debt Security of that series)
(Section 601 of the Subordinated Indenture).
If an Event of Default with respect to any series of Subordinated Debt
Securities occurs and is continuing, then the Subordinated Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal amount of all of the Debt
Securities of that series to be due and payable immediately by written notice.
Subject to certain conditions, the Holders of a majority in principal amount
of Outstanding Debt Securities of that series may rescind and annul that
acceleration if all Events of Default with respect to Debt Securities of that
series have been cured or waived (Section 502 of the Subordinated Indenture).
The Subordinated Indenture also provides that Holders of not less than a
majority in principal amount of any series of the Outstanding Subordinated
Debt Securities may, subject to certain limitations, waive any past default
with respect to such series and the consequences of that default (Section 513
of the Subordinated Indenture). The prospectus supplement relating to any
series of Subordinated Debt Securities which are Original Issue Discount
Securities will describe the particular provisions relating to acceleration of
a portion of the principal amount of those Original Issue Discount Securities
upon the occurrence and continuation of an Event of Default. Within 120 days
after the close of each fiscal year, we must file with the Subordinated
Trustee a statement, signed by specified officers of us, stating whether or
not such officers have knowledge of any default under the Subordinated
Indenture (Section 1004 of the Subordinated Indenture).
Subject to provisions in the Subordinated Indenture relating to its duties
in case of default, the Subordinated Trustee is not obligated to exercise any
of its rights or powers under the Subordinated Indenture at the request or
direction of any Holders of any series of Subordinated Debt Securities then
Outstanding, unless those Holders have offered the Subordinated Trustee
reasonable security or indemnity (Section 602 of the Subordinated Indenture).
Subject to those indemnification provisions and certain limitations contained
in the Subordinated Indenture, the Holders of not less than a majority in
principal amount of any series of the Outstanding Subordinated Debt Securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Subordinated Trustee, or of
exercising any trust or power conferred upon the Subordinated Trustee (Section
512 of the Subordinated Indenture).
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MODIFICATION OF THE INDENTURES
Senior Indenture. Modifications and amendments of the Senior Indenture may
be made only, subject to certain exceptions, with the consent of the Holders
of not less than a majority in aggregate principal amount of all Outstanding
Debt Securities under the Senior Indenture which are affected by the
modification or amendment. However, the Holder of each affected Senior Debt
Security must consent to any modification or amendment of the Senior Indenture
that:
. changes the Stated Maturity of the principal of, or any installment of
interest (or premium, if any) on, that Debt Security;
. reduces the principal amount of, or the rate or amount of interest on,
or any premium payable on redemption of, that Debt Security, or reduces
the amount of principal of an Original Issue Discount Security that
would be due and payable upon declaration of acceleration of its
Maturity or would be provable in bankruptcy, or adversely affects any
right of repayment of the Holder of that Debt Security;
. changes the Place of Payment where, or the currency in which, any
payment on that Debt Security is payable;
. impairs the right to institute suit to enforce any payment on or with
respect to that Debt Security; or
. reduces the percentage of Outstanding Debt Securities of any series
necessary to modify or amend the Senior Indenture or to waive compliance
with certain of its provisions or certain defaults and their
consequences (Section 902 of the Senior Indenture).
The Senior Indenture also contains provisions permitting us and the Senior
Trustee to amend the Senior Indenture without the consent of the Holders of
any Senior Debt Securities in certain limited circumstances, such as:
. to evidence the succession of another entity to us and the assumption by
such successor of our covenants contained in the Senior Indenture;
. to secure the Securities; and
. to cure any ambiguity, to correct or supplement any provision in the
Senior Indenture which may be inconsistent with any other provision of
the Senior Indenture.
Subordinated Indenture. Modifications and amendments to the Subordinated
Indenture may be made only, subject to certain exceptions, with the consent of
the Holders of not less than a majority in aggregate principal amount of all
Outstanding Debt Securities under the Subordinated Indenture which are
affected by the modification or amendment. However, the Holder of each
affected Subordinated Debt Security must consent to any modification or
amendment of the Subordinated Indenture that:
. changes the Stated Maturity of the principal of, or any installment of
interest (or premium, if any) on, that Debt Security;
. reduces the principal amount of, or the rate or amount of interest on,
or any premium payable on redemption of, any such Debt Security, or
reduces the amount of principal of an Original Issue Discount Security
that would be due and payable upon declaration of acceleration of its
Maturity or would be provable in bankruptcy, or adversely affects any
right of the repayment of the Holder of that Debt Security;
. changes the Place of Payment where, or the currency in which, any
payment on that Debt Security is payable;
. impairs the right to institute suit to enforce any payment on or with
respect to that Debt Security;
. reduces the percentage of Outstanding Debt Securities of any series
necessary to modify or amend the Subordinated Indenture or to waive
compliance with certain of its provisions or certain defaults and their
consequences; or
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. subordinates the indebtedness evidenced by that Debt Security to any of
our indebtedness other than Senior Indebtedness (as defined in the
Subordinated Indenture) (Section 902 of the Subordinated Indenture).
The Subordinated Indenture also contains provisions permitting us and the
Subordinated Trustee to amend the Subordinated Indenture without the consent
of the Holders of any Subordinated Securities in certain limited
circumstances, such as:
. to evidence the succession of another entity to us and the assumption by
such successor of our covenants contained in the Subordinated Indenture;
. to secure the Securities; and
. to cure any ambiguity, to correct or supplement any provision in the
Subordinated Indenture which may be inconsistent with any other
provision of the Subordinated Indenture.
DEFEASANCE AND COVENANT DEFEASANCE
When we establish a series of Debt Securities, we may provide that that
series is subject to the defeasance and discharge provisions of the applicable
Indenture. If those provisions are made applicable, we may elect either:
. to defease and be discharged from, subject to certain limitations, all
of our obligations with respect to those Debt Securities ("defeasance")
(Section 1402 of the Indentures); or
. to be released from our obligations to comply with certain covenants
relating to those Debt Securities as described in the applicable
prospectus supplement ("covenant defeasance") (Section 1403 of the
Indentures).
To effect such a defeasance or covenant defeasance, we must irrevocably
deposit with the relevant Trustee, in trust, an amount, in funds or Government
Obligations (as defined below), or both, which, through the payment of
principal and interest in accordance with their terms, will provide money in
an amount sufficient to pay, when due, the principal of (and premium, if any)
and interest, if any, on those Debt Securities and any mandatory sinking fund
or analogous payments on those Debt Securities.
On such a defeasance, our obligations to pay Additional Amounts, if any,
upon the occurrence of certain events, to register the transfer or exchange of
those Debt Securities, to replace certain of those Debt Securities, to
maintain an office relating to those Debt Securities and to hold moneys for
payment in trust will not be discharged.
Such a trust may only be established if, among other things, we have
delivered to the relevant Trustee an Opinion of Counsel to the effect that the
Holders of those Debt Securities:
. will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the defeasance or covenant defeasance; and
. will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if the
defeasance or covenant defeasance had not occurred. In the case of
defeasance, the Opinion of Counsel must be based upon a ruling of the
Internal Revenue Service or a change in applicable United States federal
income tax law occurring after the date of the applicable Indenture
(Section 1404 of the Indentures).
"Government Obligations" means generally securities which are:
. direct obligations of the United States of America or of the government
which issued the foreign currency in which the Debt Securities of a
particular series are payable, in each case, where the issuer has
pledged its full faith and credit to pay the obligations; or
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. obligations of an agency or instrumentality of the United States of
America or of the government which issued the foreign currency in which
the Debt Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government.
In any case, the issuer of Government Obligations cannot have the option
to call or redeem the obligations. In addition, Government Obligations
include, subject to certain qualifications, a depository receipt issued
by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal
of any such Government Obligation held by such custodian for the account
of a depository receipt holder (Section 101 of the Indentures).
If we effect covenant defeasance with respect to any Debt Securities and
those Debt Securities are declared due and payable because any Event of
Default has occurred (other than an Event of Default relating to any covenant
from which we have been released because of the covenant defeasance) the
amount in money and/or Government Obligations on deposit with the relevant
Trustee, will be sufficient to pay amounts due on the Debt Securities at the
time of their Stated Maturity but may not be sufficient to pay all amounts due
on the Debt Securities at the time of the acceleration. However, we would
remain liable to pay all amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the provisions, if
any, permitting defeasance or covenant defeasance, including any modifications
to the provisions described above.
SENIOR DEBT SECURITIES
Senior Debt Securities are to be issued under the Senior Indenture. Each
series of Senior Debt Securities will constitute Senior Indebtedness and will
rank equally with each other series of Senior Debt Securities and other Senior
Indebtedness. All subordinated debt (including, but not limited to, all
Subordinated Securities) will be subordinated to the Senior Debt Securities
and other Senior Indebtedness.
SUBORDINATION OF SUBORDINATED SECURITIES
Subordinated Indenture. The payment of the principal of (and premium, if
any) and interest on the Subordinated Securities will be subordinated to our
Senior Indebtedness, whether outstanding on the date of the Subordinated
Indenture or incurred after that date (Section 1701 of the Subordinated
Indenture). At September 30, 1998, after giving pro forma effect to the
Company's issuance on December 2, 1998 of 10 1/2% Senior Discount Notes Due
2008, our aggregate Senior Indebtedness was approximately $2,646,000,000. The
applicable prospectus supplement for each issuance of Subordinated Securities
will specify the aggregate amount of our outstanding indebtedness as of the
most recent practicable date that would rank senior to and equally with the
offered Subordinated Securities.
Ranking. No class of Subordinated Securities is subordinated to any other
class of subordinated debt securities. See "Subordination Provisions" below.
Subordination Provisions. If any of certain specified events occur, the
holders of Senior Indebtedness, must receive payment of the full amount due on
the Senior Indebtedness in respect of principal, premium (if any) and
interest, or such payment must be duly provided for, before we may pay the
Holders of any of the Subordinated Securities principal of (or premium, if
any) or interest on the Subordinated Securities. These events are:
. any distribution of our assets upon our dissolution, winding up,
liquidation or reorganization or any other marshalling of our assets and
liabilities, except for a distribution in connection with a merger or
consolidation or a conveyance or transfer of all or substantially all of
our properties complying with the covenant described above under
"Merger";
. the occurrence and continuation of a default with respect to the payment
of principal of (or premium, if any) or interest on any Senior
Indebtedness; or
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. a declaration of the principal of any series of the Subordinated
Securities (or in the case of Original Issue Discount Securities, the
portion of the principal amount thereof referred to in Section 502 of
the Subordinated Indenture) as due and payable, that has not been
rescinded and annulled.
However, if the event is the acceleration of any series of Subordinated
Securities, only the holders of Senior Indebtedness outstanding at the time of
the acceleration of those Subordinated Securities (or, in the case of Original
Issue Discount Securities, that portion of the principal amount) must receive
payment of the full amount due on that Senior Indebtedness in respect of
principal, premium (if any) and interest, or such payment must be duly
provided for, before we may pay the Holders of any of the Subordinated
Securities principal of (or premium, if any) or interest on the Subordinated
Securities.
As a result of the subordination in favor of the holders of Senior
Indebtedness, certain of our general creditors, including holders of Senior
Indebtedness, may recover more, ratably, than the Holders of the Subordinated
Securities in the event of insolvency.
DEFINITION OF SENIOR INDEBTEDNESS
Senior Indebtedness is defined in the Subordinated Indenture to mean the
following indebtedness or obligations, unless the instrument by which we
incurred, assumed or guaranteed that indebtedness or those obligations
expressly provides that that indebtedness or those obligations are subordinate
or junior in right of payment to any other of our indebtedness or obligations:
. the principal of and premium, if any, and unpaid interest on
indebtedness for money borrowed;
. purchase money and similar obligations;
. obligations under capital leases;
. guarantees, assumptions or purchase commitments relating to, or other
transactions as a result of which we are responsible for the payment of,
such indebtedness of others;
. renewals, extensions and refunding of any such indebtedness;
. interest or obligations in respect of any such indebtedness accruing
after the commencement of any insolvency or bankruptcy proceedings; and
. obligations associated with derivative products.
CONVERTIBLE DEBT SECURITIES
Unless otherwise provided in the applicable prospectus supplement, the
following provisions will apply to Debt Securities that will be convertible
into Common Stock or Preferred Stock (the "Convertible Debt Securities").
Conversion. Unless we have previously redeemed a Convertible Debt Security,
the Holder of those Convertible Debt Securities may, at any time during the
period specified in the applicable prospectus supplement, convert those
Convertible Debt Securities into shares of Common Stock or Preferred Stock.
The conversion price or rate for each $1,000 principal amount of Convertible
Debt Securities will be specified in the applicable prospectus supplement. The
Holder of a Convertible Debt Security may convert a portion of the Convertible
Debt Security which is $1,000 principal amount or any integral multiple of
$1,000 (Section 1602 of the Indentures). In the case of Convertible Debt
Securities called for redemption, conversion rights will expire at the close
of business on the date fixed for the redemption. However, in the case of
repayment at the option of the applicable Holder, conversion rights will
terminate upon receipt of written notice of the Holder's exercise of that
option (Section 1602 of the Indentures).
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In certain events, the conversion price or rate will be subject to
adjustment as specified in the applicable Indenture. For Debt Securities
convertible into Common Stock, those events include:
. the issuance of shares of Common Stock as a dividend;
. subdivisions and combinations of Common Stock;
. the issuance to all holders of Common Stock of rights or warrants
entitling such holders (for a period not exceeding 45 days) to subscribe
for or purchase shares of Common Stock at a price per share less than
the current market price per share of Common Stock; and
. the distribution to all holders of Common Stock of (1) shares of our
capital stock (other than Common Stock), (2) evidences of our
indebtedness or assets (excluding cash dividends or distributions paid
from our retained earnings) or (3) subscription rights or warrants
(other than those referred to above).
No adjustment of the conversion price or rate will be required in any of
these cases unless an adjustment would require a cumulative increase or
decrease of at least 1% in such price or rate (Section 1605 of the
Indentures). Fractional shares of Common Stock will not be issued upon
conversion. In place of fractional shares, we will pay a cash adjustment
(Section 1606 of the Indentures). Unless otherwise specified in the applicable
prospectus supplement, Convertible Debt Securities convertible into Common
Stock surrendered for conversion between any record date for an interest
payment and the related interest payment date must be accompanied by payment
of an amount equal to the interest payment on the surrendered Convertible Debt
Security (Section 1604 of the Indentures). However, that payment does not have
to accompany Convertible Debt Securities surrendered for conversion if those
Convertible Debt Securities have been called for redemption during that
period.
The adjustment provisions for Debt Securities convertible into shares of
Preferred Stock will be determined at the time of an issuance of such Debt
Securities and will be described in the applicable prospectus supplement.
DESCRIPTION OF PREFERRED STOCK
This section describes the general terms and provisions of our Preferred
Stock. The applicable prospectus supplement will describe the specific terms
of the Preferred Stock offered through that prospectus supplement as well as
any general terms described in this section that will not apply to those
shares of Preferred Stock.
We have summarized certain selected terms of the Preferred Stock in this
section. The summary is not complete. You should read our Restated Certificate
of Incorporation that is an exhibit to our Annual Report on Form 10-K and the
Certificate of Designation relating to the applicable series of the Preferred
Stock that we will file with the SEC for additional information before you buy
any Preferred Stock.
GENERAL
Our Restated Certificate of Incorporation and Delaware General Corporation
Law give our Board of Directors the authority, without further stockholder
action, to issue a maximum of 10,000,000 shares of Preferred Stock. The Board
of Directors has the authority to fix the following terms with respect to
shares of any series of Preferred Stock:
. the designation of the series;
. the number of shares to comprise the series;
. the dividend rate or rates payable with respect to the shares of the
series;
. the redemption price or prices, if any, and the terms and conditions of
any redemption;
. the voting rights;
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. any sinking fund provisions for the redemption or purchase of the shares
of the series;
. the terms and conditions upon which the shares are convertible or
exchangeable, if they are convertible or exchangeable; and
. any other relative rights, preferences and limitations pertaining to the
series.
The Preferred Stock will have the rights described in this section unless
the applicable prospectus supplement provides otherwise. You should read the
prospectus supplement relating to the particular series of the Preferred Stock
it offers for specific terms, including:
. the designation, stated value and liquidation preference of that series
of the Preferred Stock and the number of shares offered;
. the initial public offering price at which the shares will be issued;
. the dividend rate or rates (or method of calculation), the dividend
periods, the date or dates on which dividends will be payable and
whether such dividends will be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to cumulate;
. any redemption or sinking fund provisions;
. any conversion or exchange provisions;
. the procedures for any auction and remarketing, if any, of that series
of Preferred Stock;
. whether interests in that series of Preferred Stock will be represented
by our Depositary Shares; and
. any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of that
series of Preferred Stock.
When we issue shares of Preferred Stock against payment for the shares, they
will be fully paid and nonassessable (that is, the full purchase price for
those shares will have been paid and the holders of those shares will not be
assessed any additional monies for those shares). Holders of Preferred Stock
will have no preemptive rights to subscribe for any additional securities that
we may issue.
Because we are a holding company, our rights and the rights of holders of
our securities, including the holders of Preferred Stock, to participate in
the distribution of assets of any subsidiary of ours upon the subsidiary's
liquidation or recapitalization will be subject to the prior claims of this
subsidiary's creditors and preferred stockholders, except to the extent we may
ourselves be a creditor with recognized claims against the subsidiary or a
holder of preferred stock of the subsidiary.
DIVIDENDS
The Holders of the Preferred Stock will be entitled to receive dividends, if
declared by our Board of Directors out of our assets that we can legally use
to pay dividends. The prospectus supplement relating to a particular series of
Preferred Stock will describe the dividend rates and dates on which dividends
will be payable. The rates may be fixed or variable or both. If the dividend
rate is variable, the applicable prospectus supplement will describe the
formula used for determining the dividend rate for each dividend period. We
will pay dividends to the holders of record as they appear on our stock books
on the record dates fixed by our Board of Directors. The applicable prospectus
supplement will specify whether dividends will be paid in the form of cash,
Preferred Stock (of the same or a different series) or Common Stock.
The applicable prospectus supplement will also state whether dividends on
any series of Preferred Stock are cumulative or noncumulative. If our Board of
Directors does not declare a dividend payable on a dividend payment date on
any noncumulative series of Preferred Stock, then the holders of that series
will not be entitled to receive a dividend for that dividend period and we
will not be obligated to pay the dividend accrued for that period, whether or
not dividends on such Preferred Stock are declared or paid on any future
dividend payment dates.
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The Board of Directors will not declare and pay a dividend on any of our
stock ranking, as to dividends, equal with or junior to any series of
Preferred Stock unless full dividends on that series have been declared and
paid (or declared and sufficient money is set aside for payment). Until full
dividends are paid (or declared and payment is set aside) on Preferred Stock
ranking equal as to dividends, then:
. we will declare any dividends pro rata among the Preferred Stock of each
series and any Preferred Stock ranking equal to the Preferred Stock as
to dividends (i.e., the dividends we declare per share on each series of
such Preferred Stock will bear the same relationship to each other that
the full accrued dividends per share on each such series of the
Preferred Stock bear to each other);
. other than such pro rata dividends, we will not declare or pay any
dividends or declare or make any distributions upon any security ranking
junior to or equal with the Preferred Stock as to dividends or upon
liquidation (except dividends or distributions paid for with securities
ranking junior to the Preferred Stock as to dividends and upon
liquidation); and
. we will not redeem, purchase or otherwise acquire (or set aside money
for a sinking fund for) any securities ranking junior to or equal with
the Preferred Stock as to dividends or upon liquidation (except by
conversion into or exchange for stock junior to the Preferred Stock as
to dividends and upon liquidation).
We will not owe any interest, or any money in lieu of interest, on any
dividend payment(s) on any series of the Preferred Stock which may be past
due.
REDEMPTION
Preferred Stock may be redeemable, in whole or in part, at our option, and
may be subject to mandatory redemption through a sinking fund or otherwise, as
described in the applicable prospectus supplement. Redeemed Preferred Stock
will become authorized but unissued shares of Preferred Stock that we may
issue in the future.
If a series of Preferred Stock is subject to mandatory redemption, the
applicable prospectus supplement will specify the number of shares that we
will redeem each year and the redemption price. If Preferred Stock is
redeemed, we will pay all accrued and unpaid dividends on those shares to, but
excluding, the redemption date. In the case of any noncumulative series of
Preferred Stock, accrued and unpaid dividends will not include any
accumulation of dividends for prior dividend periods. The applicable
prospectus supplement will also specify whether we will pay the redemption
price in cash or other property. If the redemption price for Preferred Stock
of any series is payable only from the net proceeds of the issuance of our
capital stock, the terms of such Preferred Stock may provide that, if no such
capital stock shall have been issued or to the extent the net proceeds from
any issuance are insufficient to pay in full the aggregate redemption price
then due, such Preferred Stock shall automatically and mandatorily be
converted into shares of the applicable capital stock pursuant to conversion
provisions specified in the applicable prospectus supplement.
If fewer than all of the outstanding shares of any series of the Preferred
Stock are to be redeemed, our Board of Directors will determine the number of
shares to be redeemed. We may redeem the shares pro rata from the holders of
record in proportion to the number of shares held by them (with adjustments to
avoid redemption of fractional shares) or by lot in a manner determined by the
Board of Directors.
Even though the terms of a series of Preferred Stock may permit redemption
of shares of Preferred Stock in whole or in part, if any dividends, including
accumulated dividends, on that series are past due:
. we will not redeem any Preferred Stock of that series unless we
simultaneously redeem all outstanding shares of Preferred Stock of that
series; and
. we will not purchase or otherwise acquire any Preferred Stock of that
series.
The prohibition discussed in the prior sentence will not prohibit us from
purchasing or acquiring Preferred Stock of that series pursuant to a purchase
or exchange offer if we make the offer on the same terms to all holders of
that series.
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Unless the applicable prospectus supplement specifies otherwise, we will
give notice of a redemption by mailing a notice to each record holder of the
shares to be redeemed, between 30 to 60 days prior to the date fixed for
redemption. We will mail the notices to the holders' addresses as they appear
on our stock records. Each notice will state:
. the redemption date;
. the number of shares and the series of the Preferred Stock to be
redeemed;
. the redemption price;
. the place or places where holders can surrender the certificates for the
Preferred Stock for payment of the redemption price;
. that dividends on the shares to be redeemed will cease to accrue on the
redemption date; and
. the date when the holders' conversion rights, if any, will terminate.
If we redeem fewer than all shares of any series of the Preferred Stock held
by any holder, we will also specify the number of shares to be redeemed from
the holder in the notice.
If we have given notice of the redemption and have provided the funds for
the payment of the redemption price, then beginning on the redemption date:
. the dividends on the Preferred Stock called for redemption will no
longer accrue;
. such shares will no longer be considered outstanding; and
. the holders will no longer have any rights as stockholders except to
receive the redemption price.
When the holders of these shares surrender the certificates representing
these shares, in accordance with the notice, the redemption price described
above will be paid out of the funds we provide. If fewer than all the shares
represented by any certificate are redeemed, a new certificate will be issued
representing the unredeemed shares without cost to the holder of those shares.
CONVERSION OR EXCHANGE RIGHTS
The prospectus supplement relating to a series of Preferred Stock that is
convertible or exchangeable will state the terms on which shares of such
series are convertible or exchangeable into Common Stock, another series of
preferred stock or Debt Securities.
RIGHTS UPON LIQUIDATION
Unless the applicable prospectus supplement states otherwise, if we
voluntarily or involuntarily liquidate, dissolve or wind up our business, the
holders of shares of each series of the Preferred Stock will be entitled to
receive:
. liquidation distributions in the amount stated in the applicable
prospectus supplement; and
. all accrued and unpaid dividends (whether or not earned or declared).
We will pay these amounts to the holders of shares of each series of the
Preferred Stock, and all amounts owing on any Preferred Stock ranking equally
with such series of Preferred Stock as to distributions upon liquidation, out
of our assets available for distribution to stockholders before any
distribution is made to holders of any securities ranking junior to the series
of Preferred Stock upon liquidation.
If (1) we voluntarily or involuntarily liquidate, dissolve or wind up our
business; and (2) the assets available for distribution to the holders of the
Preferred Stock of any series and any other shares of our stock ranking equal
with such series as to any such distribution are insufficient to pay all
amounts to which the holders are entitled, then we will only make pro rata
distributions to the holders of all shares ranking equal as to distributions
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upon dissolution, liquidation or winding up of our business (i.e., the
distributions we pay to the holders of all shares ranking equal as to
distributions upon dissolution, liquidation or winding up of our business will
bear the same relationship to each other that the full distributable amounts
for which such holders are respectively entitled upon such dissolution,
liquidation or winding up of our business bear to each other).
After we pay the full amount of the liquidation distribution to which the
holders of a series of the Preferred Stock are entitled, such holders will
have no right or claim to any of our remaining assets.
VOTING RIGHTS
Except as indicated below or in the applicable prospectus supplement, or
except as expressly required by applicable law, the holders of Preferred Stock
will not be entitled to vote.
If we fail to pay dividends on any shares of Preferred Stock for six
consecutive quarterly periods, the holders of such shares of Preferred Stock
(voting separately as a class with all other series of preferred stock upon
which the same voting rights have been conferred and are exercisable) will be
entitled to vote for the election of two additional directors to the Board of
Directors. This may be done at a special meeting called by the holders of
record of at least 10% of those shares of Preferred Stock or the next annual
meeting of stockholders and at each subsequent meeting until:
. in the case of a series of Preferred Stock with cumulative dividends,
all dividends accumulated on that series of Preferred Stock for the past
dividend periods and the then current dividend period have been fully
paid or declared and a sum sufficient for the payment of these dividends
has been set aside for payment; or
. in the case of a series of noncumulative Preferred Stock, four
consecutive quarterly dividends on that series of noncumulative
Preferred Stock have been fully paid or declared and a sum sufficient
for the payment of these dividends has been set aside for payment.
In this case, the entire Board of Directors will be increased by two
directors.
So long as any shares of Preferred Stock remain outstanding, unless we
receive the consent of the holders of any outstanding series of Preferred
Stock as specified below, we will not:
. authorize, create or issue, or increase the authorized or issued amount
of, any class or series of capital stock ranking prior to the
outstanding series of Preferred Stock with respect to payment of
dividends or distribution of assets upon liquidation, dissolution or
winding up, or reclassify any capital stock into any such shares, or
authorize, create or issue any obligation or security convertible into,
exchangeable for or evidencing the right to purchase any of these
shares; or
. amend, alter or repeal the provisions of our Restated Certificate of
Incorporation, including the Certificate of Designation relating to that
series of Preferred Stock, whether by merger, consolidation, or
otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of that series of Preferred Stock
or the holders of that series of Preferred Stock.
This consent must be given by the holders of at least two-thirds of each
series of all outstanding Preferred Stock described in the preceding sentence,
voting separately as a class. We will not be required to obtain this consent
with respect to the actions relating to changes to our Restated Certificate of
Incorporation, however, if we only:
. increase the amount of the authorized Preferred Stock or any outstanding
series of Preferred Stock or any of our other capital stock; or
. create and issue another series of Preferred Stock or any other capital
stock; and
. in either case, such Preferred Stock ranks equal with or junior to the
outstanding Preferred Stock with respect to the payment of dividends and
the distribution of assets upon the liquidation, dissolution or winding
up of our business.
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<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
This section describes the general terms and provisions of shares of
Preferred Stock represented by depositary shares (the "Depositary Shares").
The applicable prospectus supplement will describe the specific terms of the
Depositary Shares offered through that prospectus supplement and any general
terms outlined in this section that will not apply to those Depositary Shares.
We have summarized in this section certain terms and provisions of the
Deposit Agreement (as defined below), the Depositary Shares and the receipts
representing Depositary Shares ("Depositary Receipts"). The summary is not
complete. You should read the forms of Deposit Agreement and Depositary
Receipt relating to a series of Preferred Stock that we will file with the SEC
for additional information before you buy any Depositary Shares that represent
Preferred Stock of that series.
GENERAL
We may issue Depositary Receipts evidencing the Depositary Shares. Each
Depositary Share will represent a fraction of a share of Preferred Stock.
Shares of Preferred Stock of each class or series represented by Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") among us, the depositary (the "Preferred Stock Depositary") and
the holders of the Depositary Receipts. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Receipt will be entitled, in proportion
to the fraction of a share of Preferred Stock represented by the Depositary
Shares evidenced by such Depositary Receipt, to all the rights and preferences
of the Preferred Stock represented by such Depositary Shares. Those rights
include any dividend, voting, conversion, redemption and liquidation rights.
Immediately following the issuance and delivery of the Preferred Stock by us
to the Preferred Stock Depositary, we will cause the Preferred Stock
Depositary to issue the Depositary Receipts on our behalf.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Receipts in proportion to the number of such Depositary Receipts
owned by such holders.
If there is a distribution other than in cash, the Preferred Stock
Depositary will distribute property it receives to the entitled record holders
of Depositary Receipts, unless the Preferred Stock Depositary determines that
it is not feasible to make such distribution. If this occurs, the Preferred
Stock Depositary may, with our approval, sell the property and distribute the
net proceeds from this sale to the holders of Depositary Shares.
WITHDRAWAL OF STOCK
If a holder of Depositary Receipts surrenders the Depositary Receipts at the
corporate trust office of the Preferred Stock Depositary (unless the related
Depositary Shares have previously been called for redemption, converted or
exchanged into other securities of our company), the holder will be entitled
to receive at this office the number of shares of the Preferred Stock and any
money or other property represented by such Depositary Shares. Holders of
Depositary Receipts will be entitled to receive whole or fractional shares of
the Preferred Stock on the basis of the proportion of Preferred Stock
represented by each Depositary Share specified in the applicable prospectus
supplement. Holders of shares of Preferred Stock received in exchange for
Depositary Shares will no longer be entitled to receive Depositary Shares in
exchange for shares of Preferred Stock. If the holder delivers Depositary
Receipts evidencing a number of Depositary Shares that is more than the number
of Depositary Shares representing the number of shares of Preferred Stock to
be withdrawn, the Preferred Stock Depositary will issue the holder a new
Depositary Receipt evidencing such excess number of Depositary Shares at the
same time.
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REDEMPTION OF DEPOSITARY SHARES
Whenever we redeem shares of Preferred Stock held by the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of that redemption
date the number of Depositary Shares representing shares of the Preferred
Stock so redeemed. However, we must have paid in full the redemption price of
the Preferred Stock to be redeemed plus any accrued and unpaid dividends on
the Preferred Stock to the Preferred Stock Depositary.
The redemption price per Depositary Share will be equal to the redemption
price and any other amounts per share payable with respect to the Preferred
Stock. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Preferred Stock
Depositary by lot or pro rata or other equitable method, in each case as we
may determine.
After the date fixed for redemption, the Depositary Shares called for
redemption will no longer be outstanding. When the Depositary Shares are no
longer outstanding, all rights of the holders of the related Depositary
Receipts will cease, except the right to receive money or other property that
the holders of the Depositary Receipts were entitled to receive upon such
redemption. These payments will be made when the holders surrender their
Depositary Receipts to the Preferred Stock Depositary.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depositary will mail
information about the meeting contained in the notice to the record holders of
the Depositary Shares representing such Preferred Stock. Each record holder of
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the
Preferred Stock Depositary as to how the Preferred Stock underlying the
holder's Depositary Shares will be voted.
The Preferred Stock Depositary will vote the amount of Preferred Stock
represented by such Depositary Shares according to these instructions. We will
agree to take all reasonable action deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to vote the
Preferred Stock in that manner. The Preferred Stock Depositary will not vote
shares of Preferred Stock for which it does not receive specific instructions
from the holders of Depositary Shares representing such Preferred Stock. The
Preferred Stock Depositary will not be responsible for any failure to carry
out any voting instruction, or for the manner or effect of any vote, as long
as its action or inaction is in good faith and does not result from its
negligence or willful misconduct.
EXCHANGE OF PREFERRED STOCK
Whenever we exchange all of the shares of Preferred Stock held by the
Preferred Stock Depositary for Debt Securities or Common Stock, the Preferred
Stock Depositary will exchange as of that exchange date all Depositary Shares
representing all of the shares of the Preferred Stock exchanged for Debt
Securities or Common Stock. However, we must have issued and deposited with
the Preferred Stock Depositary Debt Securities or Common Stock for all of the
shares of the Preferred Stock to be exchanged.
The exchange rate per Depositary Share will be equal to the exchange rate
per share of Preferred Stock, multiplied by the fraction of a share of
Preferred Stock represented by one Depositary Share, plus all money and other
property, if any, represented by such Depositary Shares, including all accrued
and unpaid dividends on the shares of Preferred Stock.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, are not convertible or exchangeable into
Common Stock or any of our other securities or property. Nevertheless, the
prospectus supplement relating to an offering of Depositary Shares may provide
that, the holders of Depositary Receipts may surrender their Depositary
Receipts to the Preferred Stock
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Depositary with written instructions to the Preferred Stock Depositary to
instruct us to cause the conversion or exchange of the Preferred Stock
represented by these Depositary Shares into whole shares of our Common Stock,
other shares of our Preferred Stock or our Debt Securities. We have agreed
that upon receipt of these instructions and any related amounts payable we
will cause the requested conversion or exchange. If the Depositary Shares are
to be converted or exchanged in part only, a new Depositary Receipt or
Receipts will be issued for any Depositary Shares not to be converted or
exchanged.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may be amended by agreement between us and
the Preferred Stock Depositary. However, any amendment that materially and
adversely alters the rights of the holders of Depositary Shares or that would
be materially and adversely inconsistent with the rights granted to the
holders of the related Preferred Stock will not be effective unless approved
by the holders of at least two thirds of the Depositary Shares then
outstanding.
We may terminate the Deposit Agreement upon not less than 60 days' notice if
holders of a majority of the Depository Shares then outstanding consent. If we
terminate the Deposit Agreement, the Preferred Stock Depositary will deliver
or make available to each holder of Depositary Receipts that surrenders the
Depositary Receipts it holds, the number of whole or fractional shares of
Preferred Stock represented by the Depositary Shares evidenced by these
Depositary Receipts.
In addition, the Deposit Agreement will automatically terminate if:
. all outstanding Depositary Shares are redeemed, converted or exchanged;
or
. there is a final distribution in respect of the related Preferred Stock
in connection with any liquidation, dissolution or winding up of our
business and the distribution has been distributed to the holders of the
related Depositary Receipts.
CHARGES OF PREFERRED STOCK DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the Deposit Agreement. In addition, we will pay
the fees and expenses of the Preferred Stock Depositary in connection with the
performance of its duties under the Deposit Agreement. Holders of Depositary
Receipts will pay transfer and other taxes and governmental charges and any
other charges that are stated to be their responsibility in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering notice
to us. We also may remove the Preferred Stock Depositary at any time.
Resignations or removals will take effect upon the appointment of a successor
Preferred Stock Depositary. This successor must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications that we send to the Preferred Stock
Depositary with respect to the related Preferred Stock.
Neither we nor the Preferred Stock Depositary will be liable if it is
prevented or delayed, by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. Our obligations and
the Preferred Stock Depositary's obligations under the Deposit Agreement will
be limited to performance in good faith and without negligence or willful
misconduct of the duties described in the Deposit Agreement. Neither we nor
the Preferred Stock Depositary will be obligated to prosecute or defend any
legal proceeding relating to any
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Depositary Receipts, Depositary Shares or shares of Preferred Stock unless
satisfactory indemnity is furnished. We and the Preferred Stock Depositary may
rely on written advice of counsel or accountants, or information provided by
persons presenting shares of Preferred Stock for deposit, holders of
Depositary Receipts or other persons believed to be competent and authorized
to this information and on documents believed to be genuine.
If the Preferred Stock Depositary receives conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and us,
on the other hand, the Preferred Stock Depositary will be entitled to act on
the claims, requests or instructions received from us.
DESCRIPTION OF COMMON STOCK
We may issue (either separately or together with other securities) shares of
our Common Stock. Under our Restated Certificate of Incorporation, we are
authorized to issue up to 500,000,000 shares of our Common Stock. A prospectus
supplement relating to an offering of Common Stock, or other securities
convertible or exchangeable for, or exercisable into, Common Stock, will
describe the relevant terms, including the number of shares offered, any
initial offering price, and market price and dividend information, as well as,
if applicable, information on other related securities. See "Description of
Outstanding Capital Stock" below.
DESCRIPTION OF OUTSTANDING CAPITAL STOCK
We have summarized certain terms and provisions of our outstanding capital
stock in this section. The summary is not complete. We have also filed our
Restated Certificate of Incorporation, our By-Laws and the Certificate of
Designation relating to the Series A Preferred Stock as exhibits to our Annual
Report on Form 10-K. You should read our Restated Certificate of Incorporation
and our By-Laws and the Certificate of Designation relating to the Series A
Preferred Stock for additional information before you purchase any of our
capital stock.
As of November 1, 1998, our authorized capital stock was 518,500,000 shares.
Those shares consisted of: (a) 500,000,000 shares of Common Stock, par value
$.01 per share, (b) 10,000,000 shares of Preferred Stock, par value $.01 per
share and (c) 8,500,000 shares of Class R Convertible Common Stock, par value
$.01 per share. As of November 1, 1998 there were 307,122,679 shares of Common
Stock, no shares of Preferred Stock and no shares of Class R Convertible
Common Stock outstanding.
COMMON STOCK
Subject to the senior rights of Preferred Stock which may from time to time
be outstanding, holders of Common Stock are entitled to receive dividends
declared by the Board of Directors out of funds legally available for their
payment. Upon dissolution and liquidation of our business, holders of Common
Stock are entitled to a ratable share of our net assets remaining after
payment to the holders of the Preferred Stock of the full preferential amounts
they are entitled to. All outstanding shares of Common Stock are fully paid
and nonassessable.
The holders of Common Stock are entitled to one vote per share for the
election of Directors and on all other matters submitted to a vote of
stockholders. Holders of Common Stock are not entitled to cumulative voting
for the election of Directors. They are not entitled to preemptive rights.
The transfer agent and registrar for the Common Stock is Norwest Bank
Minnesota, N.A.
PREFERRED STOCK
The Preferred Stock has priority over the Common Stock with respect to
dividends and to other distributions, including the distribution of assets
upon liquidation. The Board of Directors is authorized to fix and determine
the terms, limitations and relative rights and preferences of the Preferred
Stock, to establish series
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of Preferred Stock and to fix and determine the variations as among series.
The Board of Directors without stockholder approval could issue Preferred
Stock with voting and conversion rights which could adversely affect the
voting power of the holders of Common Stock. The Board of Directors has
designated 500,000 shares of Series A Junior Participating Preferred Stock
("Participating Preferred Stock"). Participating Preferred Stock will be
issued in units consisting of one one-thousandth of a share (the "Units") of
Participating Preferred Stock. Participating Preferred Stock is on a parity
with the Common Stock with respect to dividends and to other distributions,
including the distribution of assets on liquidation. Quarterly dividends per
Unit equal the amount of the quarterly dividend paid per share of Common
Stock, when, as and if declared by the Board of Directors. The holders of
Units are entitled to one vote per Unit, voting together with the Common Stock
on all matters submitted to the stockholders. As of the date of this
Prospectus, there are no outstanding shares of Preferred Stock.
ANTI-TAKEOVER PROVISIONS
We currently have provisions in our Restated Certificate of Incorporation
and By-Laws that could have an "anti-takeover" effect. The provisions in the
Restated Certificate of Incorporation include:
. a classified Board of Directors;
. a prohibition on our stockholders taking action by written consent;
. the requirement that special meetings of stockholders be called only by
the Board of Directors or the Chairman of the Board; and
. the requirement of the affirmative vote of at least 66-2/3% of our
outstanding shares of stock entitled to vote thereon to adopt, repeal,
alter, amend or rescind our By-Laws.
The By-Laws contain specific procedural requirements for the nomination of
directors and the introduction of business by a stockholder of record at an
annual meeting of stockholders where such business is not specified in the
notice of meeting or brought by or at the discretion of the Board of
Directors. In addition to these provisions, the Board of Directors has adopted
a stockholder's rights plan, under which rights were distributed in a
dividend. These rights entitle the holder to acquire Units of Participating
Preferred Stock, which is exercisable upon the occurrence of certain events,
including the acquisition by a person or group of a specified percentage of
the Common Stock.
PLAN OF DISTRIBUTION
We may sell the offered securities (1) through agents, (2) through
underwriters or dealers or (3) directly to one or more purchasers.
BY AGENTS
Offered securities may be sold through agents designated by us. The agents
agree to use their reasonable best efforts to solicit purchases for the period
of their appointment.
BY UNDERWRITERS
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may
resell the securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase the
securities will be subject to certain conditions. The underwriters will be
obligated to purchase all the securities of the series offered if any of the
securities are purchased. Any initial public offering price and any discounts
or concessions allowed or re-allowed or paid to dealers may be changed from
time to time.
DIRECT SALES
Offered securities may also be sold directly by us. In this case, no
underwriters or agents would be involved.
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GENERAL INFORMATION
Underwriters, dealers and agents that participate in the distribution of the
offered securities may be underwriters as defined in the Securities Act of
1933, as amended (the "Act"), and any discounts or commissions they receive
from us and any profit on the resale of the offered securities by them may be
treated as underwriting discounts and commissions under the Act. Any
underwriters or agents will be identified and their compensation described in
a prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Act, or to contribute with respect to payments which the underwriters,
dealers or agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, us or our subsidiaries in the ordinary course of their
businesses.
LEGAL OPINIONS
Willkie Farr & Gallagher will issue an opinion for us about the legality of
the offered securities. Any underwriters will be advised about other issues
relating to any offering by their own legal counsel.
EXPERTS
The consolidated balance sheets of Level 3 Communications, Inc. as of
December 28, 1996 and December 27, 1997, and the related statements of
earnings, changes in stockholders' equity, and cash flows for each of three
years in the period ended December 27, 1997, as well as the consolidated
balance sheets of RCN Corporation and Subsidiaries as of December 31, 1996 and
1997 and the related statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1997, as well as the balance sheets of Kiewit Construction &
Mining Group, a business group of Peter Kiewit Sons', Inc., as of December 28,
1996 and December 27, 1997 and the related statements of earnings, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 27, 1997, as well as the consolidated balance sheets of the
Diversified Group, a business group of Peter Kiewit Sons', Inc. as of December
28, 1996 and December 27, 1997 and the related statements of earnings, changes
in stockholders' equity, and cash flows for each of the three years in the
period ended December 27, 1997, incorporated by reference in this registration
statement, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses, other than underwriting discounts and commissions,
in connection with the offerings of the Securities are as follows:
<TABLE>
<S> <C>
Securities Act Registration Fee................................... $973,000
"Blue Sky" Fees and Expenses...................................... 15,000
Printing and Engraving Expenses................................... 200,000
Legal Fees and Expenses........................................... 200,000
Fees of Rating Agencies........................................... 60,000
Accounting Fees and Expenses...................................... 100,000
Fees of Indenture Trustees (including counsel fees)............... 20,000
Miscellaneous..................................................... 57,000
----------
Total........................................................... $1,625,000
==========
</TABLE>
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* Estimated and subject to future contingencies.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation 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 such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may, in advance of the final action of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or
agent in defending such action, provided that the director or officer
undertakes to repay such amount if it shall ultimately be determined that he
or she is not entitled to be indemnified by the corporation. A corporation may
indemnify such person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses (including attorneys' fees) which he
or she actually and reasonably incurred in connection therewith. The
indemnification provided is not deemed to be exclusive of any other rights to
which an officer or director may be entitled under any corporation's by-law,
agreement, vote or otherwise.
In accordance with Section 145 of the DGCL, Article XI of the Company's
Restated Certificate of Incorporation (the "Certificate") and the Company's
By-laws (the "By-laws") provide that the Company shall indemnify each person
who is or was a director, officer or employee of the Company (including the
heirs, executors, administrators or estate of such person) or is or was
serving at the request of the Company as director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise, to
the fullest extent permitted under subsections 145(a), (b), and (c) of the
DGCL or any successor statute. The indemnification
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provided by the Certificate and the By-laws shall not be deemed exclusive of
any other rights to which any of those seeking indemnification or advancement
of expenses may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. Expenses (including attorneys'
fees) incurred in defending a civil, criminal, administrative or investigative
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the indemnified person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Company.
The Certificate further provides that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an improper
personal benefit. If the DGCL is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Company shall be eliminated or limited to the
fullest extent permitted by the DGCL as so amended.
The By-laws provide that the Company may purchase and maintain insurance on
behalf of its directors, officers, employees and agents against any
liabilities asserted against such persons arising out of such capacities.
ITEM 16. EXHIBITS.
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement Basic Provisions for Debt Securities*
1.2 -- Form of Underwriting Agreement Basic Provisions for Equity
Securities*
4.1 -- Form of Senior Indenture*
4.2 -- Form of Subordinated Indenture*
4.3 -- Form of Certificate of Designation for the Preferred Stock (together
with Preferred Stock certificate)*
4.4 -- Form of Senior Debt Security *
4.5 -- Form of Subordinated Security *
4.6 -- Form of Deposit Agreement*
4.7 -- The instruments defining the rights of the holders of the long-term
debt securities of the Registrant are omitted pursuant to Section
(b)(4)(iii)(A) of Item 601 of Regulation S-K. Registrant agrees to
furnish supplementally copies of these instruments to the
Securities and Exchange Commission upon request.
5 -- Opinion of Willkie Farr & Gallagher*
23.1 -- Consent of PricewaterhouseCoopers LLP
23.2 -- Consent of PricewaterhouseCoopers LLP
23.3 -- Consent of Willkie Farr & Gallagher (included in Exhibit 5)*
24 -- Power of Attorney (included on the signature pages hereto)
25 -- Statement of Eligibility of Senior and Subordinated Trustee on Form
T-1*
</TABLE>
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* To be filed by amendment or incorporated by reference to the extent
applicable in connection with an offering.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
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<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(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 subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in registration statements on Form S-3 or
Form S-8 and the 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 this 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.
The undersigned Registrant hereby further undertakes that, for the 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 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.
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 provisions described under Item 15 of this
registration statement, or otherwise (other than insurance), the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in such 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 whether such indemnification by
it is against public policy as expressed in such Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in Omaha,
Nebraska, on December 14, 1998.
LEVEL 3 COMMUNICATIONS, INC.
/s/ James Q. Crowe
By: _________________________________
Name: James Q. Crowe
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of Level 3 Communications, Inc.,
hereby severally constitute and appoint James Q. Crowe, R. Douglas Bradbury,
Thomas C. Stortz and Neil J. Eckstein, and each of them, attorneys-in-fact for
the undersigned, in any and all capacities, with the power of substitution, to
sign any amendments to this Registration Statement (including post-effective
amendments) and any subsequent registration statement for the same offering
which may be filed under Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact, and each of them, 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 and to all interests and purposes as he might
or could do in person, hereby ratifying and confirming all that each said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment has been signed below by the following persons, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Walter Scott, Jr. Chairman of the Board December 14, 1998
____________________________________
Walter Scott, Jr.
/s/ James Q. Crowe President, Chief Executive December 14, 1998
____________________________________ Officer and Director
James Q. Crowe
/s/ R. Douglas Bradbury Executive Vice President, December 14, 1998
____________________________________ Chief Financial Officer and
R. Douglas Bradbury Director (principal
financial officer)
/s/ Eric J. Mortensen Controller (principal December 14, 1998
____________________________________ accounting officer)
Eric J. Mortensen
/s/ William L. Grewcock Director December 14, 1998
____________________________________
William L. Grewcock
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
Director
____________________________________
Charles M. Harper
/s/ Richard R. Jaros Director December 14, 1998
____________________________________
Richard R. Jaros
/s/ Robert E. Julian Director December 14, 1998
____________________________________
Robert E. Julian
/s/ David C. McCourt Director December 14, 1998
____________________________________
David C. McCourt
Director
____________________________________
Kenneth E. Stinson
/s/ Michael B. Yanney Director December 14, 1998
____________________________________
Michael B. Yanney
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE
EXHIBIT DESCRIPTION NUMBER
------- ----------- ----------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement Basic Provisions for
Debt Securities*
1.2 -- Form of Underwriting Agreement Basic Provisions for
Equity Securities*
4.1 -- Form of Senior Indenture*
4.2 -- Form of Subordinated Indenture*
4.3 -- Form of Certificate of Designation for the Preferred
Stock (together with Preferred Stock certificate)*
4.4 -- Form of Senior Debt Security *
4.5 -- Form of Subordinated Security *
4.6 -- Form of Deposit Agreement*
4.7 -- The instruments defining the rights of the holders
of the long-term debt securities of the Registrant
are omitted pursuant to Section (b)(4)(iii)(A) of
Item 601 of Regulation S-K. Registrant agrees to
furnish supplementally copies of these instruments
to the Securities and Exchange Commission upon
request.
5 -- Opinion of Willkie Farr & Gallagher*
23.1 -- Consent of PricewaterhouseCoopers LLP
23.2 -- Consent of PricewaterhouseCoopers LLP
23.3 -- Consent of Willkie Farr & Gallagher (included in
Exhibit 5)*
24 -- Power of Attorney (included on the signature pages
hereto)
25 -- Statement of Eligibility of Senior and Subordinated
Trustee on Form T-1*
</TABLE>
- --------
* To be filed by amendment or incorporated by reference to the extent
applicable in connection with an offering.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Level 3 Communications, Inc. on Form S-3 of our reports dated March 30,
1998, on our audits of the consolidated financial statements of Level 3
Communications, Inc., formerly Peter Kiewit Sons', Inc., the financial
statements and financial statement schedule of Kiewit Construction & Mining
Group, a business group of Peter Kiewit Sons', Inc., and the financial
statements of Diversified Group, a business group of Peter Kiewit Sons', Inc.
as of December 27, 1997 and December 28, 1996 and for each of the three years
in the period ended December 27, 1997 which reports are included in the 1997
Annual Report on Form 10-KA of Level 3 Communications, Inc., formerly Peter
Kiewit Sons', Inc. We also consent to the reference to our Firm under the
caption "Experts."
PricewaterhouseCoopers LLP
Omaha, Nebraska
December 14, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Level 3 Communications, Inc. on Form S-3 of our report dated March 13,
1998, except Note 2 as to which the date is May 20, 1998, on our audits of the
consolidated financial statements and financial statement schedules of RCN
Corporation and Subsidiaries as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996 and 1995, which report is incorporated by
reference in the 1997 Annual Report on Form 10-KA of Level 3 Communications,
Inc., formerly Peter Kiewit Sons', Inc. We also consent to the reference to
our firm under the caption "Experts."
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 14, 1998
