<PAGE>
As filed with the Securities and Exchange Commission on February 3, 1999
Registration No. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LEVEL 3 COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1221, 4813, 7374 47-0210602
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
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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 a copy 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 of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Proposed Maximum
Title of each Class of Amount Maximum Aggregate Amount of
Securities to be to be Offering Price Offering Registration
Registered Registered Per Note(1) Price(1) Fee
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<S> <C> <C> <C> <C>
10 1/2% Senior Discount
Notes Due 2008......... $833,815,000 59.966% $500,005,503 $139,002
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
---------------
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<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 FEBRUARY 3, 1999
PROSPECTUS
Level 3 Communications, Inc.
Offer to Exchange all Outstanding
10 1/2% Senior Discount Notes Due 2008
for
10 1/2% Senior Discount Notes Due 2008
Terms of Exchange Offer
. The Exchange Offer expires 5:00 p.m., New York City time, , 1999,
unless extended.
. The Exchange Offer is subject to the certain conditions.
. The Exchange Offer is not conditioned upon any minimum aggregate principal
amount at maturity of outstanding notes being tendered for exchange.
. Tenders of outstanding notes may be withdrawn any time prior to expiration
of the Exchange Offer.
. The exchange of notes pursuant to the Exchange Offer will not be a taxable
exchange for the U.S. federal income tax purposes.
. We will not receive any proceeds from the Exchange Offer.
. The terms of the notes to be issued are substantially identical to the
outstanding notes, except for certain transfer restrictions and
registration rights relating to the outstanding notes.
Each broker-dealer that receives registered notes for its own account in the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of those notes. The Letter of Transmittal accompanying this
Prospectus states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of notes received in exchange for the outstanding notes where such
notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, starting on the
date of this Prospectus and ending on the close of business on the day that is
180 days following the date of this Prospectus, we will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
-----------
See "Risk Factors" beginning on page 6 for a discussion of certain matters
that should be considered by participants in the Exchange Offer.
-----------
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 , 1999
<PAGE>
This Prospectus incorporates important business and financial information
about us that is not included in or delivered with this Prospectus. We will
provide this information to you at no charge upon written or oral request
directed to: Vice President, Investor Relations, Level 3 Communications, Inc.,
1450 Infinite Drive, Louisville, CO 80027, 303-926-3000. In order to ensure
timely delivery of the information, any request should be made by , 1999.
TABLE OF CONTENTS
<TABLE>
<S> <C>
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS............................ i
SUMMARY..................................................................... 1
RISK FACTORS................................................................ 6
USE OF PROCEEDS............................................................. 9
CAPITALIZATION.............................................................. 9
RATIO OF EARNINGS TO FIXED CHARGES.......................................... 10
THE EXCHANGE OFFER.......................................................... 10
DESCRIPTION OF THE NOTES.................................................... 18
REGISTRATION RIGHTS......................................................... 56
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................... 58
PLAN OF DISTRIBUTION........................................................ 63
LEGAL MATTERS............................................................... 63
EXPERTS..................................................................... 64
WHERE YOU CAN FIND MORE INFORMATION......................................... 64
</TABLE>
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference forward-looking
statements. These forward-looking statements include, among others, statements
concerning:
(1) the Business Plan (as defined);
(2) anticipated growth of the communications and information services
industry;
(3) plans to devote significant management time and capital resources to
the Company's business;
(4) expectations as to funding the Company's capital requirements; and
(5) other statements of expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical
facts.
You should be aware that these forward-looking statements are subject to
risks and uncertainties, including financial, regulatory environment, industry
growth and trend projections, that could cause actual events or results to
differ materially from those expressed or implied by the statements. The most
important factors that could prevent the Company from achieving its stated
goals include, but are not limited to, the Company's failure to:
(1) achieve and sustain profitability based on the creation and
implementation of our end-to-end, Internet Protocol based
communications network;
(2) overcome significant early operating losses;
(3) produce sufficient capital to fund the Business Plan;
(4) develop financial and management controls, as well as additional
controls of operating expenses as well as other costs;
(5) attract and retain qualified management and other personnel;
i
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(6) install on a timely basis the switches/routers, fiber optic cable and
associated electronics required for successful implementation of the
Business Plan;
(7) negotiate interconnection agreements;
(8) develop and implement effective internal processes and systems for
processing customer orders and provisioning; and
(9) make acquisitions necessary for the expansion of its networks and
services and the implementation of the Business Plan.
For a discussion of certain of these factors, see "Risk Factors" beginning
on page 6 and the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission (the "SEC") on December 7, 1998, which is
incorporated by reference in this Prospectus.
ii
<PAGE>
SUMMARY
This Summary contains a general summary of the information contained in this
Prospectus. You should read the entire Prospectus before making an investment
decision. Unless the context otherwise requires, references in this Prospectus
to the "Company", "Level 3", "we" or "us" are to Level 3 Communications, Inc.,
a Delaware corporation, and its subsidiaries. Level 3 Communications, Inc. was
known as "Peter Kiewit Sons', Inc." prior to the March 31, 1998 split-off of
its construction and mining management businesses from its other business. This
Prospectus and the Letter of Transmittal that accompanies it together
constitute the "Exchange Offer". See "Risk Factors" for certain factors which
prospective participants in the Exchange Offer should consider prior to
tendering Original Notes and "Information Regarding Forward-Looking Statements"
for certain information relating to statements contained in this Prospectus
that are not historical facts.
The Company
Level 3 engages 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 plan (the "Business
Plan") to increase substantially our information services business and to
expand the range of services we offer. We are implementing the 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 leased 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.
The Exchange Offer
On December 2, 1998, we privately placed $833,815,000 aggregate principal
amount at maturity of our 10 1/2% Senior Discount Notes Due 2008. Those notes
are referred to in this Prospectus as the "Original Notes." In connection with
the private placement, we entered into a Registration Agreement (as defined)
with the initial purchasers of the Original Notes. In the Registration
Agreement, we agreed to deliver this Prospectus to holders of the Original
Notes and complete the Exchange Offer within 180 days of the issuance of the
Original Notes. Our 10 1/2% Senior Discount Notes Due 2008 that we are offering
to exchange for Original Notes in the Exchange Offer are referred to in this
Prospectus as the "New Notes." The Original Notes and the New Notes are
together referred to in this Prospectus as the "Notes." You should read the
discussion under the heading "Description of the Notes" for information
regarding the Notes.
1
<PAGE>
The Exchange Offer
The Exchange Offer........ We are offering to exchange $1,000 in principal
amount at maturity of New Notes for each $1,000 in
principal amount at maturity of Original Notes. The
New Notes are substantially identical to the
Original Notes, except that:
(1) the New Notes will be freely transferable,
except as otherwise described in this
Prospectus;
(2) will not contain any legend restricting their
transfer;
(3) holders of the New Notes will not be entitled
to certain rights of the holders of the
Original Notes under the Registration
Agreement, which rights will terminate on
consummation of the Exchange Offer; and
(4) the New Notes will not contain any provisions
regarding the payment of Special Interest (as
defined).
We believe that you can transfer the New Notes
without complying with the registration and
prospectus delivery provisions of the Securities
Act (as defined) if:
(1) you acquire the New Notes in the ordinary
course of your business;
(2) you are not engaged in, and do not intend to
engage in, and have no arrangement or
understanding with any person to participate
in, a distribution of the New Notes;
(3) you are not an "affiliate" of the Company
within the meaning of Rule 405 under the
Securities Act;
(4) you are not a broker-dealer that acquired
Original Notes directly from the Company; and
(5) you are not a broker-dealer that acquired
Original Notes as a result of market making or
other trading activities.
If any of these conditions is not satisfied and you
transfer any New Note without delivering a proper
prospectus or without qualifying for a registration
exemption, you may incur liability under the
Securities Act.
Each broker-dealer that receives New Notes for its
own account in exchange for Original Notes, which
it acquired as a result of market-making activities
or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any
resale of those New Notes. See "Plan of
Distribution."
Minimum Condition......... The Exchange Offer is not conditioned upon any
minimum aggregate principal amount at maturity of
Original Notes being tendered for exchange.
Expiration Date........... The Exchange Offer will expire on the Expiration
Date, which is at 5:00 p.m., New York City time, on
, 1999, unless extended.
2
<PAGE>
Exchange Date............. The first date of acceptance for exchange for the
Original Notes will be the first business day
following the Expiration Date, upon surrender of
the Original Notes.
Conditions to the
Exchange Offer........... Our obligation to consummate the Exchange Offer is
subject to certain conditions. See "The Exchange
Offer--Conditions to the Exchange Offer." We
reserve the right to terminate or amend the
Exchange Offer at any time prior to the Expiration
Date if certain specified events occur.
Withdrawal Rights.........
You may withdraw the tender of your Original Notes
at any time prior to the Expiration Date. Any
Original Notes not accepted for any reason will be
returned to you without expense as promptly as
practicable after the expiration or termination of
the Exchange Offer.
Procedures for Tendering
Original Notes........... See "The Exchange Offer--How to Tender."
Federal Income
Tax Consequences......... The exchange of Original Notes for New Notes by
U.S. Holders (as defined) will not be a taxable
exchange for federal income tax purposes, and U.S.
Holders should not recognize any taxable gain or
loss as a result of such exchange.
Effect on Holders of
Original Notes........... If the Exchange Offer is completed within 180 days
of the issuance of the Original Notes, holders of
the Original Notes will have no further
registration or other rights under the Registration
Agreement, except under certain limited
circumstances. See "Registration Rights." Holders
of the Original Notes who do not tender their
Original Notes will continue to hold those Original
Notes. All untendered, and tendered but unaccepted,
Original Notes will continue to be subject to the
restrictions on transfer provided for in the
Original Notes and the Indenture (as defined). To
the extent that Original Notes are tendered and
accepted in the Exchange Offer, the trading market,
if any, for the Original Notes could be adversely
affected. See "Risk Factors--Consequences of
Failure to Exchange."
Use of Proceeds........... The Company will not receive any proceeds from the
issuance of New Notes in the Exchange Offer
Exchange Agent............
IBJ Whitehall Bank & Trust Company (formerly known
as IBJ Schroder Bank & Trust Company) is serving as
exchange agent in connection with the Exchange
Offer.
3
<PAGE>
The Notes
The Exchange Offer applies to $833,815,000 aggregate principal amount at
maturity of the Original Notes. The New Notes are substantially identical to
the Original Notes, except for certain transfer restrictions and registration
rights relating to the Original Notes. The New Notes will evidence the same
debt as the Original Notes and will be entitled to the benefits of the
Indenture. See "Description of the Notes."
Issuer.................... Level 3 Communications, Inc.
Securities Offered........ $833,815,000 aggregate principal amount at maturity
of 10 1/2% Senior Discount Notes Due 2008.
Maturity.................. December 1, 2008.
Accreted Value and The issue price of the Original Notes was $599.66
Interest................. per $1,000 principal amount at maturity. The New
Notes will accrete at a daily rate of 10 1/2% per
year, compounded semiannually, in principal amount
of $1,000 by December 1, 2008 for each $1,000
principal amount at maturity. Cash interest will
not begin to accrue until December 1, 2003 unless
we elect to commence the accrual on or after
December 1, 2001 of cash interest. After December
1, 2003, interest will accrue at a rate of 10 1/2%
per year and will be payable semiannually on June 1
and December 1, beginning June 1, 2004.
Ranking................... The Notes are:
(1) senior unsecured obligations of the Company,
ranking equal in right of payment with all
existing and future senior unsecured
indebtedness of the Company, including,
without limitation, the 9 1/8% Senior Notes
Due 2008 in an aggregate principal amount not
to exceed $2,000,000,000, originally issued on
April 28, 1998;
(2) senior in right of payment to all existing and
future subordinated indebtedness of the
Company; and
(3) effectively subordinated to all secured
indebtedness of the Company to the extent of
the value of the assets securing such
indebtedness.
The Notes are senior unsecured obligations of the
Company and rank equally with all of our other
senior unsecured indebtedness. Substantially all of
the operating assets of the Company are owned by
its subsidiaries, effectively subordinating the
Notes to all existing and future obligations of its
subsidiaries. See "Description of the Notes."
Optional Redemption....... We may redeem some or all of the Notes, at any time
on or after December 1, 2003 at the redemption
prices (expressed as percentages of Accreted Value
(as defined)) appearing in this Prospectus, plus
any accrued and unpaid interest on the redeemed
Notes to the redemption date. In addition, at any
time prior to December 1, 2001, the Company may
redeem up to 35% of the original aggregate
principal amount at maturity of the Notes at a
redemption price equal to 110.50% of the Accreted
Value of the Notes so redeemed, plus any accrued
and unpaid interest on the redeemed Notes to the
redemption date, with the net
4
<PAGE>
cash proceeds of certain public or private
offerings of our common stock resulting in
aggregate gross proceeds of at least $100 million.
However, at least 65% of the original aggregate
principal amount at maturity of the Notes must
remain outstanding immediately after giving effect
to such redemption. See "Description of the Notes--
Optional Redemption."
Change of Control
Triggering Event......... Within 30 days of the occurrence of a Change of
Control Triggering Event (as defined), the Company
must make an offer to purchase all outstanding
Notes at a price in cash equal to 101% of the
Accreted Value of the Notes, plus accrued and
unpaid interest, if any, to the purchase date. See
"Description of the Notes--Certain Covenants--
Change of Control Triggering Event."
Certain Covenants......... The Indenture contains certain covenants that
limit, among other things, the ability of the
Company and its subsidiaries to:
(1) incur indebtedness;
(2) make certain payments;
(3) pay dividends and make certain other
restricted payments and transfers;
(4) create liens;
(5) enter into certain transactions, including
transactions with affiliates;
(6) sell assets;
(7) issue or sell capital stock of restricted
subsidiaries; and
(8) in the case of the Company, consolidate, merge
or sell substantially all of the Company's
assets.
All of the covenants are subject to a number of
important qualifications and exceptions. See
"Description of the Notes."
Registration Rights....... Under the Registration Agreement, the Company has
agreed to use its best efforts to commence the
Exchange Offer or to use best efforts to cause the
Original Notes to be registered under the
Securities Act so as to permit resales. If the
Company is not in compliance with its obligations
under the Registration Agreement, Special Interest
will accrue on the Notes under certain
circumstances in addition to the interest that is
otherwise due on the Notes. If the Exchange Offer
is consummated on the terms and within the period
contemplated by this Prospectus, no Special
Interest will be payable on the Original Notes. The
New Notes will not contain any provisions regarding
the payment of Special Interest. See "Registration
Rights."
Absence of a Public
Market for the Notes..... The Notes are a new issue of securities for which
there is currently no established trading market.
There can be no assurance as to the development or
liquidity of any market for any of the Notes. The
Company does not intend to apply for listing of any
of the Notes on any securities exchange. See "Risk
Factors--Absence of Public Market; Restrictions on
Resale."
5
<PAGE>
RISK FACTORS
Before tendering Original Notes, prospective participants in the Exchange
Offer should carefully consider the following risk factors, as well as other
information contained or incorporated by reference in this Prospectus,
including, but not limited to, those risk factors contained in the Form 8-K
filed with the SEC on December 7, 1998, which is incorporated by reference in
this Prospectus. See "Where You Can Find More Information." The following risk
factors, other than "Consequences of Failure to Exchange," are generally
applicable to the Original Notes as well as the New Notes.
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION OF THE NOTES
We are a holding company with no material assets other than the stock of our
subsidiaries. The Notes are exclusively obligations of the holding company.
The Notes are unsecured and rank equal in right of payment with all of our
existing and future senior unsecured indebtedness and trade payables
including, without limitation, our 9 1/8% Senior Notes Due 2008 in an
aggregate principal amount not to exceed $2,000,000,000 originally issued on
April 28, 1998. The Notes will be effectively subordinated to all of our
secured indebtedness to the extent of the value of the assets securing that
indebtedness. Since substantially all of our operations are conducted through
our subsidiaries, our cash flow and our ability to meet our own obligations,
including obligations on the Notes, are dependent on (1) the earnings of our
subsidiaries and the distributions of those earnings to us, or (2) on loans or
other payments of funds made by these subsidiaries to us. Future debt
agreements of our subsidiaries likely will impose significant restrictions
that affect, among other things, the ability of our subsidiaries to pay
dividends or make loans, advances or other distributions to us. The ability of
the Company's subsidiaries to pay dividends and make other distributions also
will be subject to applicable state laws and regulations, among other things.
In certain circumstances, the prior or subsequent approval of these dividends
or distributions is required from the applicable regulatory or other
governmental entity.
Substantially all of our operating assets are owned by our subsidiaries.
Therefore, the Notes rank junior to all existing and future indebtedness,
trade payables, preferred stock and other obligations of our subsidiaries. In
addition, our rights and the rights of our creditors, including the holders of
the Notes, to participate in the assets of any subsidiary upon the
subsidiary's liquidation or reorganization will be subject to the prior claims
of the subsidiary's creditors and holders of the subsidiary's preferred stock,
if any. However, if we ourselves are a creditor with recognized claims against
the subsidiary, our claims would still be effectively subordinated to any
security interests in or mortgages or other liens on the assets of the
subsidiary and would rank junior to any senior indebtedness of the subsidiary.
The Indenture limits, but does not prohibit, the incurrence of additional
indebtedness by us and our subsidiaries. Therefore, both we and our
subsidiaries will retain the ability to incur substantial additional
indebtedness. We expect that we and our subsidiaries will incur substantial
additional indebtedness in the future in connection with the implementation of
the Business Plan. See "Description of the Notes."
LEVERAGE AND DEBT SERVICE
As of September 30, 1998, on a pro forma basis after giving effect to the
Initial Offering (as defined), we would have had approximately $2.646 billion
of indebtedness. For the nine months ended September 30, 1998, we had a
deficiency in the ratio of earnings to fixed charges of approximately $106
million. In addition, we expect to incur substantial net operating losses for
the foreseeable future, and there can be no assurance that we will be able to
achieve or sustain profitability in the future. Accordingly, we cannot make
any assurance that we will have sufficient funds to pay debt service on the
Notes. In addition, the Indenture permits us to incur additional debt under
certain conditions, including an unlimited amount of secured purchase money
debt. The leveraged nature of our company could limit our ability to effect
future financings or may otherwise restrict our activities. Substantial
leverage poses the risk that we may not be able to generate sufficient cash
flow to service our indebtedness, including the Notes, and to adequately fund
the Business Plan. See "Description of the Notes."
The Business Plan will require us and our subsidiaries to incur substantial
amounts of additional indebtedness in the future. The degree to which we are
leveraged, and the restrictive and financial covenants that we will be subject
to, will have important consequences to the holders of the Notes, including
the following:
6
<PAGE>
(1) our ability to obtain additional financing for the Business Plan,
including financing necessary to fund the substantial net losses
incurred in connection with the Business Plan, may be impaired in the
future;
(2) a substantial portion of our cash flow from operations must be
dedicated to the payment of debt service, which reduces the funds
available for the Business Plan;
(3) our leverage may hinder our ability to adjust rapidly to changing
market conditions; and
(4) our leverage could make us more vulnerable in the event of a downturn
in general economic conditions or in our business.
Covenants
The covenants in the Indenture allow us, subject to certain limitations, to
use our funds in a broad range of activities and investments, including
entering into joint ventures we do not control, some of which may result in
significant cash expenditures by us or result in significant losses. See
"Description of the Notes."
Risks Associated with a Change of Control
Upon the occurrence of certain change of control events, we must make an
offer to purchase all outstanding Notes at a purchase price equal to 101% of
the Accreted Value of the Notes, plus accrued and unpaid interest (if any) to
the purchase date. We can make no assurance that we would have sufficient
funds to pay the purchase price for all Notes tendered by holders seeking to
accept the offer to purchase. In addition, instruments governing our other
debt may require us to repurchase the other debt upon a change in control or
may prohibit us from purchasing any Notes prior to their stated maturity,
including upon a change of control. Our failure to purchase all validly
tendered Notes would result in an Event of Default (as defined) under the
Indenture. See "Description of the Notes--Certain Covenants--Change of Control
Triggering Event."
Absence of Public Market; Restrictions on Resale
The Notes are a new issue of securities for which there is currently no
established market. We can make no assurance as to:
(1) the liquidity of any market that may develop;
(2) the ability of the holders of Notes to sell any of their Notes; or
(3) the price at which the holders of Notes would be able to sell any of
their Notes.
We do not presently intend to apply for listing of any of the Notes on any
national securities exchange. The initial purchasers of the Original Notes
(the "Initial Purchasers") have advised the Company that they presently intend
to make a market in the Notes. However, the Initial Purchasers are not
obligated to make a market in any of the Notes and any market-making may be
discontinued at any time at the sole discretion of the Initial Purchasers and
without notice. Accordingly, we can make no assurance as to the development or
liquidity of any market for any of the Notes. If a market for any of the Notes
were to develop, the Notes could trade at prices that may be higher or lower
than their initial offering price depending on many factors. These factors
include prevailing interest rates, our operating results and prospects for our
performance, the market for similar securities and general economic
conditions. Historically, the market for securities such as the Notes has been
subject to disruptions that have caused substantial volatility in the prices
of similar securities. There can be no assurance that if a market for any of
the Notes were to develop that it would not be subject to similar disruptions.
7
<PAGE>
Original Issue Discount; Applicable High Yield Discount Obligations
The Original Notes were issued at a substantial discount from their stated
principal amount at maturity. Consequently, although cash interest on the
Notes generally will not be payable prior to June 1, 2004, original issue
discount ("OID") will be includible in the gross income of a holder of the
Notes for U.S. federal income tax purposes in advance of the receipt of cash
payments on the Notes. See "Certain Federal Income Tax Considerations" for a
more detailed discussion of the United States federal income tax consequences
applicable to holders of the Notes.
If a bankruptcy petition is filed by or against the Company under the United
States Bankruptcy Code after the issuance of the Notes, the claim of a holder
of Notes with respect to the Accreted Value of the Notes may be limited to an
amount equal to the sum of:
(1) the initial offering price for the Notes; and
(2) that portion of the original issue discount that is not deemed to
constitute "unmatured interest" within the meaning of the United
States Bankruptcy Code.
Any original issue discount that was not amortized as of the date of any such
bankruptcy filing would constitute "unmatured interest." Accordingly, holders
of the Notes under such circumstances may receive a lesser amount than they
would be entitled to under the express terms of the Indenture, even if
sufficient funds are available. In addition, to the extent that the United
States Bankruptcy Code differs from the Internal Revenue Code of 1986, as
amended, in determining the method of amortization of original issue discount,
a holder of Notes may realize taxable gain or loss upon payment of that
holder's claim in bankruptcy.
The New Notes will constitute "applicable high yield discount obligations"
("AHYDOs") because the Original Notes provided initial holders with a yield to
maturity in excess of a specified amount. Consequently, OID with respect to
the Notes will not be deductible by us until paid. See "Certain Federal Income
Tax Considerations."
Consequences of Failure to Exchange
Holders of Original Notes who do not exchange their Original Notes for New
Notes in the Exchange Offer will continue to be subject to the existing
restrictions on transfer of their Original Notes. In general, the Original
Notes may not be offered or sold, unless registered under the Securities Act
and applicable state securities laws, or pursuant to an exemption therefrom.
Except under certain limited circumstances, we do not intend to register the
Original Notes under the Securities Act of 1933, as amended (the "Securities
Act"). In addition, any holder of Original Notes who tenders in the Exchange
Offer for the purpose of participating in a distribution of the New Notes may
be deemed to have received restricted securities. If so, that holder will be
required to comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction. To the extent
Original Notes are tendered and accepted in the Exchange Offer, the trading
market, if any, for the Original Notes not tendered could be adversely
affected. See "The Exchange Offer" and "Registration Rights."
8
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of New Notes in
the Exchange Offer. The New Notes will evidence the same debt as the Original
Notes surrendered in exchange for the New Notes. Accordingly, the issuance of
the New Notes will not result in any change in the indebtedness of the
Company.
The net proceeds to the Company of the Initial Offering were approximately
$486 million (after deducting expenses). The net proceeds will be used in
connection with the implementation of the Business Plan, including funding
for:
. route miles 9,000 through 16,000 of the Company's U.S. intercity
network;
. an expansion of the fiber loops, number of buildings connected and
colocation space in the Company's U.S. cities;
. an expansion of the fiber loops, number of buildings connected and
colocation space in the Company's European cities;
. purchases of undersea cable capacity; and
. general corporate purposes, including acquisitions.
Pending such utilization, we intend to invest the net proceeds of the
Initial Offering in government securities.
CAPITALIZATION
The following table sets forth as of September 30, 1998: (i) the historical
consolidated capitalization of the Company; and (ii) that capitalization as
adjusted to give effect to the Initial Offering of the Original Notes.
<TABLE>
<CAPTION>
September 30, 1998
----------------------
Historical As Adjusted
---------- -----------
(dollars in millions)
<S> <C> <C>
Cash and marketable securities........................... $3,633 $4,119
====== ======
Current portion of long-term debt........................ $ 6 $ 6
------ ------
Notes offered hereby..................................... -- 500
Other long-term debt, less current portion............... $2,140 $2,140
------ ------
Total long-term debt, less current portion............. 2,140 2,640
------ ------
Total stockholders' equity............................... 2,098 2,098
------ ------
Total capitalization................................... $4,238 $4,738
====== ======
</TABLE>
9
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
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> <C>
Ratio of earnings to fixed charges..... -- 7.29 5.73 3.87 -- -- 20.94
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges, 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 the Company 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. The Company 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.
THE EXCHANGE OFFER
Purpose of the Exchange Offer
On December 2, 1998 the Company privately placed the Original Notes in a
transaction exempt from registration under the Securities Act (the "Initial
Offering"). Accordingly, the Original Notes may not be reoffered, resold or
otherwise pledged, hypothecated or transferred in the United States unless so
registered or unless an applicable exemption from the registration
requirements of the Securities Act is available. In the Registration
Agreement, dated November 24, 1998 (the "Registration Agreement"), that the
Company entered into with the Initial Purchasers, the Company has agreed to:
(1) file a registration statement with the SEC with respect to the Exchange
Offer within 90 days after the closing of the Initial Offering (the
"Original Notes Closing Date");
(2) use its best effort to cause such registration statement to be declared
effective under the Securities Act not later than 150 days after the
Original Notes Closing Date; and
(3) upon effectiveness of such registration statement, offer New Notes in
exchange for surrender of Original Notes.
The New Notes are being offered under this Prospectus to satisfy these
obligations of the Company under the Registration Agreement.
Terms of the Exchange
The Company is offering, upon the terms and subject to the conditions of the
Exchange Offer, to exchange $1,000 in principal amount at maturity of New
Notes for each $1,000 in principal amount at maturity of outstanding Original
Notes. The terms of the New Notes are substantially identical to the terms of
the Original Notes for which they may be exchanged pursuant to the Exchange
Offer, except that:
(1) the offer of the New Notes will have been registered under the
Securities Act and, therefore, the New Notes will be freely
transferable by holders thereof (except as otherwise described herein)
and not bear a legend regarding restrictions on transfer;
(2) holders of the New Notes will not be entitled to certain rights of the
holders of the Original Notes under the Registration Agreement, which
rights with respect to the Original Notes will terminate on
consummation of the Exchange Offer; and
10
<PAGE>
(3) the New Notes will not contain any provisions regarding the payment of
Special Interest.
The New Notes will evidence the same debt as the Original Notes and will be
entitled to the benefits of the Indenture. See "Description of the Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for exchange.
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange for the Original Notes may be
offered for resale, resold and otherwise transferred by holders of New Notes
without complying with the registration and prospectus delivery requirements
of the Securities Act, provided that:
(1) the holders acquired the New Notes in the ordinary course of the
holders' business;
(2) the holders are not engaged in, and do not intend to engage in, and
have no arrangement or understanding with any person to participate in,
a distribution of the New Notes;
(3) the holders are not "affiliates" of the Company within the meaning of
Rule 405 under the Securities Act;
(4) the holders are not broker-dealers who acquired Original Notes directly
from the Company; and
(5) the holders are not broker-dealers who acquired Original Notes as a
result of market making or other trading activities.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of those New Notes. The Letter of Transmittal that
accompanies this Prospectus (the "Letter of Transmittal") states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Original Notes where those New Notes were
acquired by the broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the date of this
Prospectus and ending on the close of business on the day that is 180 days
following the date of this Prospectus, it will make this Prospectus available
to any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
Tendering holders of Original Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Original Notes
pursuant to the Exchange Offer.
Interest on each New Note will accrue from the last interest payment date on
which interest was paid on the Original Note surrendered in exchange therefor
or, if no interest has been paid on such Original Note, from the date of
original issuance of such Original Note.
Expiration Date; Extensions; Termination; Amendments
The Exchange Offer expires on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1999, unless the Company
in its sole discretion extends the period during which the Exchange Offer is
open. In that case the term "Expiration Date" means the latest time and date
on which the Exchange Offer, as so extended by the Company, expires. The
Company reserves the right to extend the Exchange Offer at any time and from
time to time prior to the Expiration Date by giving written notice to IBJ
Whitehall Bank & Trust Company (formerly known as IBJ Schroder Bank & Trust
Company) (the "Exchange Agent") and by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service. During any extension of the
Exchange Offer, all Original Notes previously tendered in the Exchange Offer
will remain subject to the Exchange Offer.
11
<PAGE>
The initial Exchange Date will be the first business day following the
Expiration Date. The Company expressly reserves the right to:
(1) terminate the Exchange Offer and not accept for exchange any Original
Notes for any reason, including if any of the events set forth below
under "--Conditions to the Exchange Offer" shall have occurred and
shall not have been waived by the Company; and
(2) amend the terms of the Exchange Offer in any manner, whether before or
after any tender of the Original Notes.
If any such termination or amendment occurs, the Company will notify the
Exchange Agent in writing and will either issue a press release or give
written notice to the holders of the Original Notes as promptly as
practicable. Unless the Company terminates the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date, the Company will exchange
the New Notes for the Original Notes on the Exchange Date.
If the Company waives any material condition to the Exchange Offer or amends
the Exchange Offer in any other material respect, and, if at the time that
notice of such waiver or amendment is first published, sent or given to
holders of Original Notes in the manner specified above, the Exchange Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the fifth business day from, and including, the date that such notice is
first so published, sent or given, then the Exchange Offer will be extended
until the expiration of such period of five business days.
This Prospectus and the Letter of Transmittal and other relevant materials
will be mailed by the Company to record holders of Original Notes and will be
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the lists of holders for subsequent transmittal to
beneficial owners of Original Notes.
How to Tender
The tender to the Company of Original Notes by a holder of Original Notes
according to one of the procedures described below will constitute an
agreement between that holder and the Company in accordance with the terms and
subject to the conditions set forth in this Prospectus and in the Letter of
Transmittal.
General Procedures. A holder of an Original Note may tender the same by (1)
properly completing and signing the Letter of Transmittal or a facsimile of
the Letter of Transmittal (all references in this Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) and delivering
them, together with the certificate or certificates representing the Original
Notes being tendered and any required signature guarantees (or a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") pursuant
to the procedure described below), to the Exchange Agent at its address set
forth below under "--Exchange Agent" on or prior to the Expiration Date or (2)
complying with the guaranteed delivery procedures described below.
If tendered Original Notes are registered in the name of the signer of the
Letter of Transmittal and the New Notes to be issued in exchange for accepted
Original Notes are to be issued (and any untendered Original Notes are to be
reissued) in the name of the registered holder, the signature of such signer
need not be guaranteed. In any other case, the tendered Original Notes must be
endorsed or accompanied by written instruments of transfer in form
satisfactory to the Company and duly executed by the registered holder and the
signature on the endorsement or instrument of transfer must be guaranteed by a
firm (an "Eligible Institution") that is a member of a recognized signature
guarantee medallion program (an "Eligible Program") within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934 (the "Exchange Act"). If the
New Notes and/or Original Notes not exchanged are to be delivered to an
address other than that of the registered holder appearing on the note
register for the Original Notes, the signature on the Letter of Transmittal
must be guaranteed by an Eligible Institution.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Original Notes should contact such holder promptly
12
<PAGE>
and instruct such holder to tender Original Notes on such beneficial owner's
behalf. If such beneficial owner wishes to tender such Original Notes himself,
such beneficial owner must, prior to completing and executing the Letter of
Transmittal and delivering such Original Notes, either make appropriate
arrangements to register ownership of the Original Notes in such beneficial
owner's name or follow the procedures described in the immediately preceding
paragraph. The transfer of record ownership may take considerable time.
Book-Entry Transfer. The Exchange Agent will make a request to establish an
account with respect to the Original Notes at The Depository Trust Company
(the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within
two business days after receipt of this Prospectus, and any financial
institution that is a participant in the Book-Entry Transfer Facility's
systems may make book-entry delivery of Original Notes by causing the Book-
Entry Transfer Facility to transfer such Original Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Original Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "--Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
The method of delivery of Original Notes and all other documents is at the
election and risk of the holder. If sent by mail, it is recommended that
registered mail, return receipt requested, be used, proper insurance be
obtained, and the mailing be made sufficiently in advance of the Expiration
Date to permit delivery to the Exchange Agent on or before the Expiration
Date.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds
otherwise payable to a holder pursuant to the Exchange Offer if the holder
does not provide the holder's taxpayer identification number (social security
number or employer identification number) and certify that such number is
correct. Each tendering holder should complete and sign the main signature
form and the Substitute Form W-9 included as part of the Letter of
Transmittal, so as to provide the information and certification necessary to
avoid backup withholding, unless an applicable exemption exists and is proved
in a manner satisfactory to the Company and the Exchange Agent.
Guaranteed Delivery Procedures. If a holder desires to accept the Exchange
Offer and time will not permit a Letter of Transmittal or Original Notes to
reach the Exchange Agent before the Expiration Date, a tender may be effected
if the Exchange Agent has received at its office listed under "--Exchange
Agent" hereof on or prior to the Expiration Date a letter, telegram or
facsimile transmission from an Eligible Institution that:
(1) sets forth the name and address of the tendering holder, the names in
which the Original Notes are registered and, if possible, the
certificate numbers of the Original Notes to be tendered; and
(2) states that the tender is being made thereby; and
(3) guarantees that within three New York Stock Exchange trading days after
the date of execution of such letter, telegram or facsimile
transmission by the Eligible Institution, the Original Notes, in proper
form for transfer, will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of
Transmittal (and any other required documents).
Unless Original Notes being tendered by the above-described method (or a
timely Book-Entry Confirmation) are deposited with the Exchange Agent within
the time period set forth above (accompanied or preceded by a properly
completed Letter of Transmittal and any other required documents), the Company
may, at its option, reject the tender. Copies of a Notice of Guaranteed
Delivery which may be used by Eligible Institutions for the purposes described
in this paragraph are being delivered with this Prospectus and the Letter of
Transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Original Notes (or a timely Book-Entry
13
<PAGE>
Confirmation) is received by the Exchange Agent. Issuances of New Notes in
exchange for Original Notes tendered pursuant to a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) by an Eligible Institution will be made only against deposit
of the Letter of Transmittal (and any other required documents) and the
tendered Original Notes (or a timely Book-Entry Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Original Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of counsel
to the Company, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or
irregularities in tenders of any particular holder whether or not similar
defects or irregularities are waived in the case of other holders. None of the
Company, the Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or shall incur any
liability for failure to give any such notification. The Company's
interpretation of the terms and conditions of the Exchange Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Terms and Conditions of the Letter of Transmittal
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Original Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Original Notes to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Original Notes to be assigned,
transferred and exchanged. The Transferor represents and warrants that:
(1) it has full power and authority to tender, exchange, assign and
transfer the Original Notes and to acquire New Notes issuable upon the
exchange of such tendered Original Notes, and
(2) when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered Original Notes, free and clear
of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim.
The Transferor also warrants that it will, upon request, execute and deliver
any additional documents deemed by the Company to be necessary or desirable to
complete the exchange, assignment and transfer of tendered Original Notes. The
Transferor further agrees that acceptance of any tendered Original Notes by
the Company and the issuance of New Notes in exchange therefor shall
constitute performance in full by the Company of its obligations under the
Registration Agreement and that the Company shall have no further obligations
or liabilities thereunder (except in certain limited circumstances). All
authority conferred by the Transferor will survive the death or incapacity of
the Transferor and every obligation of the Transferor shall be binding upon
the heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.
By tendering Original Notes, the Transferor certifies:
(1) that it is not an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act, that it is not a broker-dealer that owns
Original Notes acquired directly from the Company or an affiliate of
the Company, that it is acquiring the New Notes offered hereby in the
ordinary course of such Transferor's business and that such Transferor
has no arrangement with any person to participate in the distribution
of such New Notes, or
(2) that it is an "affiliate" (as so defined) of the Company or of the
Initial Purchasers, and that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable to it.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of
14
<PAGE>
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
Withdrawal Rights
Original Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth below under "--Exchange Agent." Any such notice of withdrawal must:
(1) specify the person named in the Letter of Transmittal as having
tendered Original Notes to be withdrawn;
(2) specify the certificate numbers of Original Notes to be withdrawn;
(3) specify the principal amount of Original Notes to be withdrawn (which
must be an authorized denomination);
(4) state that such holder is withdrawing his election to have such
Original Notes exchanged;
(5) state the name of the registered holder of such Original Notes; and
(6) be signed by the holder in the same manner as the original signature on
the Letter of Transmittal (including any required signature guarantees)
or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership
of the Original Notes being withdrawn.
The Exchange Agent will return the properly withdrawn Original Notes promptly
following receipt of notice of withdrawal. All questions as to the validity of
notices of withdrawals, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Acceptance of Original Notes for Exchange; Delivery of New Notes
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Original Notes validly tendered and not withdrawn
and the issuance of the New Notes will be made on the Exchange Date. For the
purposes of the Exchange Offer, the Company shall be deemed to have accepted
for exchange validly tendered Original Notes when, as and if the Company has
given written notice of acceptance to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Original
Notes for the purposes of receiving New Notes from the Company and causing the
Original Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of New Notes to be
issued in exchange for accepted Original Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Original Notes. Original Notes
not accepted for exchange by the Company will be returned without expense to
the tendering holders (or in the case of Original Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the procedures described above, such non-exchanged Original Notes
will be credited to an account maintained with such Book-Entry Transfer
Facility) promptly following the Expiration Date or, if the Company terminates
the Exchange Offer prior to the Expiration Date, promptly after the Exchange
Offer is so terminated.
Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to issue New Notes in
respect of any properly tendered Original Notes not
15
<PAGE>
previously accepted and may terminate the Exchange Offer (by oral or written
notice to the Exchange Agent and by timely public announcement communicated,
unless otherwise required by applicable law or regulation, by making a release
to the Dow Jones News Service) or, at its option, modify or otherwise amend
the Exchange Offer, if:
(1) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (a) seeking to
restrain or prohibit the making or consummation of the Exchange Offer
or any other transaction contemplated by the Exchange Offer, (b)
assessing or seeking any damages as a result thereof, or (c) resulting
in a material delay in the ability of the Company to accept for
exchange or exchange some or all of the Original Notes pursuant to the
Exchange Offer;
(2) any statute, rule, regulation, order or injunction shall be sought,
proposed, introduced, enacted, promulgated or deemed applicable to the
Exchange Offer or any of the transactions contemplated by the Exchange
Offer by any government or governmental authority, domestic or foreign,
or any action shall have been taken, proposed or threatened, by any
government, governmental authority, agency or court, domestic or
foreign, that in the sole judgment of the Company might directly or
indirectly result in any of the consequences referred to in clauses
(1)(a) or (b) above or, in the sole judgment of the Company, might
result in the holders of New Notes having obligations with respect to
resales and transfers of New Notes which are greater than those
described in the interpretations of the SEC referred to on the cover
page of this Prospectus, or would otherwise make it inadvisable to
proceed with the Exchange Offer; or
(3) a material adverse change shall have occurred in the business,
condition (financial or otherwise), operations, or prospects of the
Company.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by it with respect to all or any portion of the Exchange Offer
regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition or may be waived by the Company in
whole or in part at any time or from time to time in its sole discretion. The
failure by the Company at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right, and each right will be deemed
an ongoing right which may be asserted at any time or from time to time. In
addition, the Company has reserved the right, notwithstanding the satisfaction
of each of the foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by the Company concerning the fulfillment or non-
fulfillment of any conditions will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Original Notes
tendered and no New Notes will be issued in exchange for any such Original
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or qualification of the Indenture under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
16
<PAGE>
Exchange Agent
IBJ Whitehall Bank & Trust Company (formerly known as IBJ Schroder Bank &
Trust Company) has been appointed as the Exchange Agent for the Exchange
Offer. Letters of Transmittal must be addressed to the Exchange Agent at its
address set forth below.
By Registered or Certified Mail: By Overnight Courier or By Hand:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attention: Securities Processing
Window Subcellar One (SC-1)
Attention: Reorganization Operations Department
By Facsimile:
(212) 858-2611
Confirm by Telephone: (212) 858-2103
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile or telex number other than the ones set forth
herein, will not constitute a valid delivery.
Solicitation of Tenders; Expenses
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. However,
the Company will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and
expenses of the Exchange Agent and printing, accounting and legal fees, will
be paid by the Company and are estimated at approximately $400,000.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any exchange made under
this Prospectus shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company since the respective
dates as of which information is given in this Prospectus. The Exchange Offer
is not being made to (nor will tenders be accepted from or on behalf of)
holders of Original Notes in any jurisdiction in which the making of the
Exchange Offer or the acceptance thereof would not be in compliance with the
laws of such jurisdiction. However, the Company may, at its discretion, take
such action as it may deem necessary to make the Exchange Offer in any such
jurisdiction and extend the Exchange Offer to holders of Original Notes in
such jurisdiction. In any jurisdiction the securities laws or blue sky laws of
which require the Exchange Offer to be made by a licensed broker or dealer,
the Exchange Offer is being made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
Appraisal Rights
Holders of Original Notes will not have dissenters' rights or appraisal
rights in connection with the Exchange Offer.
Federal Income Tax Consequences
The exchange of Original Notes for New Notes by holders will not be a
taxable exchange for federal income tax purposes, and holders should not
recognize any taxable gain or loss or any interest income as a result of such
exchange.
17
<PAGE>
Other
Participation in the Exchange Offer is voluntary, and holders should
carefully consider whether to accept. Holders of the Original Notes are urged
to consult their financial and tax advisors in making their own decisions on
what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Original Notes pursuant to the terms of this Exchange Offer,
the Company will have fulfilled a covenant contained in the terms of the
Original Notes and the Registration Agreement. Holders of the Original Notes
who do not tender their certificates in the Exchange Offer will continue to
hold such certificates and will be entitled to all the rights, and limitations
applicable thereto, under the Indenture, except for any such rights under the
Registration Agreement, which by their terms terminate or cease to have
further effect as a result of the making of this Exchange Offer. See
"Description of the Notes." All untendered Original Notes will continue to be
subject to the restriction on transfer set forth in the Indenture. To the
extent that Original Notes are tendered and accepted in the Exchange Offer,
the trading market, if any, for the Original Notes could be adversely
affected. See "Risk Factors--Consequences of Failure to Exchange."
The Company may in the future seek to acquire untendered Original Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plan to acquire any Original
Notes which are not tendered in the Exchange Offer.
DESCRIPTION OF THE NOTES
General
The Original Notes were, and the New Notes will be, issued under the
Indenture, dated as of December 2, 1998 (the "Indenture"), between the Company
and IBJ Whitehall Bank & Trust Company (formerly known as IBJ Schroder Bank &
Trust Company), as trustee (the "Trustee"). The Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. For
purposes of this Description of the Notes, the term "Company" refers to Level
3 Communications, Inc. and does not include its subsidiaries except for
purposes of financial data determined on a consolidated basis.
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended, and to all of the
provisions of the Indenture, including the definitions of certain terms
therein and those terms made a part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The definitions of
certain capitalized terms used in the following summary are set forth below
under "--Certain Definitions." The Notes and the New Notes will be considered
collectively to be a single class for all purposes under the Indenture,
including waivers, amendments, redemptions and Offers to Purchase. For
purposes of this "Description of the Notes," all references herein to the
"Notes" shall be deemed to refer collectively to the Notes and the New Notes.
The Notes will be senior unsecured obligations of the Company, ranking pari
passu in right of payment with all existing and future senior unsecured
indebtedness of the Company including, without limitation, the 9 1/8% Senior
Notes (as defined), and will be senior in right of payment to all existing and
future indebtedness of the Company expressly subordinated in right of payment
to the Notes. As of September 30, 1998, on a pro forma basis after giving
effect to the Initial Offering, the Company (excluding its subsidiaries) would
have had, in addition to the Notes, $2.0 billion of other indebtedness
outstanding, none of which would have constituted secured or subordinated
indebtedness.
Substantially all the operations of the Company are conducted through its
subsidiaries and, therefore, the Company is dependent upon cash flow from
those entities to meet its obligations. The payment of dividends and the
making of loans and advances to the Company by its subsidiaries are subject to
various restrictions. Future
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debt of certain of the subsidiaries may prohibit the payment of dividends or
the making of loans or advances to the Company. In addition, the ability of
subsidiaries of the Company to make such payments, loans or advances to the
Company is limited by the laws of the relevant states in which such
subsidiaries are organized or located. In certain circumstances, the prior or
subsequent approval of such payments, loans or advances by such subsidiaries
to the Company is required from applicable regulatory bodies or other
governmental entities. The Company's subsidiaries will have no direct
obligation to pay amounts due on the Notes and will have no obligation to
guarantee the Notes. As a result, the Notes effectively will be subordinated
to all existing and future indebtedness and other liabilities of the Company's
subsidiaries (including trade payables). As of September 30, 1998, the total
balance sheet liabilities of the Company's subsidiaries was approximately $146
million in indebtedness, of which approximately $145 million in indebtedness
was secured by the assets of the borrowing subsidiaries, and $418 million in
other liabilities. The Indenture permits the Company and its subsidiaries to
incur substantial amounts of additional debt and other liabilities, including
in connection with the implementation of the Business Plan. Any rights of the
Company and its creditors, including the holders of Notes, to participate in
the assets of any of the Company's subsidiaries upon any liquidation or
reorganization of any such subsidiary will be subject to the prior claims of
that subsidiary's creditors (including trade creditors). See "Risk Factors--
Holding Company Structure; Effective Subordination of the Notes" and
"--Leverage and Debt Service."
Principal, Maturity and Interest
The Notes are limited in aggregate principal amount at maturity to
$833,815,000 and will mature on December 1, 2008. The Original Notes were
issued at a discount to their aggregate principal amount at maturity to
generate aggregate gross proceeds of approximately $500,005,503. The Notes
will accrete at a rate of 10 1/2% per annum, compounded semiannually, to an
aggregate principal amount of $833,815,000 by December 1, 2003. Except as set
forth below under "Registration Rights" with respect to the Original Notes,
cash interest will not accrue on the Notes prior to December 1, 2003;
provided, however, that the Company may elect, upon not less than 60 days
prior notice, to commence the accrual of cash interest on all outstanding
Notes on or after December 1, 2001, in which case the outstanding principal
amount at maturity of each Note will on such commencement date be reduced to
the Accreted Value of such Note as of such date and cash interest shall be
payable with respect to such Note on each June 1 and December 1 thereafter.
Except as otherwise described in this paragraph, interest on the Notes will
accrue at the rate of 10 1/2% per annum and will be payable in cash
semiannually in arrears on June 1 and December 1, commencing June 1, 2004. The
record date for payment of interest will be the close of business on the May
15 or November 15 preceding the applicable interest payment date. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company, which, unless otherwise provided by the Company, will be the offices
of the Trustee. At the option of the Company, interest may be paid by check
mailed to the registered holders at their registered addresses. The Notes will
be issued without coupons and in fully registered form only, in minimum
denominations of $1,000 and integral multiples thereof. The Notes will be
issued only against payment in immediately available funds. No service charge
will be made for any registration of transfer or exchange of the Notes, but
the Company may require payment of a sum sufficient to cover any transfer tax
or other similar governmental charge payable in connection therewith.
The interest rate on the Original Notes is subject to increase in the
circumstances (such additional interest being referred to as "Special
Interest") described under "Registration Rights." All references in this
Prospectus to interest on the Original Notes shall include such Special
Interest, if appropriate. If the Exchange Offer is consummated on the terms
and within the period contemplated by this Prospectus, no Special Interest
will be payable. The New Notes will not contain any provisions regarding the
payment of Special Interest.
Book-Entry System
The Notes will initially be issued in the form of Global Securities held in
book-entry form. The Notes will be deposited with the Trustee as custodian for
the Depository, and the Depository or its nominee will initially be
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the sole registered holder of the Notes for all purposes under the Indenture.
Except as set forth below, a Global Security may not be transferred except as
a whole by the Depository to a nominee of the Depository or by a nominee of
the Depository to the Depository.
Upon the issuance of a Global Security, the Depository or its nominee will
credit, on its internal system, the accounts of persons holding through it
with the respective principal amounts at maturity of the individual beneficial
interest represented by such Global Security purchased by such persons in this
Offering. Such accounts shall initially be designated by the Initial
Purchasers with respect to Notes placed by the Initial Purchasers for the
Company. Ownership of beneficial interests in a Global Security will be
limited to persons that have accounts with the Depository ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in a Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depository or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
Payment of principal, premium, if any, and interest on Notes represented by
any such Global Security will be made to the Depository or its nominee, as the
case may be, as the sole registered owner and the sole holder of the Notes
represented thereby for all purposes under the Indenture. None of the Company,
the Trustee, any agent of the Company or the Initial Purchasers will have any
responsibility or liability for any aspect of the Depository's reports
relating to or payments made on account of beneficial ownership interests in a
Global Security representing any Notes or for maintaining, supervising or
reviewing any of the Depository's records relating to such beneficial
ownership interests.
The Company has been advised by the Depository that upon receipt of any
payment of principal of, premium, if any, or interest on any Global Security,
the Depository will immediately credit, on its book-entry registration and
transfer system, the accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal or
face amount of such Global Security, as shown on the records of the
Depository. The Company expects that payments by participants to owners of
beneficial interests in a Global Security held through such participants will
be governed by standing instructions and customary practices as is now the
case with securities held for customer accounts registered in "street name"
and will be the sole responsibility of such participants.
So long as the Depository or its nominee is the registered owner or holder
of such Global Security, the Depository or such nominee, as the case may be,
will be considered the sole owner or holder of the Notes represented by such
Global Security for the purposes of receiving payment on the Notes, receiving
notices and for all other purposes under the Indenture and the Notes.
Beneficial interests in the Notes will be evidenced only by, and transfers
thereof will be effected only through, records maintained by the Depository
and its participants. Except as provided above, owners of beneficial interests
in a Global Security will not be entitled to receive physical delivery of
certificated Notes in definitive form and will not be considered the holders
of such Global Security for any purposes under the Indenture. Accordingly,
each person owning a beneficial interest in a Global Security must rely on the
procedures of the Depository and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, in the event that the Company requests
any action of holders or that an owner of a beneficial interest in a Global
Security desires to give or take any action that a holder is entitled to give
or take under the Indenture, the Depository would authorize the participants
holding the relevant beneficial interest to give or take such action, and such
participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depository has advised the Company that it will take any action
permitted to be taken by a holder of Notes only at the direction of one or
more participants to whose account with the Depository interests in the
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Global Security are credited and only in respect of such portion of the
aggregate principal amount at maturity of the Notes as to which such
participant or participants has or have given such direction.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in Global Securities among participants of
the Depository, it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time. None of
the Company, the Trustee, any agent of the Company or the Initial Purchasers
will have any responsibility for the performance by the Depository or its
participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
The Depository has advised the Company that the Depository is a limited-
purpose trust company organized under the Banking Law of the State of New
York, a "banking organization" within the meaning of New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. The Depository was created to hold the
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (including
the Initial Purchasers), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
the Depository. Access to the Depository's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
Certificated Notes
Notes represented by a Global Security are exchangeable for certificated
Notes only if:
(1) the Depository notifies the Company that it is unwilling or unable to
continue as a depository for such Global Security or if at any time the
Depository ceases to be a clearing agency registered under the Exchange
Act, and a successor depository is not appointed by the Company within
90 days;
(2) the Company executes and delivers to the Trustee a notice that such
Global Security shall be so transferable, registrable and exchangeable,
and such transfer shall be registrable; or
(3) there shall have occurred and be continuing an Event of Default or an
event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to the Notes represented by
such Global Security.
Any Global Security that is exchangeable for certificated Notes pursuant to
the preceding sentence will be transferred to, and registered and exchanged
for, certificated Notes in authorized denominations and registered in such
names as the Depository or its nominee holding such Global Security may
direct. Subject to the foregoing, a Global Security is not exchangeable,
except for a Global Security of like denomination to be registered in the name
of the Depository or its nominee. In the event that a Global Security becomes
exchangeable for certificated Notes:
(1) certificated Notes will be issued only in fully registered form in
denominations of $1,000 or integral multiples thereof;
(2) payment of principal, premium, if any, and interest on the certificated
Notes will be payable, and the transfer of the certificated Notes will
be registrable, at the office or agency of the Company maintained for
such purposes; and
(3) no service charge will be made for any issuance of the certificated
Notes, although the Company may require payment of a sum sufficient to
cover any tax or governmental charge imposed in connection therewith.
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In addition, such certificates will bear the legend referred to under "Notice
to Investors" (unless the Company determines otherwise in accordance with
applicable law) subject, with respect to such Notes, to the provisions of such
legend.
Optional Redemption
The Notes will be subject to redemption at the option of the Company, in
whole or in part, at any time or from time to time on or after December 1,
2003, upon not less than 30 nor more than 60 days' prior notice, at the
redemption prices (expressed as percentages of Accreted Value) set forth
below, plus accrued and unpaid interest thereon (if any) to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed
during the twelve months beginning December 1, of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2003.................................................... 105.25%
2004.................................................... 103.50%
2005.................................................... 101.75%
2006 and thereafter..................................... 100.00%
</TABLE>
In addition, at any time or from time to time prior to December 1, 2001, the
Company may redeem up to 35% of the original aggregate principal amount at
maturity of the Notes at a redemption price equal to 110.50% of the Accreted
Value of the Notes so redeemed, plus accrued and unpaid interest thereon (if
any) to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), with the net cash proceeds of one or more private placements to Persons
other than Affiliates of the Company or underwritten public offerings of
Common Stock of the Company resulting in gross proceeds of at least $100
million in the aggregate; provided that at least 65% of the original aggregate
principal amount at maturity of the Notes would remain outstanding immediately
after giving effect to such redemption. Any such redemption shall be made
within 90 days of any such private placement or public offering upon not less
than 30 nor more than 60 days' prior notice.
Mandatory Redemption
Except as set forth under "--Certain Covenants--Change of Control Triggering
Event" and "--Limitation on Asset Dispositions," the Company is not required
to make mandatory redemption payments or sinking fund payments with respect to
the Notes.
Certain Covenants
The Indenture contains, among others, the following covenants:
Limitation on Consolidated Debt. (a) The Company may not, and may not permit
any Restricted Subsidiary to, directly or indirectly, Incur any Debt, unless,
after giving pro forma effect to such Incurrence and the receipt and
application of the net proceeds thereof, no Default or Event of Default would
occur as a consequence of such Incurrence or be continuing following such
Incurrence and either (1) the ratio of (A) the aggregate consolidated
principal amount (or, in the case of Debt issued at a discount, the then-
Accreted Value) of Debt of the Company outstanding as of the most recent
available quarterly or annual balance sheet, after giving pro forma effect to
the Incurrence of such Debt and any other Debt Incurred or repaid since such
balance sheet date and the receipt and application of the net proceeds
thereof, to (B) Consolidated Cash Flow Available for Fixed Charges for the
four full fiscal quarters next preceding the Incurrence of such Debt for which
consolidated financial statements are available, would be less than 5.0 to
1.0, or (2) the Company's Consolidated Capital Ratio as of the most recent
available quarterly or annual balance sheet, after giving pro forma effect to
(x) the Incurrence of such Debt and any other Debt Incurred or repaid since
such balance sheet date, (y) the issuance of any Capital Stock (other than
Disqualified Stock) of the Company since such balance sheet date,
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<PAGE>
including the issuance of any Capital Stock to be issued concurrently with the
Incurrence of such Debt, and (z) the receipt and application of the net
proceeds of such Debt or Capital Stock, as the case may be, is less than 2.25
to 1.0.
(b) Notwithstanding the foregoing limitation, the Company or any Restricted
Subsidiary may Incur any and all of the following (each of which shall be
given independent effect):
(1) Debt under the Notes, the Indenture or any Restricted Subsidiary
Guarantee;
(2) Debt under Credit Facilities in an aggregate principal amount
outstanding or available (together with all refinancing Debt
outstanding or available pursuant to clause (8) below in respect of
Debt previously Incurred pursuant to this clause (2)) at any one time
not to exceed the greater of (X) $750 million, which amount shall be
permanently reduced by the amount of Net Available Proceeds used to
repay Debt under the Credit Facilities, and not reinvested in
Telecommunications/IS Assets or used to purchase Notes or repay other
Debt, pursuant to and as permitted by the covenant described under "--
Limitation on Asset Dispositions", and (Y) 85% of the Eligible
Receivables;
(3) Purchase Money Debt, provided that the amount of such Purchase Money
Debt does not exceed 100% of the cost of the construction,
installation, acquisition, lease, development or improvement of the
applicable Telecommunications/IS Assets;
(4) Subordinated Debt of the Company; provided, however, that the aggregate
principal amount of such Debt, together with any other outstanding Debt
Incurred pursuant to this clause (4), shall not exceed $500 million at
any one time (which amount shall be permanently reduced by the amount
of Net Available Proceeds used to repay Subordinated Debt of the
Company, and not reinvested in Telecommunications/IS Assets or used to
purchase Notes or repay other Debt, pursuant to and as permitted by the
covenant described under "--Limitation on Asset Dispositions"), except
to the extent such Debt in excess of $500 million (A) is subordinated
to all other Debt of the Company other than Debt Incurred pursuant to
this clause (4) in excess of such $500 million limitation, (B) does not
provide for the payment of cash interest on such Debt prior to the
Stated Maturity of the Notes and (C) (1) does not provide for payments
of principal of such Debt at stated maturity or by way of a sinking
fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof by the Company (including
any redemption, retirement or repurchase which is contingent upon
events or circumstances, but excluding any retirement required by
virtue of the acceleration of any payment with respect to such Debt
upon any event of default thereunder), in each case on or prior to the
Stated Maturity of the Notes, and (2) does not permit redemption or
other retirement (including pursuant to an offer to purchase made by
the Company) of such Debt at the option of the holder thereof on or
prior to the Stated Maturity of the Notes;
(5) Debt outstanding on the Measurement Date;
(6) Debt owed by the Company to any Restricted Subsidiary of the Company or
Debt owed by a Restricted Subsidiary of the Company to the Company or a
Restricted Subsidiary of the Company; provided, however, that (X) upon
the transfer, conveyance or other disposition by such Restricted
Subsidiary or the Company of any Debt so permitted to a Person other
than the Company or another Restricted Subsidiary of the Company or (Y)
if for any reason such Restricted Subsidiary ceases to be a Restricted
Subsidiary, the provisions of this clause (6) shall no longer be
applicable to such Debt and such Debt shall be deemed to have been
Incurred by the issuer thereof at the time of such transfer, conveyance
or other disposition or when such Restricted Subsidiary ceases to be a
Restricted Subsidiary;
(7) Debt Incurred by a Person prior to the time (A) such Person became a
Restricted Subsidiary, (B) such Person merges into or consolidates with
a Restricted Subsidiary or (C) another Restricted Subsidiary merges
into or consolidates with such Person (in a transaction in which such
Person becomes a Restricted Subsidiary), which Debt was not Incurred in
anticipation of such transaction and was outstanding prior to such
transaction;
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(8) Debt Incurred to renew, extend, refinance, defease, repay, prepay,
repurchase, redeem, retire, exchange or refund (each, a "refinancing")
Debt Incurred pursuant to clause (1), (2), (3), (5), (7) or (12) of
this paragraph (b) or this clause (8), in an aggregate principal amount
(or if issued at a discount, the then-Accreted Value) not to exceed the
aggregate principal amount (or if issued at a discount, the then-
Accreted Value) of and accrued interest on the Debt so refinanced plus
the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt so refinanced or the
amount of any premium reasonably determined by the board of directors
of the Company as necessary to accomplish such refinancing by means of
a tender offer or privately negotiated repurchase, plus the expenses of
the Company Incurred in connection with such refinancing; provided,
however, that (A) the refinancing Debt shall not be senior in right of
payment to the Debt that is being refinanced and (B) in the case of any
refinancing of Debt Incurred pursuant to clause (1), (5), (7) or (12)
or, if such Debt previously refinanced Debt Incurred pursuant to any
such clause, this clause (8), the refinancing Debt by its terms, or by
the terms of any agreement or instrument pursuant to which such Debt is
issued, (x) does not provide for payments of principal of such Debt at
stated maturity or by way of a sinking fund applicable thereto or by
way of any mandatory redemption, defeasance, retirement or repurchase
thereof by the Company (including any redemption, retirement or
repurchase which is contingent upon events or circumstances, but
excluding any retirement required by virtue of the acceleration of any
payment with respect to such Debt upon any event of default
thereunder), in each case prior to the time the same are required by
the terms of the Debt being refinanced and (y) does not permit
redemption or other retirement (including pursuant to an offer to
purchase made by the Company) of such Debt at the option of the holder
thereof prior to the time the same are required by the terms of the
Debt being refinanced, other than, in the case of clause (x) or (y),
any such payment, redemption or other retirement (including pursuant to
an offer to purchase made by the Company) which is conditioned upon a
change of control pursuant to provisions substantially similar to those
described under "--Change of Control Triggering Event";
(9) Debt (A) in respect of performance, surety or appeal bonds, Guarantees,
letters of credit or reimbursement obligations Incurred or provided in
the ordinary course of business securing the performance of
contractual, franchise, lease, self-insurance or license obligations
and not in connection with the Incurrence of Debt or (B) in respect of
customary agreements providing for indemnification, adjustment of
purchase price after closing, or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds
securing any such obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, Incurred in connection with
the disposition of any business, assets or Restricted Subsidiary of the
Company (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary of the Company for the purpose of financing such
acquisition) and in an aggregate principal amount not to exceed the
gross proceeds actually received by the Company or any Restricted
Subsidiary in connection with such disposition;
(10) Debt consisting of Permitted Interest Rate or Currency Protection
Agreements;
(11) Debt not otherwise permitted to be Incurred pursuant to clauses (1)
through (10) above or clause (12) below, which, together with any
other outstanding Debt Incurred pursuant to this clause (11), has an
aggregate principal amount not in excess of $50 million at any time
outstanding; and
(12) Debt under the 9 1/8% Senior Notes, the 9 1/8% Senior Notes Indenture
or restricted subsidiary guarantees issued in accordance with the 9
1/8% Senior Notes Indenture.
Notwithstanding any other provision of this "--Limitation on Consolidated
Debt" covenant, the maximum amount of Debt that the Company or a Restricted
Subsidiary may Incur pursuant to this "--Limitation on Consolidated Debt"
covenant shall not be deemed to be exceeded due solely to the result of
fluctuations in the exchange rates of currencies.
For purposes of determining any particular amount of Debt under this
"--Limitation on Consolidated Debt" covenant, (1) Guarantees, Liens or
obligations with respect to letters of credit supporting Debt otherwise
included in the determination of such particular amount shall not be included
and (2) any Liens granted for the
24
<PAGE>
benefit of the Notes pursuant to the provisions referred to in the
"--Limitation on Liens" covenant described below shall not be treated as Debt.
For purposes of determining compliance with this "--Limitation on Consolidated
Debt" covenant, in the event that an item of Debt meets the criteria of more
than one of the types of Debt described in the above clauses, the Company, in
its sole discretion, shall classify such item of Debt and only be required to
include the amount and type of such Debt in one of such clauses.
Limitation on Debt of Restricted Subsidiaries. The Company may not permit
any Restricted Subsidiary that is not a Guarantor to Incur any Debt except any
and all of the following (each of which shall be given independent effect):
(1) Restricted Subsidiary Guarantees;
(2) Debt outstanding on the Measurement Date;
(3) Debt of Restricted Subsidiaries under Credit Facilities permitted to be
Incurred pursuant to clause (2) of paragraph (b) of "--Limitation on
Consolidated Debt";
(4) Purchase Money Debt of Restricted Subsidiaries permitted to be Incurred
pursuant to clause (3) of paragraph (b) of "--Limitation on
Consolidated Debt";
(5) Debt owed by a Restricted Subsidiary to the Company or a Restricted
Subsidiary of the Company permitted to be Incurred pursuant to clause
(6) of paragraph (b) of "--Limitation on Consolidated Debt";
(6) Debt of Restricted Subsidiaries consisting of Permitted Interest Rate
or Currency Protection Agreements permitted to be Incurred pursuant to
clause (10) of paragraph (b) of "--Limitation on Consolidated Debt";
(7) Debt of Restricted Subsidiaries permitted to be Incurred under clause
(7) of paragraph (b) of "--Limitation on Consolidated Debt";
(8) Debt of Restricted Subsidiaries permitted to be Incurred under clause
(9) or (11) of paragraph (b) of "--Limitation on Consolidated Debt";
and
(9) Debt which is Incurred to refinance any Debt of a Restricted Subsidiary
permitted to be Incurred pursuant to clauses (1), (2), (3), (4) and (7)
of this paragraph or this clause (9), in an aggregate principal amount
(or if issued at a discount, the then-Accreted Value) not to exceed the
aggregate principal amount (or if issued at a discount, the then-
Accreted Value) of the Debt so refinanced, plus the amount of any
premium required to be paid in connection with such refinancing
pursuant to the terms of the Debt so refinanced or the amount of any
premium reasonably determined by the board of directors of the Company
as necessary to accomplish such refinancing by means of a tender offer
or privately negotiated repurchase, plus the amount of expenses of the
Company and the applicable Restricted Subsidiary Incurred in connection
therewith; provided, however, that, in the case of any refinancing of
Debt Incurred pursuant to clause (1), (2) or (7) or, if such Debt
previously refinanced Debt Incurred pursuant to any such clause, this
clause (9), the refinancing Debt by its terms, or by the terms of any
agreement or instrument pursuant to which such Debt is Incurred, (x)
does not provide for payments of principal at the stated maturity of
such Debt or by way of a sinking fund applicable to such Debt or by way
of any mandatory redemption, defeasance, retirement or repurchase of
such Debt by the Company or any Restricted Subsidiary (including any
redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each
case prior to the time the same are required by the terms of the Debt
being refinanced and (y) does not permit redemption or other retirement
(including pursuant to an offer to purchase made by the Company or a
Restricted Subsidiary) of such Debt at the option of the holder thereof
prior to the stated maturity of the Debt being refinanced, other than,
in the case of clause (x) or (y), any such payment, redemption or other
retirement (including pursuant to an offer to purchase made by the
Company or a Restricted Subsidiary) which is conditioned upon the
change of control of the Company pursuant to provisions substantially
similar to those contained in the Indenture described under "--Change
of Control Triggering Event."
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Notwithstanding any other provision of this "--Limitation on Debt of
Restricted Subsidiaries" covenant, the maximum amount of Debt that a
Restricted Subsidiary may Incur pursuant to this "--Limitation on Debt of
Restricted Subsidiaries" covenant shall not be deemed to be exceeded due
solely as the result of fluctuations in the exchange rates of currencies.
For purposes of determining any particular amount of Debt under this
"--Limitation on Debt of Restricted Subsidiaries" covenant, Guarantees, Liens or
obligations with respect to letters of credit supporting Debt otherwise
included in the determination of such particular amount shall not be included.
For purposes of determining compliance with this "--Limitation on Debt of
Restricted Subsidiaries" covenant, in the event that an item of Debt meets the
criteria of more than one of the types of Debt described in the above clauses,
the Company, in its sole discretion, shall classify such item of Debt and only
be required to include the amount and type of such Debt in one of such
clauses.
Limitation on Restricted Payments. (a) The Company may not, and may not
permit any Restricted Subsidiary to:
(i) directly or indirectly, declare or pay any dividend, or make any
distribution, in respect of its Capital Stock or to the holders
thereof, excluding any dividends or distributions which are made solely
to the Company or a Restricted Subsidiary (and, if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to the other stockholders
of such Restricted Subsidiary on a pro rata basis or on a basis that
results in the receipt by the Company or a Restricted Subsidiary of
dividends or distributions of greater value than it would receive on a
pro rata basis) or any dividends or distributions payable solely in
shares of Capital Stock of the Company (other than Disqualified Stock)
or in options, warrants or other rights to acquire Capital Stock of the
Company (other than Disqualified Stock);
(ii) purchase, redeem, or otherwise retire or acquire for value (x) any
Capital Stock of the Company or any Restricted Subsidiary of the
Company or (y) any options, warrants or rights to purchase or acquire
shares of Capital Stock of the Company or any Restricted Subsidiary or
any securities convertible or exchangeable into shares of Capital
Stock of the Company or any Restricted Subsidiary, except, in any such
case, any such purchase, redemption or retirement or acquisition for
value (A) paid to the Company or a Restricted Subsidiary (or, in the
case of any such purchase, redemption or other retirement or
acquisition for value with respect to a Restricted Subsidiary that is
not a Wholly Owned Subsidiary, to the other stockholders of such
Restricted Subsidiary on a pro rata basis or on a basis that results
in the receipt by the Company or a Restricted Subsidiary of payments
of greater value than it would receive on a pro rata basis) or (B)
paid solely in shares of Capital Stock (other than Disqualified Stock)
of the Company;
(iii) make any Investment (other than an Investment in the Company or a
Restricted Subsidiary or a Permitted Investment) in any Person,
including the Designation of any Restricted Subsidiary as an
Unrestricted Subsidiary, or the Revocation of any such Designation,
according to the covenant described under "--Limitation on
Designations of Unrestricted Subsidiaries";
(iv) redeem, defease, repurchase, retire or otherwise acquire or retire for
value, prior to any scheduled maturity, repayment or sinking fund
payment, Debt of the Company which is subordinate in right of payment
to the Notes (other than any redemption, defeasance, repurchase,
retirement or other acquisition or retirement for value made in
anticipation of satisfying a scheduled maturity, repayment or sinking
fund obligation due within one year thereof); and
(v) issue, transfer, convey, sell or otherwise dispose of Capital Stock of
any Restricted Subsidiary to a Person other than the Company or another
Restricted Subsidiary if the result thereof is that such Restricted
Subsidiary shall cease to be a Restricted Subsidiary, in which event
the amount of such "Restricted Payment" shall be the Fair Market Value
of the remaining interest, if any, in such former Restricted Subsidiary
held by the Company and the other Restricted Subsidiaries
(each of clauses (i) through (v) above being a "Restricted Payment") if:
(1) an Event of Default, or an event that with the passing of time or the
giving of notice, or both, would constitute an Event of Default, shall
have occurred and be continuing, or
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(2) upon giving effect to such Restricted Payment, the Company could not
Incur at least $1.00 of additional Debt pursuant to the terms of the
Indenture described in paragraph (a) of "--Limitation on Consolidated
Debt" above, or
(3) upon giving effect to such Restricted Payment, the aggregate of all
Restricted Payments made on or after the Measurement Date, including
Restricted Payments made pursuant to clause (A) or (B) of the proviso
at the end of this sentence, and Permitted Investments made on or after
the Measurement Date pursuant to clause (9) or (10) of the definition
thereof (the amount of any such Restricted Payment or Permitted
Investment, if made other than in cash, to be based upon Fair Market
Value) exceeds the sum of: (a) 50% of cumulative Consolidated Net
Income (or, in the case that Consolidated Net Income shall be negative,
100% of such negative amount) since the end of the last full fiscal
quarter prior to the Measurement Date through the last day of the last
full fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment plus, (b) in the case of any Revocation made after
the Measurement Date, an amount equal to the lesser of the portion
(proportionate to the Company's equity interest in the Subsidiary to
which such Revocation relates) of the Fair Market Value of the net
assets of such Subsidiary at the time of Revocation and the amount of
Investments previously made (and treated as a Restricted Payment) by
the Company or any Restricted Subsidiary in such Subsidiary; provided,
however, that the Company or a Restricted Subsidiary of the Company
may, without regard to the limitations in clause (3) but subject to
clauses (1) and (2), make (A) Restricted Payments in an aggregate
amount not to exceed the sum of $50 million and the aggregate net cash
proceeds received after the Measurement Date (i) as capital
contributions to the Company, from the issuance (other than to a
Subsidiary or an employee stock ownership plan or trust established by
the Company or any such Subsidiary for the benefit of their employees)
of Capital Stock (other than Disqualified Stock) of the Company, and
(ii) from the issuance or sale of Debt of the Company or any Restricted
Subsidiary (other than to a Subsidiary, the Company or an employee
stock ownership plan or trust established by the Company or any such
Subsidiary for the benefit of their employees) that after the
Measurement Date has been converted into or exchanged for Capital Stock
(other than Disqualified Stock) of the Company and (B) Investments in
Persons engaged in the Telecommunications/IS Business in an aggregate
amount not to exceed the after-tax gain on the sale, after the
Measurement Date, of Special Assets to the extent sold for cash, Cash
Equivalents, Telecommunications/IS Assets or the assumption of Debt of
the Company or any Restricted Subsidiary (other than Debt that is
subordinated to the Notes or any applicable Restricted Subsidiary
Guarantee) and release of the Company and all Restricted Subsidiaries
from all liability on the Debt assumed. The aggregate net cash proceeds
referred to in the immediately preceding clauses (A)(i) and (A)(ii)
shall not be utilized to make Restricted Payments pursuant to such
clauses to the extent such proceeds have been utilized to make
Permitted Investments under clause (9) of the definition of "Permitted
Investments."
(b) Notwithstanding the foregoing limitation:
(i) the Company may pay any dividend on Capital Stock of any class of the
Company within 60 days after the declaration thereof if, on the date
when the dividend was declared, the Company could have paid such
dividend in accordance with the foregoing provisions; provided,
however, that at the time of such payment of such dividend, no other
Event of Default shall have occurred and be continuing (or result
therefrom);
(ii) the Company may repurchase any shares of its Common Stock or options
to acquire its Common Stock from Persons who were formerly directors,
officers or employees of the Company or any of its Subsidiaries or
other Affiliates in an amount not to exceed $3 million in any 12-month
period;
(iii) the Company and any Restricted Subsidiary may refinance any Debt
otherwise permitted by clause (8) of paragraph (b) under "--
Limitation on Consolidated Debt" above or clause (9) under "--
Limitation on Debt of Restricted Subsidiaries" above;
(iv) the Company and any Restricted Subsidiary may retire or repurchase any
Capital Stock of the Company or of any Restricted Subsidiary or any
Subordinated Debt of the Company in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company
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or an employee stock ownership plan or trust established by the Company
or any such Subsidiary for the benefit of their employees) of, Capital
Stock (other than Disqualified Stock) of the Company, provided that the
proceeds from any such exchange or sale of Capital Stock shall be
excluded from any calculation pursuant to clause (A)(i) in the proviso
at the end of paragraph (a) above or pursuant to clause (b) of the
definition of "Invested Capital"; and
(v) the Company may pay cash dividends in any amount not in excess of $50
million in any 12-month period in respect of Preferred Stock of the
Company (other than Disqualified Stock).
The Restricted Payments described in the foregoing clauses (i), (ii) and (v)
shall be included in the calculation of Restricted Payments; the Restricted
Payments described in clauses (iii) and (iv) shall be excluded in the
calculation of Restricted Payments.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. (a) The Company may not, and may not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction (other
than pursuant to law or regulation) on the ability of any Restricted
Subsidiary:
(1) to pay dividends (in cash or otherwise) or make any other distributions
in respect of its Capital Stock owned by the Company or any other
Restricted Subsidiary or pay any Debt or other obligation owed to the
Company or any other Restricted Subsidiary;
(2) to make loans or advances to the Company or any other Restricted
Subsidiary; or
(3) to transfer any of its Property to the Company or any other Restricted
Subsidiary;
(b) Notwithstanding the foregoing limitation, the Company may, and may
permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist:
(1) any encumbrance or restriction pursuant to any agreement in effect on
the Measurement Date;
(2) any customary (as conclusively determined in good faith by the Chief
Financial Officer of the Company) encumbrance or restriction applicable
to a Restricted Subsidiary that is contained in an agreement or
instrument governing or relating to Debt contained in any Credit
Facilities or Purchase Money Debt, provided that such encumbrances and
restrictions permit the distribution of funds to the Company in an
amount sufficient for the Company to make the timely payment of
interest, premium (if any) and principal (whether at stated maturity,
by way of a sinking fund applicable thereto, by way of any mandatory
redemption, defeasance, retirement or repurchase thereof, including
upon the occurrence of designated events or circumstances or by virtue
of acceleration upon an event of default, or by way of redemption or
retirement at the option of the holder of the Debt, including pursuant
to offers to purchase) according to the terms of the Indenture and the
Notes and other Debt that is solely an obligation of the Company, but
provided further that such agreement may nevertheless contain customary
(as so determined) net worth, leverage, invested capital and other
financial covenants, customary (as so determined) covenants regarding
the merger of or sale of all or any substantial part of the assets of
the Company or any Restricted Subsidiary, customary (as so determined)
restrictions on transactions with affiliates and customary (as so
determined) subordination provisions governing Debt owed to the Company
or any Restricted Subsidiary;
(3) any encumbrance or restriction pursuant to an agreement relating to any
Acquired Debt, which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the
Person so acquired;
(4) any encumbrance or restriction pursuant to an agreement effecting a
refinancing of Debt Incurred pursuant to an agreement referred to in
clause (1), (2) or (3) of this paragraph (b), provided, however, that
the provisions contained in such agreement relating to such encumbrance
or restriction are no more restrictive (as so determined) in any
material respect than the provisions contained in the agreement the
subject thereof;
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(5) in the case of clause (3) of paragraph (a) above, any encumbrance or
restriction contained in any security agreement (including a Capital
Lease Obligation) securing Debt of the Company or a Restricted
Subsidiary otherwise permitted under the Indenture, but only to the
extent such restrictions restrict the transfer of the Property subject
to such security agreement;
(6) in the case of clause (3) of paragraph (a) above, customary provisions
(A) that restrict the subletting, assignment or transfer of any
Property that is a lease, license, conveyance or similar contract, (B)
contained in asset sale or other asset disposition agreements limiting
the transfer of the Property being sold or disposed of pending the
closing of such sale or disposition or (C) arising or agreed to in the
ordinary course of business, not relating to any Debt, and that do not,
individually or in the aggregate, detract from the value of Property of
the Company or any Restricted Subsidiary in any manner material to the
Company or any Restricted Subsidiary;
(7) any encumbrance or restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all of the Capital Stock or
Property of such Restricted Subsidiary, provided that the consummation
of such transaction would not result in a Default or an Event of
Default, that such restriction terminates if such transaction is
abandoned and that the consummation or abandonment of such transaction
occurs within one year of the date such agreement was entered into; and
(8) any encumbrance or restriction pursuant to the Indenture and the Notes.
Limitation on Liens. The Company may not, and may not permit any Restricted
Subsidiary to, directly or indirectly, Incur or suffer to exist any Lien on or
with respect to any Property now owned or acquired after the Measurement Date
to secure any Debt without making, or causing such Restricted Subsidiary to
make, effective provision for securing the Notes (1) equally and ratably with
such Debt as to such Property for so long as such Debt will be so secured or
(2) in the event such Debt is Debt of the Company or a Guarantor which is
subordinate in right of payment to the Notes or the applicable Restricted
Subsidiary Guarantee, prior to such Debt as to such Property for so long as
such Debt will be so secured.
The foregoing restrictions shall not apply to:
(1) Liens existing on the Measurement Date and securing Debt outstanding on
the Measurement Date or Incurred on or after the Measurement Date
pursuant to any Credit Facility to secure Debt permitted to be Incurred
pursuant to clause (2) of paragraph (b) under "--Limitation on
Consolidated Debt";
(2) Liens securing Debt in an amount which, together with the aggregate
amount of Debt then outstanding or available under all Credit
Facilities (together with all refinancing Debt then outstanding or
available pursuant to clause (8) of paragraph (b) of "--Limitation on
Consolidated Debt" in respect of Debt previously Incurred under Credit
Facilities), does not exceed 1.5 times the Company's Consolidated Cash
Flow Available for Fixed Charges for the four full fiscal quarters
preceding the Incurrence of such Lien for which the Company's
consolidated financial statements are available, determined on a pro
forma basis as if such Debt had been Incurred and the proceeds thereof
had been applied at the beginning of such four fiscal quarters;
(3) Liens in favor of the Company or any Restricted Subsidiary; provided,
however, that any subsequent issue or transfer of Capital Stock or
other event that results in any such Restricted Subsidiary ceasing to
be a Restricted Subsidiary or any subsequent transfer of the Debt
secured by any such Lien (except to the Company or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Lien by the issuer thereof;
(4) Liens to secure Purchase Money Debt permitted to be Incurred pursuant
to clause (3) of paragraph (b) under "--Limitation on Consolidated
Debt," provided that any such Lien may not extend to any Property other
than the Telecommunications/IS Assets installed, constructed, acquired,
leased, developed or improved with the proceeds of such Purchase Money
Debt and any improvements or accessions thereto (it being understood
that all Debt to any single lender or group of related lenders or
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<PAGE>
outstanding under any single credit facility, and in any case relating
to the same group or collection of Telecommunications/IS Assets financed
thereby, shall be considered a single Purchase Money Debt, whether drawn
at one time or from time to time);
(5) Liens to secure Acquired Debt, provided that (a) such Lien attaches to
the acquired Property prior to the time of the acquisition of such
Property and (b) such Lien does not extend to or cover any other
Property;
(6) Liens to secure Debt Incurred to refinance, in whole or in part, Debt
secured by any Lien referred to in the foregoing clauses (1), (4) and
(5) or this clause (6) so long as such Lien does not extend to any
other Property (other than improvements and accessions to the original
Property) and the principal amount of Debt so secured is not increased
except as otherwise permitted under clause (8) of paragraph (b) of
"--Limitation on Consolidated Debt" or clause (9) of "--Limitation on Debt
of Restricted Subsidiaries";
(7) Liens not otherwise permitted by the foregoing clauses (1) through (6)
securing Debt in an aggregate amount not to exceed 5% of the Company's
Consolidated Tangible Assets;
(8) Liens granted after the Issue Date pursuant to "--Limitation on Liens"
to secure the Notes; and
(9) Permitted Liens.
Limitation on Sale and Leaseback Transactions. The Company may not, and may
not permit any Restricted Subsidiary to, directly or indirectly, enter into,
assume, Guarantee or otherwise become liable with respect to any Sale and
Leaseback Transaction, unless:
(1) the Company or such Restricted Subsidiary would be entitled to Incur
(A) Debt in an amount equal to the Attributable Value of the Sale and
Leaseback Transaction pursuant to the covenant described under
"--Limitation on Consolidated Debt" above and (B) a Lien pursuant to the
covenant described under "--Limitation on Liens" above, equal in amount
to the Attributable Value of the Sale and Leaseback Transaction,
without also securing the Notes; and
(2) the Sale and Leaseback Transaction is treated as an Asset Disposition
and all of the conditions of the Indenture described under
"--Limitation on Asset Dispositions" below (including the provisions
concerning the application of Net Available Proceeds) are satisfied
with respect to such Sale and Leaseback Transaction, treating all of
the consideration received in such Sale and Leaseback Transaction as
Net Available Proceeds for purposes of such covenant.
Limitation on Asset Dispositions. The Company may not, and may not permit
any Restricted Subsidiary to, make any Asset Disposition unless:
(1) the Company or the Restricted Subsidiary, as the case may be, receives
consideration for such disposition at least equal to the Fair Market
Value for the Property sold or disposed of as determined by the board
of directors of the Company in good faith and evidenced by a resolution
of the board of directors of the Company filed with the Trustee; and
(2) at least 75% of the consideration for such disposition consists of cash
or Cash Equivalents or the assumption of Debt of the Company or any
Restricted Subsidiary (other than Debt that is subordinated to the
Notes or any applicable Restricted Subsidiary Guarantee) and release of
the Company and all Restricted Subsidiaries from all liability on the
Debt assumed (or if less than 75%, the remainder of such consideration
consists of Telecommunications/IS Assets); provided, however, that, to
the extent such disposition involves Special Assets, all or any portion
of the consideration may, at the Company's election, consist of
Property other than cash, Cash Equivalents, the assumption of Debt or
Telecommunications/IS Assets.
The Net Available Proceeds (or any portion thereof) from Asset Dispositions
may be applied by the Company or a Restricted Subsidiary, to the extent the
Company or such Restricted Subsidiary elects (or is required by the terms of
any Debt):
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(1) to the permanent repayment or reduction of Debt then outstanding under
any Credit Facility, to the extent such Credit Facility would require
such application or prohibit payments pursuant to the Offer to Purchase
described in the following paragraph (other than Debt owed to the
Company or any Affiliate of the Company); or
(2) to reinvest in Telecommunications/IS Assets (including by means of an
Investment in Telecommunications/IS Assets by a Restricted Subsidiary
with Net Available Proceeds received by the Company or another
Restricted Subsidiary).
Any Net Available Proceeds from an Asset Disposition not applied in
accordance with the preceding paragraph within 360 days (or, in the case of a
disposition of Special Assets identified in clause (a) of the definition
thereof in which the Net Available Proceeds exceed $500 million, 540 days)
from the date of the receipt of such Net Available Proceeds shall constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10
million, the Company will be required to make an Offer to Purchase with such
Excess Proceeds on a pro rata basis according to principal amount (or, in the
case of Debt issued at a discount, the then-Accreted Value) for:
(1) outstanding Notes at a price in cash equal to 100% of the Accreted
Value of the Notes on the purchase date plus accrued and unpaid
interest (if any) thereon (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant
interest payment date); and
(2) any other Debt of the Company or any Guarantor that is pari passu with
the Notes, or any Debt of a Restricted Subsidiary that is not a
Guarantor, at a price no greater than 100% of the principal amount
thereof plus accrued and unpaid interest (if any) to the purchase date
(or 100% of the then-Accreted Value plus accrued and unpaid interest
(if any) to the purchase date in the case of original issue discount
Debt), to the extent, in the case of this clause (2), required under
the terms thereof (other than Debt owed to the Company or any Affiliate
of the Company).
To the extent there are any remaining Excess Proceeds following the completion
of the Offer to Purchase, the Company shall apply such Excess Proceeds to the
repayment of other Debt of the Company or any Restricted Subsidiary, to the
extent permitted or required under the terms thereof. Any other remaining
Excess Proceeds may be applied to any use as determined by the Company which
is not otherwise prohibited by the Indenture, and the amount of Excess
Proceeds shall be reset to zero.
Limitation on Issuance and Sales of Capital Stock of Restricted
Subsidiaries. The Company may not, and may not permit any Restricted
Subsidiary to, issue, transfer, convey, sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary or securities convertible
or exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any Person other than
the Company or a Restricted Subsidiary except:
(1) a sale of all of the Capital Stock of such Restricted Subsidiary owned
by the Company and any Restricted Subsidiary that complies with the
provisions described under "--Limitation on Asset Dispositions" above
to the extent such provisions apply;
(2) in a transaction that results in such Restricted Subsidiary becoming a
Joint Venture, provided (A) such transaction complies with the
provisions described under "--Limitation on Asset Dispositions" above
to the extent such provisions apply and (B) the remaining interest of
the Company or any other Restricted Subsidiary in such Joint Venture
would have been permitted as a new Restricted Payment or Permitted
Investment under the provisions of "--Limitation on Restricted
Payments" above;
(3) the issuance, transfer, conveyance, sale or other disposition of shares
of such Restricted Subsidiary so long as after giving effect to such
transaction such Restricted Subsidiary remains a Restricted Subsidiary
and such transaction complies with the provisions described under
"--Limitation on Asset Dispositions" to the extent such provisions apply;
(4) the transfer, conveyance, sale or other disposition of shares required
by applicable law or regulation;
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(5) if required, the issuance, transfer, conveyance, sale or other
disposition of directors' qualifying shares;
(6) Disqualified Stock issued in exchange for, or upon conversion of, or
the proceeds of the issuance of which are used to refinance, shares of
Disqualified Stock of such Restricted Subsidiary, provided that the
amounts of the redemption obligations of such Disqualified Stock shall
not exceed the amounts of the redemption obligations of, and such
Disqualified Stock shall have redemption obligations no earlier than
those required by, the Disqualified Stock being exchanged, converted or
refinanced;
(7) in a transaction where the Company or a Restricted Subsidiary acquires
at the same time not less than its Proportionate Interest in such
issuance of Capital Stock;
(8) Capital Stock issued and outstanding on the Measurement Date;
(9) Capital Stock of a Restricted Subsidiary issued and outstanding prior
to the time that such Person becomes a Restricted Subsidiary so long as
such Capital Stock was not issued in contemplation of such Person's
becoming a Restricted Subsidiary or otherwise being acquired by the
Company; and
(10) an issuance of Preferred Stock of a Restricted Subsidiary (other than
Preferred Stock convertible or exchangeable into Common Stock of any
Restricted Subsidiary) otherwise permitted by the Indenture.
Transactions with Affiliates. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, sell, lease,
transfer, or otherwise dispose of any of its Property to, or purchase any
Property from, or enter into any contract, agreement, understanding, loan,
advance, Guarantee or transaction (including the rendering of services) with
or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(a) such Affiliate Transaction or series of Affiliate Transactions is:
(1) in the best interest of the Company or such Restricted Subsidiary, and
(2) on terms that are no less favorable to the Company or such Restricted
Subsidiary than those that would have been obtained in a comparable
arm's-length transaction by the Company or such Restricted Subsidiary
with a Person that is not an Affiliate (or, in the event that there are
no comparable transactions involving Persons who are not Affiliates of
the Company or the relevant Restricted Subsidiary to apply for
comparative purposes, is otherwise on terms that, taken as a whole, the
Company has determined to be fair to the Company or the relevant
Restricted Subsidiary); and
(b) the Company delivers to the Trustee:
(1) with respect to any Affiliate Transaction or series of Affiliate
Transactions involving aggregate payments in excess of $10 million but
less than $15 million, a certificate of the chief executive, operating
or financial officer of the Company evidencing such officer's
determination that such Affiliate Transaction or series of Affiliate
Transactions complies with clause (a) above, and
(2) with respect to any Affiliate Transaction or series of Affiliate
Transactions involving aggregate payments equal to or in excess of $15
million, a board resolution certifying that such Affiliate Transaction
or series of Affiliate Transactions complies with clause (a) above and
that such Affiliate Transaction or series of Affiliate Transactions has
been approved by the board of directors, including a majority of the
disinterested members of the board of directors, provided that, in the
event that there shall not be at least two disinterested members of the
board of directors with respect to the Affiliate Transaction, the
Company shall, in addition to such board resolution, file with the
Trustee a written opinion from an investment banking firm of national
standing in the United States which, in the good faith judgment of the
board of directors of the Company, is independent with respect to the
Company and its Affiliates and qualified to perform such task, which
opinion shall be to the effect that the consideration to be paid or
received in connection with such Affiliate Transaction is fair, from a
financial point of view, to the Company or such Restricted Subsidiary.
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Notwithstanding the foregoing, the following shall not be deemed Affiliate
Transactions:
(1) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business and
consistent with industry practice;
(2) any agreement or arrangement with respect to the compensation of a
director or officer of the Company or any Restricted Subsidiary
approved by a majority of the disinterested members of the board of
directors and consistent with industry practice;
(3) transactions between or among the Company and its Restricted
Subsidiaries, provided that no more than 5% of the Voting Stock (on a
fully diluted basis) of any such Restricted Subsidiary is owned by an
Affiliate of the Company (other than a Restricted Subsidiary);
(4) Restricted Payments and Permitted Investments permitted by the covenant
described under "--Limitation on Restricted Payments" (other than
Investments in Affiliates that are not the Company or Restricted
Subsidiaries);
(5) transactions pursuant to the terms of any agreement or arrangement as
in effect on the Measurement Date; and
(6) transactions with respect to wireline or wireless transmission
capacity, the lease or sharing or other use of cable or fiber optic
lines, equipment, rights-of-way or other access rights, between the
Company (or any Restricted Subsidiary) and any other Person, provided
that, in the case of this clause (6), such transaction complies with
clause (a) in the immediately preceding paragraph.
Change of Control Triggering Event. Within 30 days of the occurrence of both
a Change of Control and a Rating Decline with respect to the Notes (a "Change
of Control Triggering Event"), the Company will be required to make an Offer
to Purchase all outstanding Notes at a price in cash equal to 101% of the
Accreted Value of the Notes on the purchase date plus any accrued and unpaid
interest (if any) to such purchase date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
A "Change of Control" means the occurrence of any of the following events:
(1) if any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act or any successor provisions to either of
the foregoing), including any group acting for the purpose of
acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one
or more of the Permitted Holders, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, except that a person will
be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly,
of 35% or more of the total voting power of the Voting Stock of the
Company; provided, however, that the Permitted Holders are the
"beneficial owners" (as defined in Rule 13d-3 under the Exchange Act,
except that a person will be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, in the aggregate of a lesser percentage of the
total voting power of the Voting Stock of the Company than such other
person or group (for purposes of this clause (1), such person or group
shall be deemed to beneficially own any Voting Stock of a corporation
(the "specified corporation") held by any other corporation (the
"parent corporation") so long as such person or group beneficially
owns, directly or indirectly, in the aggregate a majority of the total
voting power of the Voting Stock of such parent corporation); or
(2) the sale, transfer, assignment, lease, conveyance or other disposition,
directly or indirectly, of all or substantially all the assets of the
Company and the Restricted Subsidiaries, considered as a whole (other
than a disposition of such assets as an entirety or virtually as an
entirety to a Wholly Owned Restricted Subsidiary or one or more
Permitted Holders) shall have occurred; or
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(3) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of the
Company (together with any new directors whose election or appointment
by such board or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the board of
directors of the Company then in office; or
(4) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.
In the event that the Company makes an Offer to Purchase the Notes, the
Company intends to comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1
under, the Exchange Act.
The existence of the holders' right to require, subject to certain
conditions, the Company to repurchase Notes upon a Change of Control
Triggering Event may deter a third party from acquiring the Company in a
transaction that constitutes a Change of Control. If an Offer to Purchase is
made, there can be no assurance that the Company will have sufficient funds to
pay the Purchase Price for all Notes tendered by holders seeking to accept the
Offer to Purchase. In addition, instruments governing other Debt of the
Company may prohibit the Company from purchasing any Notes prior to their
Stated Maturity, including pursuant to an Offer to Purchase, or require that
such Debt be repurchased upon a Change of Control. In the event that an Offer
to Purchase occurs at a time when the Company does not have sufficient
available funds to pay the Purchase Price for all Notes tendered pursuant to
such Offer to Purchase or a time when the Company is prohibited from
purchasing the Notes (and the Company is unable either to obtain the consent
of the holders of the relevant Debt or to repay such Debt), an Event of
Default would occur under the Indenture. In addition, one of the events that
constitutes a Change of Control under the Indenture is a sale, transfer,
assignment, lease, conveyance or other disposition of all or substantially all
of the assets of the Company. The Indenture will be governed by New York law,
and there is no established definition under New York law of "substantially
all" of the assets of a corporation. Accordingly, if the Company were to
engage in a transaction in which it disposed of less than all of its assets, a
question of interpretation could arise as to whether such disposition was of
"substantially all" of its assets and whether the Company was required to make
an Offer to Purchase.
Except as described herein with respect to a Change of Control, the
Indenture does not contain any other provisions that permit holders of Notes
to require that the Company repurchase or redeem Notes in the event of a
takeover, recapitalization or similar restructuring.
Reports. Whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, or any successor provision thereto, the Company shall file
with the SEC the annual reports, quarterly reports and other documents which
the Company would have been required to file with the SEC pursuant to such
Section 13(a) or 15(d) or any successor provision thereto if the Company were
subject thereto, such documents to be filed with the SEC on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been required to file them. The Company shall also in any event:
(1) within 15 days of each Required Filing Date (A) transmit by mail to all
holders, as their names and addresses appear in the Security Register,
without cost to such holders, and (B) file with the Trustee copies of
the annual reports, quarterly reports and other documents (without
exhibits) which the Company would have been required to file with the
SEC pursuant to Section 13(a) or 15(d) of the Exchange Act or any
successor provisions thereto if the Company were subject thereto; and
(2) if filing such documents by the Company with the SEC is not permitted
under the Exchange Act, promptly upon written request, supply copies of
such documents (without exhibits) to any prospective holder.
Limitation on Designations of Unrestricted Subsidiaries. The Indenture
provides that the Company will not designate any Subsidiary of the Company
(other than a newly created Subsidiary in which no Investment has previously
been made) as an "Unrestricted Subsidiary" under the Indenture (a
"Designation") unless:
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(1) no Default or Event of Default shall have occurred and be continuing at
the time of or after giving effect to such Designation;
(2) immediately after giving effect to such Designation, the Company would
be able to Incur $1.00 of Debt under paragraph (a) of "--Limitation on
Consolidated Debt"; and
(3) the Company would not be prohibited under the Indenture from making an
Investment at the time of Designation (assuming the effectiveness of
such Designation) in an amount (the "Designation Amount") equal to the
portion (proportionate to the Company's equity interest in such
Restricted Subsidiary) of the Fair Market Value of the net assets of
such Restricted Subsidiary on such date.
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant
"--Limitation on Restricted Payments" for all purposes of the Indenture in the
Designation Amount; provided, however, that, upon a Revocation of any such
Designation of a Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary of an amount (if
positive) equal to:
(1) the Company's "Investment" in such Subsidiary at the time of such
Revocation; less
(2) the portion (proportionate to the Company's equity interest in such
Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such Revocation.
At the time of any Designation of any Subsidiary as an Unrestricted
Subsidiary, such Subsidiary shall not own any Capital Stock of the Company or
any Restricted Subsidiary. The Indenture provides that neither the Company nor
any Restricted Subsidiary shall at any time:
(1) provide credit support for, or a Guarantee of, any Debt of any
Unrestricted Subsidiary (including any undertaking, agreement or
instrument evidencing such Debt); provided that the Company or a
Restricted Subsidiary may pledge Capital Stock or Debt of any
Unrestricted Subsidiary on a nonrecourse basis such that the pledgee
has no claim whatsoever against the Company other than to obtain such
pledged Capital Stock or Debt;
(2) be directly or indirectly liable for any Debt of any Unrestricted
Subsidiary; or
(3) be directly or indirectly liable for any Debt which provides that the
holder thereof may (upon notice, lapse of time or both) declare a
default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a
default with respect to any Debt, Lien or other obligation of any
Unrestricted Subsidiary (including any right to take enforcement action
against such Unrestricted Subsidiary),
except in the case of clause (1) or (2) to the extent permitted under
"--Limitation on Restricted Payments" and "--Transactions with Affiliates."
Unless Designated as an Unrestricted Subsidiary, any Person that becomes a
Subsidiary of the Company will be classified as a Restricted Subsidiary;
provided, however, that such Subsidiary shall not be designated as a
Restricted Subsidiary and shall be automatically classified as an Unrestricted
Subsidiary if either of the requirements set forth in clauses (1) and (2) of
the immediately following paragraph will not be satisfied immediately
following such classification. Except as provided in the first sentence of
this "--Limitation on Designations of Unrestricted Subsidiaries," no
Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.
The Indenture provides that a Designation may be revoked (a "Revocation") by
a resolution of the board of directors of the Company delivered to the
Trustee, provided that the Company will not make any Revocation unless:
(1) no Default or Event of Default shall have occurred and be continuing at
the time of and after giving effect to such Revocation; and
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(2) all Liens and Debt of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if Incurred at such time,
have been permitted to be Incurred at such time for all purposes of the
Indenture.
All Designations and Revocations must be evidenced by resolutions of the
board of directors of the Company delivered to the Trustee (1) certifying
compliance with the foregoing provisions and (2) giving the effective date of
such Designation or Revocation, such delivery to the Trustee to occur within
45 days after the end of the fiscal quarter of the Company in which such
Designation or Revocation is made (or, in the case of a Designation or
Revocation made during the last fiscal quarter of the Company's fiscal year,
within 90 days after the end of such fiscal year).
Mergers, Consolidations and Certain Sales of Assets
The Company may not, in a single transaction or a series of related
transactions, (1) consolidate with or merge into any other Person or Persons
or permit any other Person to consolidate with or merge into the Company or
(2) directly or indirectly, transfer, sell, lease, convey or otherwise dispose
of all or substantially all its assets to any other Person or Persons unless:
(A) in a transaction in which the Company is not the surviving Person or in
which the Company transfers, sells, leases, conveys or otherwise
disposes of all or substantially all of its assets to any other Person,
the resulting, surviving or transferee Person (the "successor entity")
is organized under the laws of the United States of America or any
State thereof or the District of Columbia and shall expressly assume,
by a supplemental indenture executed and delivered to the Trustee in
form satisfactory to the Trustee, all of the Company's obligations
under the Indenture;
(B) immediately before and after giving effect to such transaction and
treating any Debt which becomes an obligation of the Company (or the
successor entity) or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Company or such Restricted
Subsidiary at the time of the transaction, no Default or Event of
Default shall have occurred and be continuing;
(C) immediately after giving effect to such transaction, the Consolidated
Net Worth of the Company (or the successor entity) is equal to or
greater than that of the Company immediately prior to the transaction;
(D) immediately after giving effect to such transaction and treating any
Debt which becomes an obligation of the Company (or the successor
entity) or a Restricted Subsidiary as a result of such transaction as
having been Incurred by the Company or such Restricted Subsidiary at
the time of the transaction, the Company (or the successor entity)
could Incur at least $1.00 of additional Debt pursuant to the
provisions of the Indenture described in paragraph (a) under "--Certain
Covenants--Limitation on Consolidated Debt" above;
(E) if, as a result of any such transaction, Property of the Company (or
the successor entity) or any Restricted Subsidiary would become subject
to a Lien prohibited by the provisions of the Indenture described under
"--Certain Covenants--Limitation on Liens" above, the Company (or the
successor entity) shall have secured the Notes as required by said
covenant;
(F) in the case of a transfer, sale, lease, conveyance or other disposition
of all or substantially all of the assets of the Company, such assets
shall have been transferred as an entirety or virtually as an entirety
to one Person and such Person shall have complied with all the
provisions of this paragraph; and
(G) certain other conditions are met.
The successor entity shall succeed to, and be substituted for, and may
exercise every right and power of the Company under the Indenture, and the
predecessor Company, except in the case of a lease, shall be released from all
its obligations under the Indenture.
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Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Accreted Value" of any Note as of or to any date of determination prior to
December 1, 2003, or of any other Debt issued at a price less than the
principal amount at stated maturity, means, as of any date of determination,
an amount equal to the sum of:
(1) the issue price of such Debt as determined in accordance with Section
1273 of the Code or any successor provisions (which, in the case of the
Notes, will be $599.66 per $1,000 principal amount at maturity of
Notes) plus
(2) the aggregate of the portions of the original issue discount (the
excess of the amounts considered as part of the "stated redemption
price at maturity" of such Debt within the meaning of Section
1273(a)(2) of the Code or any successor provisions, whether denominated
as principal or interest, over the issue price of such Debt) that shall
theretofore have accrued pursuant to Section 1272 of the Code (without
regard to Section 1272(a)(7) of the Code) from the date of issue of
such Debt to the date of determination (which amount, in the case of
the Notes, shall be amortized on a daily basis and compounded
semiannually on each June 1 and December 1 at a rate of 10 1/2% per
annum from the Issue Date through the date of determination on the
basis of a 360-day year of twelve 30-day months), minus all amounts
theretofore paid in respect of such Debt, which amounts are considered
as part of the "stated redemption price at maturity" of such Debt
within the meaning of Section 1273(a)(2) of the Code or any successor
provisions (whether such amounts paid were denominated principal or
interest).
The Accreted Value of any Notes on or after December 1, 2003, will mean the
principal amount at maturity of such Note. Notwithstanding the foregoing, if
the Company elects to commence the accrual of cash interest on the Notes on or
after December 1, 2001 and prior to December 1, 2003, the Notes shall cease to
accrete, and the Accreted Value and the principal amount at maturity of such
Note shall be the Accreted Value on the date of commencement of such accrual
as calculated in accordance with the first sentence of this definition.
"Acquired Debt" means, with respect to any specified Person, (1) Debt of any
other Person existing at the time such Person merges with or into or
consolidates with or becomes a Subsidiary of such specified Person and (2)
Debt secured by a Lien encumbering any Property acquired by such specified
Person, which Debt was not incurred in anticipation of, and was outstanding
prior to, such merger, consolidation or acquisition.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of the
covenants described under "--Certain Covenants--Transactions with Affiliates"
and "--Limitation on Asset Dispositions" and the definition of
"Telecommunications/IS Assets" only, "Affiliate" shall also mean any
beneficial owner of shares representing 10% or more of the total voting power
of the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"Asset Disposition" means any transfer, conveyance, sale, lease, issuance or
other disposition by the Company or any Restricted Subsidiary in one or more
related transactions (including a consolidation or merger or other sale of any
such Restricted Subsidiary with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary of the
Company, but excluding a disposition by a Restricted Subsidiary to the Company
or a Restricted Subsidiary or by the Company to a Restricted Subsidiary) of:
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(1) shares of Capital Stock or other ownership interests of a Restricted
Subsidiary (other than as permitted by clause (5), (6), (7) or (9) of
the covenant described under "--Certain Covenants--Limitation on
Issuance and Sales of Capital Stock of Restricted Subsidiaries"),
(2) substantially all of the assets of the Company or any Restricted
Subsidiary representing a division or line of business or
(3) other Property of the Company or any Restricted Subsidiary outside of
the ordinary course of business (excluding any transfer, conveyance,
sale, lease or other disposition of equipment that is obsolete or no
longer used by or useful to the Company, provided that the Company has
delivered to the Trustee an Officers' Certificate stating that such
criteria are satisfied);
provided in each case that the aggregate consideration for such transfer,
conveyance, sale, lease or other disposition is equal to $5 million or more in
any 12-month period.
The following shall not be Asset Dispositions:
(1) Permitted Telecommunications Capital Asset Dispositions that comply
with clause (1) of the first paragraph under "--Certain Covenants--
Limitation on Asset Dispositions";
(2) when used with respect to the Company, any Asset Disposition permitted
pursuant to "--Mergers, Consolidations and Certain Sales of Assets"
which constitutes a disposition of all or substantially all of the
assets of the Company and the Restricted Subsidiaries taken as a whole;
(3) Receivables sales constituting Debt under Qualified Receivable
Facilities permitted to be Incurred pursuant to "--Certain Covenants--
Limitation on Consolidated Debt"; and
(4) any disposition that constitutes a Permitted Investment or a Restricted
Payment permitted by the covenant described under "--Certain
Covenants--Limitation on Restricted Payments."
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount
of rent required to be paid by such Person under such lease during the
remaining term thereof (including any period for which such lease has been
extended) as determined in accordance with generally accepted accounting
principles, discounted from the last date of such remaining term to the date
of determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to
be paid under any such lease for any such period shall be the aggregate amount
of rent payable by the lessee with respect to such period after excluding
amounts required to be paid on account of insurance, taxes, assessments,
utility, operating and labor costs and similar charges. In the case of any
lease which is terminable by the lessee upon the payment of penalty, such net
amount shall also include the lesser of the amount of such penalty (in which
case no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated) or the rent
which would otherwise be required to be paid if such lease is not so
terminated. "Attributable Value" means, as to a Capital Lease Obligation, the
principal amount thereof.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amount under a lease of (or other Debt arrangements conveying
the right to use) Property of such Person which is required to be classified
and accounted for as a capital lease or a liability on the face of a balance
sheet of such Person in accordance with generally accepted accounting
principles (a "Capital Lease"). The stated maturity of such obligation shall
be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty. The principal amount of such obligation
shall be the capitalized amount thereof that would appear on the face of a
balance sheet of such Person in accordance with generally accepted accounting
principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether
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general or limited, of such Person and any rights (other than debt securities
convertible or exchangeable into an equity interest), warrants or options to
acquire an equity interest in such Person.
"Cash Equivalents" means:
(1) Government Securities maturing, or subject to tender at the option of
the holder thereof, within two years after the date of acquisition
thereof;
(2) time deposits and certificates of deposit of any commercial bank
organized in the United States having capital and surplus in excess of
$500 million or a commercial bank organized under the law of any other
country that is a member of the OECD having total assets in excess of
$500 million (or its foreign currency equivalent at the time) with a
maturity date not more than one year from the date of acquisition;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with (A) any bank meeting the qualifications specified in
clause (2) above or (B) any primary government securities dealer
reporting to the Market Reports Division of the Federal Reserve Bank
of New York;
(4) direct obligations issued by any state of the United States of America
or any political subdivision of any such state or any public
instrumentality thereof maturing, or subject to tender at the option
of the holder thereof, within 90 days after the date of acquisition
thereof, provided that, at the time of acquisition, the long-term debt
of such state, political subdivision or public instrumentality has a
rating of A (or higher) from S&P or A-2 (or higher) from Moody's (or,
if at any time neither S&P nor Moody's shall be rating such
obligations, then an equivalent rating from such other nationally
recognized rating service acceptable to the Trustee);
(5) commercial paper issued by the parent corporation of any commercial
bank organized in the United States having capital and surplus in
excess of $500 million or a commercial bank organized under the laws
of any other country that is a member of the OECD having total assets
in excess of $500 million (or its foreign currency equivalent at the
time), and commercial paper issued by others having one of the two
highest ratings obtainable from either S&P or Moody's (or, if at any
time neither S&P nor Moody's shall be rating such obligations, then
from such other nationally recognized rating service acceptable to the
Trustee) and in each case maturing within one year after the date of
acquisition;
(6) overnight bank deposits and bankers' acceptances at any commercial
bank organized in the United States having capital and surplus in
excess of $500 million or a commercial bank organized under the laws
of any other country that is a member of the OECD having total assets
in excess of $500 million (or its foreign currency equivalent at the
time);
(7) deposits available for withdrawal on demand with a commercial bank
organized in the United States having capital and surplus in excess of
$500 million or a commercial bank organized under the laws of any
other country that is a member of the OECD having total assets in
excess of $500 million (or its foreign currency equivalent at the
time); and
(8) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (1) through (7).
"Change of Control" has the meaning set forth under "--Certain Covenants--
Change of Control Triggering Event" above.
"Change of Control Triggering Event" has the meaning set forth under
"--Certain Covenants--Change of Control Triggering Event" above.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
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"Consolidated Capital Ratio" means as of the date of determination the ratio
of (1) the aggregate amount of Debt of the Company and its Restricted
Subsidiaries on a consolidated basis as at the date of determination to (2)
the sum of:
(A) $2.024 billion,
(B) the aggregate net proceeds to the Company from the issuance or sale of
any Capital Stock (including Preferred Stock) of the Company other
than Disqualified Stock subsequent to the Measurement Date,
(C) the aggregate net proceeds from the issuance or sale of Debt of the
Company or any Restricted Subsidiary subsequent to the Measurement
Date convertible or exchangeable into Capital Stock of the Company
other than Disqualified Stock, in each case upon conversion or
exchange thereof into Capital Stock of the Company subsequent to the
Measurement Date and
(D) the after-tax gain on the sale, subsequent to the Measurement Date, of
Special Assets to the extent such Special Assets have been sold for
cash, Cash Equivalents, Telecommunications/IS Assets or the assumption
of Debt of the Company or any Restricted Subsidiary (other than Debt
that is subordinated to the Notes or any applicable Restricted
Subsidiary Guarantee) and release of the Company and all Restricted
Subsidiaries from all liability on the Debt assumed.
However, for purposes of calculation of the Consolidated Capital Ratio, the
net proceeds from the issuance or sale of Capital Stock or Debt described in
clause (B) or (C) above shall not be included to the extent (X) such proceeds
have been utilized to make a Permitted Investment under clause (9) of the
definition thereof or a Restricted Payment or (Y) such Capital Stock or Debt
shall have been issued or sold to the Company, a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any
such Subsidiary for the benefit of their employees.
"Consolidated Cash Flow Available for Fixed Charges" for any period means
the Consolidated Net Income of the Company and its Restricted Subsidiaries for
such period increased by the sum of (to the extent reducing Consolidated Net
Income for such period):
(1) Consolidated Interest Expense of the Company and its Restricted
Subsidiaries for such period, plus
(2) Consolidated Income Tax Expense of the Company and its Restricted
Subsidiaries for such period, plus
(3) consolidated depreciation and amortization expense and any other non-
cash items (other than any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenditures in any
future period);
however, there shall be excluded therefrom the Consolidated Cash Flow
Available for Fixed Charges (if positive) of any Restricted Subsidiary
(calculated separately for such Restricted Subsidiary in the same manner as
provided above for the Company) that is subject to a restriction which
prevents the payment of dividends or the making of distributions to the
Company or another Restricted Subsidiary to the extent of such restrictions.
"Consolidated Income Tax Expense" for any period means the aggregate amounts
of the provisions for income taxes of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" for any period means the interest expense
included in a consolidated income statement (excluding interest income) of the
Company and its Restricted Subsidiaries for such period in accordance with
generally accepted accounting principles, including without limitation or
duplication (or, to the extent not so included, with the addition of):
(1) the amortization of Debt discounts and issuance costs, including
commitment fees;
(2) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities;
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(3) net costs with respect to interest rate swap or similar agreements or
foreign currency hedge, exchange or similar agreements (including
fees);
(4) Preferred Stock Dividends (other than dividends paid in shares of
Preferred Stock that is not Disqualified Stock) declared and paid or
payable;
(5) accrued Disqualified Stock Dividends, whether or not declared or paid;
(6) interest on Debt guaranteed by the Company and its Restricted
Subsidiaries;
(7) the portion of any Capital Lease Obligation or Sale and Leaseback
Transaction paid during such period that is allocable to interest
expense;
(8) interest Incurred in connection with investments in discontinued
operations; and
(9) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company or a
Restricted Subsidiary) in connection with Debt Incurred by such plan
or trust.
"Consolidated Net Income" for any period means the net income (or loss) of
the Company and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting
principles; provided that there shall be excluded therefrom:
(1) for purposes of the covenant described under "--Certain Covenants--
Limitation on Restricted Payments" only, the net income (or loss) of
any Person acquired by the Company or a Restricted Subsidiary in a
pooling-of-interests transaction for any period prior to the date of
such transaction;
(2) the net income (or loss) of any Person that is not a Restricted
Subsidiary except to the extent of the amount of dividends or other
distributions actually paid to the Company or a Restricted Subsidiary
by such Person during such period (except, for purposes of the covenant
described under "--Certain Covenants--Limitation on Restricted
Payments" only, to the extent such dividends or distributions have been
subtracted from the calculation of the amount of Investments to support
the actual making of Investments);
(3) gains or losses realized upon the sale or other disposition of any
Property of the Company or its Restricted Subsidiaries that is not sold
or disposed of in the ordinary course of business (it being understood
that Permitted Telecommunications Capital Asset Dispositions shall be
considered to be in the ordinary course of business);
(4) gains or losses realized upon the sale or other disposition of any
Special Assets;
(5) all extraordinary gains and extraordinary losses, determined in
accordance with generally accepted accounting principles;
(6) the cumulative effect of changes in accounting principles;
(7) non-cash gains or losses resulting from fluctuations in currency
exchange rates;
(8) any non-cash expense related to the issuance to employees or directors
of the Company or any Restricted Subsidiary of (A) options to purchase
Capital Stock of the Company or such Restricted Subsidiary or (B) other
compensatory rights; provided, in either case, that such options or
rights, by their terms can be redeemed at the option of the holder of
such option or right only for Capital Stock; and
(9) with respect to a Restricted Subsidiary that is not a Wholly Owned
Subsidiary any aggregate net income (or loss) in excess of the
Company's or any Restricted Subsidiary's pro rata share of the net
income (or loss) of such Restricted Subsidiary that is not a Wholly
Owned Subsidiary; provided further that there shall further be excluded
therefrom the net income (but not net loss) of any Restricted
Subsidiary that is subject to a restriction which prevents the payment
of dividends or the making of distributions to the Company or another
Restricted Subsidiary to the extent of such restriction.
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"Consolidated Net Worth" of any Person means the stockholders' equity of
such Person, determined on a consolidated basis in accordance with generally
accepted accounting principles, less amounts attributable to Disqualified
Stock of such Person.
"Consolidated Tangible Assets" of any Person means the total amount of
assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting principles would be included on a
consolidated balance sheet of such Person and its Subsidiaries after deducting
therefrom all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each case under
generally accepted accounting principles would be included on such
consolidated balance sheet.
"Credit Facilities" means one or more credit agreements, loan agreements or
similar facilities, secured or unsecured, providing for revolving credit
loans, term loans and/or letters of credit, including any Qualified Receivable
Facility, entered into from time to time by the Company and its Restricted
Subsidiaries, and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as the
same may be amended, supplemented, modified, restated or replaced from time to
time.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or
not contingent:
(1) every obligation of such Person for money borrowed;
(2) every obligation of such Person evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in
connection with the acquisition of Property;
(3) every reimbursement obligation of such Person with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of such Person;
(4) every obligation of such Person issued or assumed as the deferred
purchase price of Property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business);
(5) every Capital Lease Obligation of such Person and all Attributable
Value in respect of Sale and Leaseback Transactions entered into by
such Person;
(6) all obligations to redeem or repurchase Disqualified Stock issued by
such Person;
(7) the liquidation preference of any Preferred Stock (other than
Disqualified Stock, which is covered by the preceding clause (6))
issued by any Restricted Subsidiary of such Person;
(8) every obligation under Interest Rate or Currency Protection Agreements
of such Person; and
(9) every obligation of the type referred to in clauses (1) through (8) of
another Person and all dividends of another Person the payment of
which, in either case, such Person has Guaranteed. The "amount" or
"principal amount" of Debt at any time of determination as used herein
represented by (A) any Debt issued at a price that is less than the
principal amount at maturity thereof, shall be, except as otherwise
set forth herein, the Accreted Value of such Debt at such time or (B)
in the case of any Receivables sale constituting Debt, the amount of
the unrecovered purchase price (that is, the amount paid for
Receivables that has not been actually recovered from the collection
of such Receivables) paid by the purchaser (other than the Company or
a Wholly Owned Restricted Subsidiary of the Company) thereof. The
amount of Debt represented by an obligation under an Interest Rate or
Currency Protection Agreement shall be equal to (X) zero if such
obligation has been Incurred pursuant to clause (10) of paragraph (b)
of the covenant described under "--Certain Covenants--Limitation on
Consolidated Debt" or (Y) the notional amount of such obligation if
not Incurred pursuant to such clause.
"Default" means any event, act or condition the occurrence of which is, or
after notice or the passage of time or both would be, an Event of Default.
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"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final Stated Maturity of the Notes;
provided, however, that any Preferred Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require the Company to repurchase or redeem such Preferred Stock upon the
occurrence of a change of control occurring prior to the final Stated Maturity
of the Notes shall not constitute Disqualified Stock if the change of control
provisions applicable to such Preferred Stock are no more favorable to the
holders of such Preferred Stock than the provisions applicable to the Notes
contained in the covenant described under "--Certain Covenants--Change of
Control Triggering Event" and such Preferred Stock specifically provides that
the Company will not repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such Notes as are required to
be repurchased pursuant to the covenant described under "--Certain Covenants--
Change of Control Triggering Event."
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Restricted Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the
maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) applicable to the Company for the period during which such
dividends were paid.
"Eligible Receivables" means, at any time, Receivables of the Company and
its Restricted Subsidiaries, as evidenced on the most recent quarterly
consolidated balance sheet of the Company as at a date at least 45 days prior
to such time, arising in the ordinary course of business of the Company or any
Restricted Subsidiary.
"Event of Default" has the meaning set forth under "--Events of Default"
below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or any
successor act), and the rules and regulations thereunder (or respective
successors thereto).
"Fair Market Value" means, with respect to any Property, the price that
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under
pressure or compulsion to complete the transaction. Unless otherwise specified
in the Indenture, Fair Market Value shall be determined by the board of
directors of the Company acting in good faith and shall be evidenced by a
resolution of the board of directors of the Company delivered to the Trustee.
"Government Securities" means direct obligations of, or obligations fully
and unconditionally guaranteed or insured by, the United States of America or
any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option (unless, for purposes of
the definition of "Cash Equivalents" only, the obligations are redeemable or
callable at a price not less than the purchase price paid by the Company or
the applicable Restricted Subsidiary, together with all accrued and unpaid
interest (if any) on such Government Securities).
"Guarantee" by any Person means any obligation, direct or indirect,
contingent or otherwise, of such Person guaranteeing, or having the economic
effect of guaranteeing, any Debt of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and any obligation, direct or
indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such Debt, including
any such obligations arising by virtue of partnership arrangements or
by agreements to keep-well;
(2) to purchase Property or services or to take-or-pay for the purpose of
assuring the holder of such Debt of the payment of such Debt;
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(3) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable
the primary obligor to pay such Debt; or
(4) entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof, in whole or in part
(and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guarantee by any
Person shall not include endorsements by such Person for collection or
deposit, in either case, in the ordinary course of business.
"Guarantor" means a Restricted Subsidiary of the Company that has executed a
Restricted Subsidiary Guarantee.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other
obligation including the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on
the balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable"
and "Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that
results in an obligation of such Person that exists at such time becoming Debt
shall not be deemed an Incurrence of such Debt and that neither the accrual of
interest nor the accretion of original issue discount shall be deemed an
Incurrence of Debt. Debt otherwise incurred by a Person before it becomes a
Subsidiary of the Company shall be deemed to have been Incurred at the time at
which it becomes a Subsidiary.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement
or arrangement (including caps, floors, collars and similar agreements)
relating to, or the value of which is dependent upon, interest rates or
currency exchange rates or indices.
"Invested Capital" means the sum of:
(1) $500 million;
(2) the aggregate net proceeds received by the Company from the issuance or
sale of any Capital Stock, including Preferred Stock, of the Company
but excluding Disqualified Stock, subsequent to the Measurement Date;
and
(3) the aggregate net proceeds from the issuance or sale of Debt of the
Company or any Restricted Subsidiary subsequent to the Measurement Date
convertible or exchangeable into Capital Stock of the Company other
than Disqualified Stock, in each case upon conversion or exchange
thereof into Capital Stock of the Company subsequent to the Measurement
Date.
However, the net proceeds from the issuance or sale of Capital Stock or Debt
described in clause (2) or (3) shall be excluded from any computation of
Invested Capital to the extent:
(A) utilized to make a Restricted Payment; or
(B) such Capital Stock or Debt shall have been issued or sold to the
Company, a Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any such Subsidiary for the
benefit of their employees.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of
cash or other Property to others or payments for Property or services for the
account or use of others, or otherwise) to, purchase, redemption, retirement
or acquisition of Capital Stock, bonds, notes, debentures or other securities
or evidence of Debt issued by, or Incurrence of, or payment on, a Guarantee of
any obligation of, any other Person; provided that Investments shall exclude
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commercially reasonable extensions of trade credit. The amount, as of any date
of determination, of any Investment shall be the original cost of such
Investment, plus the cost of all additions, as of such date, thereto and minus
the amount, as of such date, of any portion of such Investment repaid to such
Person in cash as a repayment of principal or a return of capital, as the case
may be (except to the extent such repaid amount has been included in
Consolidated Net Income to support the actual making of Restricted Payments),
but without any other adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment. In
determining the amount of any Investment involving a transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such transfer.
"Issue Date" means the date on which the Notes are initially issued.
"Issue Date Rating" means the respective ratings assigned to the Notes by
the Rating Agencies on the Issue Date.
"Joint Venture" means a Person in which the Company or a Restricted
Subsidiary holds not more than 50% of the shares of Voting Stock.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest,
lien, charge, easement (other than any easement not materially impairing
usefulness), encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with respect
to such Property (including any Capital Lease Obligation, conditional sale or
other title retention agreement having substantially the same economic effect
as any of the foregoing and any Sale and Leaseback Transaction). For purposes
of this definition the sale, lease, conveyance or other transfer by the
Company or any of its Subsidiaries of, including the grant of indefeasible
rights of use or equivalent arrangements with respect to, dark or lit
communications fiber capacity or communications conduit shall not constitute a
Lien.
"Measurement Date" means April 28, 1998, the date the 9 1/8% Senior Notes
were originally issued.
"Moody's" means Moody's Investors Service, Inc. or, if Moody's Investors
Service, Inc. shall cease rating debt securities having a maturity at original
issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, however,
that if Moody's Investors Service, Inc. ceases rating debt securities having a
maturity at original issuance of at least one year and its ratings business
with respect thereto shall not have been transferred to any successor Person,
then "Moody's" shall mean any other national recognized rating agency (other
than S&P) that rates debt securities having a maturity at original issuance of
at least one year and that shall have been designated by the Trustee by a
written notice given to the Company.
"Net Available Proceeds" from any Asset Disposition by any Person means cash
or cash equivalents received (including amounts received by way of sale or
discounting of any note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiror of Debt or other obligations relating to such Property) therefrom by
such Person, net of:
(1) all legal, title and recording taxes, expenses and commissions and
other fees and expenses (including appraisals, brokerage commissions
and investment banking fees) Incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a
liability as a consequence of such Asset Disposition;
(2) all payments made by such Person or its Subsidiaries on any Debt which
is secured by such Property in accordance with the terms of any Lien
upon or with respect to such Property or which must by the terms of
such Lien, or in order to obtain a necessary consent to such Asset
Disposition or by applicable law, be repaid out of the proceeds from
such Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or Joint Ventures of such Person as a
result of such Asset Disposition; and
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(4) appropriate amounts to be provided by such Person or any Subsidiary
thereof, as the case may be, as a reserve in accordance with generally
accepted accounting principles against any liabilities associated with
such Property and retained by such Person or any Subsidiary thereof, as
the case may be, after such Asset Disposition, including liabilities
under any indemnification obligations and severance and other employee
termination costs associated with such Asset Disposition, in each case
as determined by the board of directors of such Person, in its
reasonable good faith judgment evidenced by a resolution of the board
of directors filed with the Trustee; provided, however, that any
reduction in such reserve within twelve months following the
consummation of such Asset Disposition will be, for all purposes of the
Indenture and the Notes, treated as a new Asset Disposition at the time
of such reduction with Net Available Proceeds equal to the amount of
such reduction; provided further, however, that, in the event that any
consideration for a transaction (which would otherwise constitute Net
Available Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, at
such time as such portion of the consideration is released to such
Person or its Restricted Subsidiary from escrow, such portion shall be
treated for all purposes of the Indenture and the Notes as a new Asset
Disposition at the time of such release from escrow with Net Available
Proceeds equal to the amount of such portion of consideration released
from escrow.
"9 1/8% Senior Notes" means the Company's 9 1/8% Senior Notes Due 2008 in an
aggregate principal amount not to exceed $2,000,000,000, originally issued on
April 28, 1998.
"9 1/8% Senior Notes Indenture" means the Indenture dated as of April 28,
1998, as amended, supplemented or modified from time to time, between the
Company and IBJ Schroder Bank & Trust Company, as trustee, relating to the 9
1/8% Senior Notes.
"Offer to Purchase" means a written offer (the "Offer") sent by the Company
by first-class mail, postage prepaid, to each holder of Notes at its address
appearing in the Note Register on the date of the Offer offering to purchase
up to the principal amount at maturity of Notes specified in such Offer at the
purchase price specified in such Offer (as determined pursuant to the
Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not
less than 30 days or more than 60 days after the date of such Offer and a
settlement date (the "Purchase Date") for purchase of Notes within five
Business Days after the Expiration Date. The Company shall notify the Trustee
at least 15 Business Days (or such shorter period as is acceptable to the
Trustee) prior to the mailing of the Offer of the Company's obligation to make
an Offer to Purchase, and the Offer shall be mailed by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company. The Offer shall contain information concerning the business of the
Company and its Subsidiaries which the Company in good faith believes will
enable such holders to make an informed decision with respect to the Offer to
Purchase, which at a minimum will include:
(1) the most recent annual and quarterly financial statements and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the documents required to be filed
with the Trustee pursuant to the Indenture (which requirements may be
satisfied by delivery of such documents together with the Offer);
(2) a description of material developments in the Company's business
subsequent to the date of the latest of such financial statements
referred to in clause (1) (including a description of the events
requiring the Company to make the Offer to Purchase);
(3) if applicable, appropriate pro forma financial information concerning
the Offer to Purchase and the events requiring the Company to make the
Offer to Purchase; and
(4) any other information required by applicable law to be included
therein.
The Offer shall contain all instructions and materials necessary to enable
such holders to tender Notes pursuant to the Offer to Purchase. The Offer
shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase is
being made;
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(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount at maturity of the outstanding Notes
offered to be purchased by the Company pursuant to the Offer to
Purchase (including, if less than 100%, the manner by which such has
been determined pursuant to the section of the Indenture requiring the
Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for $1,000 aggregate
principal amount at maturity of Notes accepted for payment (as
specified pursuant to the Indenture) (the "Purchase Price");
(5) that the holder may tender all or any portion of the Notes registered
in the name of such holder and that any portion of a Note tendered must
be tendered in an integral multiple of $1,000 principal amount at
maturity;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that any Notes not tendered or tendered but not purchased by the
Company will continue to accrue or accrete interest, as the case may
be;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer
to Purchase and that interest thereon, if any, shall cease to accrue or
accrete, as the case may be, on and after the Purchase Date;
(9) that each holder electing to tender a Note pursuant to the Offer to
Purchase will be required to surrender such Note at the place or places
specified in the Offer prior to the close of business on the Expiration
Date (such Note being, if the Company or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
holder thereof or his attorney duly authorized in writing);
(10) that holders will be entitled to withdraw all or any portion of Notes
tendered if the Company (or the Paying Agent) receives, not later than
the close of business on the Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder,
the principal amount at maturity of the Note the holder tendered, the
certificate number of the Note the holder tendered and a statement
that such holder is withdrawing all or a portion of his tender;
(11) that (A) if Notes in an aggregate principal amount at maturity less
than or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall
purchase all such Notes and (B) if Notes in an aggregate principal
amount at maturity in excess of the Purchase Amount are tendered and
not withdrawn pursuant to the Offer to Purchase, the Company shall
purchase Notes having an aggregate principal amount at maturity equal
to the Purchase Amount on a pro rata basis (with such adjustments as
may be deemed appropriate so that only Notes in denominations of
$1,000 principal amount at maturity or integral multiples thereof
shall be purchased); and
(12) that in the case of any holder whose Note is purchased only in part,
the Company shall execute, and the Trustee shall authenticate and
deliver to the holder of such Note without service charge, a new Note
or Notes, of any authorized denomination as requested by such holder,
in an aggregate principal amount at maturity equal to and in exchange
for the unpurchased portion of the Note so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of the
board of directors of the Company, a Vice Chairman of the board of directors
of the Company, the President or a Vice President, and by the Chief Financial
Officer, the Chief Accounting Officer, the Treasurer, an Assistant Treasurer,
the Controller, the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee, which shall comply with the Indenture.
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"Opinion of Counsel" means an opinion of counsel acceptable to the Trustee
(who may be counsel to the Company, including an employee of the Company).
"OECD" shall mean the Organization for Economic Cooperation and Development.
"Permitted Holders" means the members of the Company's Board of Directors on
the Measurement Date and their respective estates, spouses, ancestors, and
lineal descendants, the legal representatives of any of the foregoing and the
trustees of any bona fide trusts of which the foregoing are the sole
beneficiaries or the grantors, or any Person of which the foregoing
"beneficially owns" (as defined in Rule 13d-3 under the Exchange Act) at least
66 2/3% of the total voting power of the Voting Stock of such Person.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and not for purposes of
speculation and which, in the case of an interest rate agreement, shall have a
notional amount no greater than the principal amount at maturity due with
respect to the Debt being hedged thereby.
"Permitted Investments" means (1) Cash Equivalents; (2) investments in
prepaid expenses; (3) negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (4)
loans, advances or extensions of credit to employees and directors made in the
ordinary course of business and consistent with past practice; (5) obligations
under Permitted Interest Rate or Currency Protection Agreements; (6) bonds,
notes, debentures and other securities received as a result of Asset
Dispositions pursuant to and in compliance with "--Certain Covenants--
Limitation on Asset Dispositions"; (7) Investments in any Person as a result
of which such Person becomes a Restricted Subsidiary; (8) Investments made
prior to the Measurement Date; (9) Investments made after the Measurement Date
in Persons engaged in the Telecommunications/IS Business in an aggregate
amount not to exceed Invested Capital; and (10) additional Investments in an
aggregate amount not to exceed $200 million.
"Permitted Liens" means:
(1) Liens for taxes, assessments, governmental charges, levies or claims
which are not yet delinquent or which are being contested in good faith
by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor;
(2) other Liens incidental to the conduct of the Company's and its
Restricted Subsidiaries' businesses or the ownership of its Property
not securing any Debt, and which do not in the aggregate materially
detract from the value of the Company's and its Restricted
Subsidiaries' Property when taken as a whole, or materially impair the
use thereof in the operation of its business;
(3) Liens, pledges and deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of statutory obligations;
(4) Liens, pledges or deposits made to secure the performance of tenders,
bids, leases, public or statutory obligations, sureties, stays,
appeals, indemnities, performance or other similar bonds and other
obligations of like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money, the
obtaining of advances or credit or the payment of the deferred purchase
price of Property and which do not in the aggregate materially impair
the use of Property in the operation of the business of the Company and
the Restricted Subsidiaries taken as a whole);
(5) zoning restrictions, servitudes, easements, rights-of-way, restrictions
and other similar charges or encumbrances incurred in the ordinary
course of business which, in the aggregate, do not materially detract
from the value of the Property subject thereto or materially interfere
with the ordinary conduct of the business of the Company or its
Restricted Subsidiaries; and
(6) any interest or title of a lessor in the Property subject to any lease
other than a Capital Lease.
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"Permitted Telecommunications Capital Asset Disposition" means the transfer,
conveyance, sale, lease or other disposition of optical fiber and/or conduit
and any related equipment used in a Segment (as defined) of the Company's
communications network that (1) constitute capital assets in accordance with
generally accepted accounting principles and (2) after giving effect to such
disposition, would result in the Company retaining at least either (A) 24
optical fibers per route mile on such Segment as deployed at the time of such
disposition or (B) 12 optical fibers and one empty conduit per route mile on
such Segment as deployed as such time. "Segment" means (X) with respect to the
Company's intercity network, the through-portion of such network between two
local networks (e.g., Omaha to Denver) and (Y) with respect to a local network
of the Company (e.g., Dallas), the entire through-portion of such network,
excluding the spurs which branch off the through-portion.
"Person" means any individual, corporation, company, partnership, joint
venture, limited liability company, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding-up of such Person, to shares
of Capital Stock of any other class of such Person.
"Preferred Stock Dividends" means all dividends with respect to Preferred
Stock of Restricted Subsidiaries held by Persons other than the Company or a
Wholly Owned Restricted Subsidiary. The amount of any such dividend shall be
equal to the quotient of such dividend divided by the difference between one
and the maximum statutory federal income rate (expressed as a decimal number
between 1 and 0) applicable to the issuer of such Preferred Stock for the
period during which such dividends were paid.
"Property" means, with respect to any Person, any interest of such Person in
any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, including Capital Stock in, and other securities of, any other
Person. For purposes of any calculation required pursuant to the Indenture,
the value of any Property shall be its Fair Market Value.
"Proportionate Interest" in any issuance of Capital Stock of a Restricted
Subsidiary means a ratio (1) the numerator of which is the aggregate amount of
Capital Stock of such Restricted Subsidiary beneficially owned by the Company
and the Restricted Subsidiaries and (2) the denominator of which is the
aggregate amount of Capital Stock of such Restricted Subsidiary beneficially
owned by all Persons (excluding, in the case of this clause (2), any
Investment made in connection with such issuance).
"Purchase Money Debt" means Debt (including Acquired Debt and Capital Lease
Obligations, mortgage financings and purchase money obligations) incurred for
the purpose of financing all or any part of the cost of construction,
installation, acquisition, lease, development or improvement by the Company or
any Restricted Subsidiary of any Telecommunications/IS Assets of the Company
or any Restricted Subsidiary and including any related notes, Guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as the same may be amended, supplemented, modified or restated from
time to time.
"Qualified Receivable Facility" means Debt of the Company or any Subsidiary
Incurred from time to time pursuant to either (1) credit facilities secured by
Receivables or (2) Receivables purchase facilities, and including any related
notes, Guarantees, collateral documents, instruments and agreements executed
in connection therewith, as the same may be amended, supplemented, modified or
restated from time to time.
"Rating Agencies" mean Moody's and S&P.
"Rating Date" means the earlier of the date of public notice of the
occurrence of a Change of Control or of the intention of the Company to effect
a Change of Control.
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"Rating Decline" shall be deemed to have occurred if, no later than 90 days
after the Rating Date (which period shall be extended so long as the rating of
the Notes is under publicly announced consideration for possible downgrade by
any of the Rating Agencies), either of the Rating Agencies assigns or
reaffirms a rating to the Notes that is lower than the applicable Issue Date
Rating (or the equivalent thereof). If, prior to the Rating Date, either of
the ratings assigned to the Notes by the Rating Agencies is lower than the
applicable Issue Date Rating, then a Rating Decline will be deemed to have
occurred if such rating is not changed by the 90th day following the Rating
Date. A downgrade within rating categories, as well as between rating
categories, will be considered a Rating Decline.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money and
proceeds and products thereof in each case generated in the ordinary course of
business.
"Restricted Subsidiary" means (1) a Subsidiary of the Company or of a
Restricted Subsidiary that has not been designated or classified as an
Unrestricted Subsidiary pursuant to and in compliance with "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries" and (2) an
Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary
pursuant to such covenant.
"Restricted Subsidiary Guarantee" means a supplemental indenture to the
Indenture in form satisfactory to the Trustee, providing for an unconditional
Guarantee of payment in full of the Accreted Value of, premium, if any, and
interest on the Notes. Any such Restricted Subsidiary Guarantee shall not be
subordinate to any Debt of the Restricted Subsidiary providing the Restricted
Subsidiary Guarantee.
"S&P" means Standard & Poor's Ratings Service or, if Standard & Poor's
Ratings Service shall cease rating debt securities having a maturity at
original issuance of at least one year and such ratings business shall have
been transferred to a successor Person, such successor Person; provided,
however, that if Standard & Poor's Rating Service ceases rating debt
securities having a maturity at original issuance of at least one year and its
ratings business with respect thereto shall not have been transferred to any
successor Person, then "S&P" shall mean any other national recognized rating
agency (other than Moody's) that rates debt securities having a maturity at
original issuance of at least one year and that shall have been designated by
the Trustee by a written notice given to the Company.
"Sale and Leaseback Transaction" of any Person means any direct or indirect
arrangement pursuant to which any Property is sold or transferred by such
Person or a Restricted Subsidiary of such person and is thereafter leased back
from the purchaser or transferee thereof by such Person or one of its
Restricted Subsidiaries. The stated maturity of such arrangement shall be the
date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be
terminated by the lessee without payment of a penalty.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-
X promulgated by the SEC.
"Special Assets" means (1) the Capital Stock or assets of Cable Michigan,
Inc., RCN Corporation, Commonwealth Telephone Enterprises, Inc., KCP, Inc. and
California Private Transportation Company, L.P. (and any intermediate holding
companies or other entities formed solely for the purpose of owning such
Capital Stock or assets) owned, directly or indirectly, by the Company or any
Restricted Subsidiary on the Measurement Date, and (2) any Property, other
than cash, Cash Equivalents and Telecommunications/IS Assets, received as
consideration for the disposition after the Measurement Date of Special Assets
(as contemplated by the first proviso under "--Certain Covenants--Limitation
on Asset Dispositions").
"Stated Maturity" when used with respect to a Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the Accreted Value of such Note or such installment of interest is due
and payable, including pursuant to any mandatory redemption provision (but
excluding any provision
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providing for the repurchase of such Note at the option of the holder thereof
upon the happening of any contingency beyond the control of the Company unless
such contingency has occurred).
"Subordinated Debt" means Debt of the Company (1) that is not secured by any
Lien on or with respect to any Property now owned or acquired after the
Measurement Date and (2) as to which the payment of principal of (and premium,
if any) and interest and other payment obligations in respect of such Debt
shall be subordinate to the prior payment in full in cash of the Notes to at
least the following extent:
(A) no payments of principal of (or premium, if any) or interest on or
otherwise due (including by acceleration or for additional amounts) in
respect of, or repurchases, redemptions or other retirements of, such
Debt (collectively, "payments of such Debt") may be permitted for so
long as any default (after giving effect to any applicable grace
periods) in the payment of principal (or premium, if any) or interest
on the Notes exists, including as a result of acceleration;
(B) in the event that any other Default exists with respect to the Notes,
upon notice by holders of 25% or more in aggregate principal amount of
the Notes to the Trustee, the Trustee shall have the right to give
notice to the Company and the holders of such Debt (or trustees or
agents therefor) of a payment blockage, and thereafter no payments of
such Debt may be made for a period of 179 days from the date of such
notice, provided that not more than one such payment blockage notice
may be given in any consecutive 360-day period, irrespective of the
number of defaults with respect to the Notes during such period;
(C) if payment of such Debt is accelerated when any Notes are outstanding,
no payments of such Debt may be made until three Business Days after
the Trustee receives notice of such acceleration and, thereafter, such
payments may only be made to the extent the terms of such Debt permit
payment at that time; and
(D) such Debt may not (X) provide for payments of principal of such Debt at
the stated maturity thereof or by way of a sinking fund applicable
thereto or by way of any mandatory redemption, defeasance, retirement
or repurchase thereof by the Company (including any redemption,
retirement or repurchase which is contingent upon events or
circumstances but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each
case prior to the final Stated Maturity of the Notes or (Y) permit
redemption or other retirement (including pursuant to an offer to
purchase made by the Company) of such other Debt at the option of the
holder thereof prior to the final Stated Maturity of the Notes, other
than, in the case of clause (X) or (Y), any such payment, redemption or
other retirement (including pursuant to an offer to purchase made by
the Company) which is conditioned upon (a) a change of control of the
Company pursuant to provisions substantially similar to those described
under "--Certain Covenants--Change of Control Triggering Event" (and
which shall provide that such Debt will not be repurchased pursuant to
such provisions prior to the Company's repurchase of the Notes required
to be repurchased by the Company pursuant to the provisions described
under "--Certain Covenants--Change of Control Triggering Event") or (b)
a sale or other disposition of assets pursuant to provisions
substantially similar to those described under "--Certain Covenants--
Limitation on Asset Dispositions" (and which shall provide that such
Debt will not be repurchased pursuant to such provisions prior to the
Company's repurchase of the Notes required to be repurchased by the
Company pursuant to the provision described under "--Certain
Covenants--Limitation on Asset Dispositions").
"Subsidiary" of any Person means (1) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (2) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
"Telecommunications/IS Assets" means (1) any Property (other than cash, cash
equivalents and securities) to be owned by the Company or any Restricted
Subsidiary and used in the Telecommunications/IS Business; (2) for purposes of
the covenants described under "--Certain Covenants--Limitation on Consolidated
Debt" and
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"--Limitation on Liens" only, Capital Stock of any Person; or (3) for all
other purposes of the Indenture, Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of the acquisition of such Capital Stock by
the Company or another Restricted Subsidiary from any Person other than an
Affiliate of the Company; provided, however, that, in the case of clause (2)
or (3), such Person is primarily engaged in the Telecommunications/IS
Business.
"Telecommunications/IS Business" means the business of:
(1) transmitting, or providing services relating to the transmission of,
voice, video or data through owned or leased transmission facilities;
(2) constructing, creating, developing or marketing communications
networks, related network transmission equipment, software and other
devices for use in a communications business;
(3) computer outsourcing, data center management, computer systems
integration, reengineering of computer software for any purpose
(including, without limitation, for the purposes of porting computer
software from one operating environment or computer platform to another
or to address issues commonly referred to as "Year 2000 issues"); or
(4) evaluating, participating or pursuing any other activity or opportunity
that is primarily related to those identified in (1), (2) or (3) above;
provided that the determination of what constitutes a Telecommunications/IS
Business shall be made in good faith by the board of directors of the Company.
"Unrestricted Subsidiary" means (1) 91 Holding Corp. (the subsidiary that
holds indirectly the Company's interests in the SR91 tollroad); (2) any
Subsidiary of an Unrestricted Subsidiary; and (3) any Subsidiary of the
Company designated as such pursuant to and in compliance with "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries" and not
thereafter redesignated as a Restricted Subsidiary as permitted pursuant
thereto.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only for
so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Voting Stock or other ownership interests (other than
directors' qualifying shares) of which shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture:
(1) failure to pay Accreted Value of (or premium, if any, on) any Note when
due;
(2) failure to pay any interest on any Note when due, continued for 30
days;
(3) default in the payment of principal and interest on Notes required to
be purchased pursuant to an Offer to Purchase as described under "--
Certain Covenants--Change of Control Triggering Event" when due and
payable;
(4) failure to perform or comply with the provisions described under "--
Mergers, Consolidations and Certain Sales of Assets" and "--Certain
Covenants--Limitation on Asset Dispositions";
(5) failure to perform any other covenant or agreement of the Company under
the Indenture or the Notes continued for 60 days after written notice
to the Company by the Trustee or holders of at least 25% in aggregate
principal amount at maturity of the outstanding Notes;
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(6) default under the terms of any instrument evidencing or securing Debt
of the Company or any Restricted Subsidiary having an outstanding
principal amount of not less than $25 million or its foreign currency
equivalent at the time individually or in the aggregate which default
results in the acceleration of the payment of such indebtedness or
constitutes the failure to pay such indebtedness when due (after
expiration of any applicable grace period);
(7) the rendering of a judgment or judgments against the Company or any
Restricted Subsidiary in an aggregate amount in excess of $25 million
or its foreign currency equivalent at the time and shall not be waived,
satisfied or discharged for any period of 45 consecutive days during
which a stay of enforcement shall not be in effect;
(8) any Restricted Subsidiary Guarantee ceases to be in full force and
effect (other than in accordance with the terms of such Subsidiary
Guaranty) or any Guarantor denies or disaffirms its obligations under
its Restricted Subsidiary Guarantee; and
(9) certain events of bankruptcy, insolvency or reorganization affecting
the Company or any Significant Subsidiary.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will not be under any obligation to exercise any of its rights or powers under
the Indenture at the request or direction of any of the holders of Notes,
unless such holders shall have offered to the Trustee reasonable indemnity.
Subject to such provisions for the indemnification of the Trustee, the holders
of a majority in aggregate principal amount at maturity of the outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee.
If any Event of Default (other than an Event of Default described in clause
(9) above with respect to the Company) shall occur and be continuing, either
the Trustee or the holders of at least 25% in aggregate principal amount at
maturity of the outstanding Notes may declare the Accreted Value, premium, if
any, and accrued and unpaid interest, if any, in respect of the Notes to be
immediately due and payable; provided, however, that after such acceleration,
but before a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount at maturity of the outstanding Notes
may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated Accreted Value,
have been cured or waived as provided in the Indenture. If an Event of Default
specified in clause (9) above occurs with respect to the Company, the Accreted
Value, premium, if any, and accrued and unpaid interest, if any, in respect of
the Notes will ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any holder. For
information as to waiver of defaults, see "--Amendment, Supplement and
Waiver."
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless also the holders of at least 25% in aggregate
principal amount at maturity of the outstanding Notes shall have made written
request and offered reasonable indemnity to the Trustee to institute such
proceeding as trustee, and the Trustee shall not have received from the
holders of a majority in aggregate principal amount at maturity of the
outstanding Notes a direction inconsistent with such request and shall have
failed to institute such proceeding within 60 days. However, such limitations
do not apply to a suit instituted by a holder of a Note for enforcement of
payment of the Accreted Value of and premium, if any, or interest on such Note
on or after the respective due dates expressed in such Note.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become
an Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also will be required to
deliver to the Trustee annually a statement as to the performance by the
Company of certain of its obligations under the Indenture and as to any
default in such performance.
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Amendment, Supplement and Waiver
The Company and the Trustee may, at any time and from time to time, without
notice to or consent of any holders of Notes, enter into one or more
indentures supplemental to the Indenture:
(1) to evidence the succession of another Person to the Company and the
assumption by such successor of the covenants of the Company in the
Indenture and the Notes;
(2) to add to the covenants of the Company, for the benefit of the holders,
or to surrender any right or power conferred upon the Company by the
Indenture;
(3) to add any additional Events of Defaults;
(4) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(5) to evidence and provide for the acceptance of appointment under the
Indenture of a successor Trustee;
(6) to secure the Notes;
(7) to comply with the Trust Indenture Act or the Securities Act (including
Regulation S promulgated thereunder);
(8) to add additional Guarantees with respect to the Notes or to release
Guarantors from Restricted Subsidiary Guarantees as provided by the
terms of the Indenture; or
(9) to cure any ambiguity in the Indenture, to correct or supplement any
provision in the Indenture which may be inconsistent with any other
provision therein or to add any other provision with respect to matters
or questions arising under the Indenture;
provided that such actions shall not adversely affect the interests of the
holders in any material respect.
With the consent of the holders of not less than a majority in principal
amount at maturity of the outstanding Notes, the Company and the Trustee may
enter into one or more indentures supplemental to the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or modifying in any manner the rights
of the holders, provided that no such supplemental indenture shall, without
the consent of the holder of each outstanding Note:
(1) change the Stated Maturity of the Accreted Value of, or any installment
of interest on, any Note, or reduce the Accreted Value amount thereof
or the interest thereon that would be due and payable upon the Stated
Maturity thereof, or change the place of payment where, or the coin or
currency in which, any Note or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof;
(2) reduce the percentage in principal amount at maturity of the
outstanding Notes, the consent of whose holders is necessary for any
such supplemental Indenture or required for any waiver of compliance
with certain provisions of the Indenture or certain Defaults
thereunder;
(3) subordinate in right of payment, or otherwise subordinate, the Notes to
any other Debt;
(4) except as otherwise required by the Indenture, release any security
interest that may have been granted in favor of the holders of the
Notes;
(5) reduce the premium payable upon the redemption of any Note nor change
the time at which any Note may be redeemed, as described under "--
Optional Redemption";
(6) reduce the premium payable upon a Change of Control Triggering Event
or, at any time after a Change of Control Triggering Event has
occurred, change the time at which the Offer to Purchase relating
thereto must be made or at which the Notes must be repurchased pursuant
to such Offer to Purchase;
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(7) at any time after the Company is obligated to make an Offer to Purchase
with the Net Available Proceeds from Asset Dispositions, change the
time at which such Offer to Purchase must be made or at which the Notes
must be repurchased pursuant thereto;
(8) make any change in any Restricted Subsidiary Guarantee that would
adversely affect the holders of the Notes;
(9) modify any provision of the Indenture relating to the calculation of
Accreted Value with respect to the Notes; or
(10) modify any provision of this paragraph (except to increase any
percentage set forth herein).
The holders of not less than a majority in principal amount at maturity of
the outstanding Notes may, on behalf of the holders of all the Notes, waive
any past Default under the Indenture and its consequences, except Default (1)
in the payment of the Accreted Value of (or premium, if any) or interest on
any Note, or (2) in respect of a covenant or provision hereof which under the
proviso to the prior paragraph cannot be modified or amended without the
consent of the holder of each outstanding Note affected.
Satisfaction and Discharge of the Indenture, Defeasance
The Company may terminate its obligations under the Indenture when:
(1) either (A) all outstanding Notes have been delivered to the Trustee for
cancellation or (B) all such Notes not theretofore delivered to the
Trustee for cancellation have become due and payable, will become due
and payable within one year or are to be called for redemption within
one year under irrevocable arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name and at
the expense of the Company, and the Company has irrevocably deposited
or caused to deposited with the Trustee funds in an amount sufficient
to pay and discharge the entire indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for Accreted
Value of (or premium, if any, on), and interest on, the Notes;
(2) the Company has paid or caused to be paid all other sums payable by the
Company under the Indenture; and
(3) the Company has delivered an Officers' Certificate and an Opinion of
Counsel relating to compliance with the conditions set forth in the
Indenture.
The Company, at its election, shall:
(1) be deemed to have paid and discharged its debt on the Notes and the
Indenture shall cease to be of further effect as to all outstanding
Notes (except as to (A) rights of registration of transfer,
substitution and exchange of Notes and the Company's right of optional
redemption, (B) rights of holders to receive payment of Accreted Value
of, premium, if any, and interest on such Notes (but not the Purchase
Price referred to under "--Certain Covenants--Change of Control
Triggering Event" or under "--Limitation on Asset Dispositions") and
any rights of the holders with respect to such amount, (C) the rights,
obligations and immunities of the Trustee under the Indenture and (D)
certain other specified provisions in the Indenture), or
(2) cease to be under any obligation to comply with certain restrictive
covenants, including those described under "--Certain Covenants," and
terminate the operation of certain Events of Default, after the
irrevocable deposit by the Company with the Trustee, in trust for the
benefit of the holders of Notes, at any time prior to the maturity of
the Notes, of (A) money in an amount, (B) Government Securities which
through the payment of interest and principal will provide, not later
than one day before the due date of payment in respect of the Notes,
money in an amount, or (C) a combination thereof, sufficient to pay and
discharge the Accreted Value of (and premium, if any, on), and interest
on, the Notes then outstanding on the dates on which any such payments
are due in accordance with the terms of the Indenture and of the Notes.
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Such defeasance or covenant defeasance shall be deemed to occur only if
certain conditions are satisfied, including among other things, delivery by
the Company to the Trustee of an Opinion of Counsel acceptable to the Trustee
to the effect that (1) such deposit, defeasance and discharge will not be
deemed, or result in, a taxable event for federal income tax purposes with
respect to the holders, and (2) the Company's deposit will not result in the
trust relating thereto or the Trustee being subject to regulation under the
Investment Company Act of 1940.
Governing Law
The Indenture and the Notes will be governed by the laws of the State of New
York, without reference to principles of conflicts of law.
The Trustee
IBJ Whitehall Bank & Trust Company (formerly known as IBJ Schroder Bank &
Trust Company) is the Trustee under the Indenture. The address of the Trustee
is One State Street, New York, New York 10004.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, solely by reason of its status as
director, officer, employee, incorporator or stockholder of the Company. By
accepting a Note each holder waives and releases all such liability (but only
such liability). The waiver and release are part of the consideration for
issuance of the Notes. Nevertheless, such waiver may not be effective to waive
liabilities under the federal securities laws and it has been the view of the
SEC that such a waiver is against public policy.
Transfer and Exchange
A holder may transfer or exchange Notes in accordance with the Indenture.
The Company, the Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture.
REGISTRATION RIGHTS
Pursuant to the Registration Agreement, the Company has agreed to, at its
cost, (1) not later than 90 days after the Original Notes Closing Date, file a
registration statement (the "Exchange Offer Registration Statement") with the
SEC with respect to a registered offer to exchange the Notes for New Notes
having terms substantially identical in all material respects to the Notes
(except that the New Notes will not contain terms with respect to transfer
restrictions), (2) use its best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act not
later than 150 days after the Original Notes Closing Date and (3) upon the
effectiveness of the Exchange Offer Registration Statement, offer the New
Notes in exchange for surrender of the Original Notes. The Company has agreed
to keep the Exchange Offer open for not less than 30 days (or longer if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the holders of the Original Notes. The New Notes are being offered
under this Prospectus to satisfy these obligations of the Company under the
Registration Agreement. For each Original Note surrendered to the Company
pursuant to the Exchange Offer, the holder of such Original Note will receive
a New Note having a principal amount at maturity equal to that of the
surrendered Original Note.
Based upon interpretations by the staff of the SEC issued to third parties,
the Company believes that the New Notes issued pursuant to the Exchange Offer
in exchange for the Original Notes may be offered for resale, resold and
otherwise transferred by holders of New Notes without complying with the
registration and prospectus delivery requirements of the Securities Act,
provided that:
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(1) the holders acquired the New Notes in the ordinary course of the
holders' business;
(2) the holders are not engaged in, and do not intend to engage in, and
have no arrangement or understanding with any person to participate in,
a distribution of the New Notes;
(3) the holders are not "affiliates" of the Company within the meaning of
Rule 405 under the Securities Act;
(4) the holders are not broker-dealers who acquired Original Notes directly
from the Company; and
(5) the holders are not broker-dealers who acquired Original Notes as a
result of market making or other trading activities.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of those New Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Original Notes where those
New Notes were acquired by the broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting
on the date of this Prospectus and ending on the close of business on the day
that is 180 days following the date of this Prospectus, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
A holder of Original Notes (other than certain specified holders) who wishes
to exchange such Original Notes for New Notes in the Exchange Offer will be
required to represent that any New Notes to be received by it will be acquired
in the ordinary course of its business and that at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any person to participate in the distribution (within the meaning of the
Securities Act) of the New Notes and that it is not an "affiliate" of the
Company, as defined in Rule 405 of the Securities Act, or if it is an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
In the event that:
(1) applicable interpretations of the staff of the SEC do not permit the
Company to effect such an Exchange Offer,
(2) for any other reason the Exchange Offer Registration Statement is not
declared effective within 150 days after the Original Notes Closing
Date or the Exchange Offer is not consummated within 180 days after the
Original Notes Closing Date,
(3) the Initial Purchasers so request with respect to Original Notes not
eligible to be exchanged for New Notes in the Exchange Offer, or
(4) any holder of Original Notes (other than an Initial Purchaser) is not
eligible to participate in the Exchange Offer or does not receive
freely tradable New Notes in the Exchange Offer other than by reason of
such holder being an affiliate of the Company (it being understood that
the requirement that a Participating Broker-Dealer deliver the
prospectus contained in the Exchange Offer Registration Statement in
connection with sales of New Notes shall not result in such New Notes
being not "freely tradable"),
the Company will, at its cost, (A) as promptly as practicable, file a Shelf
Registration Statement covering resales of the Original Notes or the New
Notes, as the case may be, (B) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and
(C) use its best efforts to keep the Shelf Registration Statement effective
until two years after its effective date. The Company will, in the event a
Shelf Registration Statement is filed, among other things, provide to each
holder for whom such Shelf Registration Statement was filed copies of the
prospectus which is a part of the Shelf Registration Statement, notify each
such holder when the Shelf Registration Statement has become effective and
take certain other actions as are
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required to permit unrestricted resales of the Original Notes or the New
Notes, as the case may be. A holder selling such Original Notes or New Notes
pursuant to the Shelf Registration Statement generally would be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Agreement which are applicable to
such holder (including certain indemnification obligations).
If:
(1) on or prior to the 90th day following the Original Notes Closing Date,
neither the Exchange Offer Registration Statement nor the Shelf
Registration Statement has been filed with the SEC,
(2) on or prior to the 150th day following the Original Notes Closing Date,
neither the Exchange Offer Registration Statement nor the Shelf
Registration Statement has been declared effective,
(3) on or prior to the 180th day following the Original Notes Closing Date,
neither the Exchange Offer has been consummated nor the Shelf
Registration Statement has been declared effective, or
(4) after either the Exchange Offer Registration Statement or the Shelf
Registration Statement has been declared effective, such Registration
Statement thereafter ceases to be effective or usable (subject to
certain exceptions) in connection with resales of Original Notes or New
Notes in accordance with and during the periods specified in the
Registration Agreement
(each such event referred to in clauses (1) through (4), a "Registration
Default"), interest ("Special Interest") will accrue on the Accreted Value of
the Original Notes and the New Notes (in addition to the stated interest on
the Original Notes and the New Notes) from and including the date on which any
such Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. Special Interest will accrue at a rate
of 0.50% per annum on the Accreted Value during the 90-day period immediately
following the occurrence of such Registration Default and shall increase by
0.25% per annum at the end of each subsequent 90-day period, but in no event
shall such rate exceed 1.00% per annum on the Accreted Value. If the Exchange
Offer is consummated on the terms and within the period contemplated by this
Prospectus, no Special Interest will be payable.
The summary of certain provisions of the Registration Agreement contained in
this Prospectus does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Registration Agreement, a copy of which is an exhibit to the Registration
Statement of which this Prospectus is a part.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes the material U.S. Federal income
tax consequences of the exchange of the Original Notes and the holding and
disposition of the New Notes. This discussion only deals with persons that
hold the Notes as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), and that purchased the
Original Notes for cash at original issue. This discussion does not address
the U.S. Federal income tax consequences that may be relevant to a particular
holder subject to special treatment under certain U.S. Federal income tax
laws, such as dealers in securities or foreign currency, banks, trusts,
insurance companies, tax-exempt organizations, persons that hold Notes as part
of a straddle, hedge against currency risk or constructive sale or conversion
transaction, persons that have a functional currency other than the U.S.
dollar and investors in pass-through entities.
This discussion is based on the Code, the final, temporary and proposed
Treasury regulations promulgated thereunder, administrative pronouncements and
judicial decisions, all as in effect on the date hereof and all of which are
subject to change, possibly with retroactive effect. The Company has not
requested, and will not request, a ruling from the U.S. Internal Revenue
Service (the "IRS") with respect to any of the U.S. Federal income tax
consequences described below, and as a result, there can be no assurance that
the IRS will not disagree with or challenge any of the conclusions set forth
herein.
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This discussion does not discuss all of the Federal income tax
considerations that may be relevant to a holder of notes. Prospective
participants in the Exchange Offer are urged to consult their own tax advisors
with respect to the application to their particular situations of U.S. Federal
income tax laws, as well as the laws of any state, local or foreign taxing
jurisdiction.
U.S. Holders
The following discussion is limited to persons who or which are U.S.
Holders. For these purposes, "U.S. Holder" means:
(1) an individual who is a citizen or resident of the United States;
(2) a corporation or other entity taxable as a corporation created or
organized under the laws of the United States or any political
subdivision thereof or therein;
(3) an estate or trust the income of which is subject to U.S. Federal
income tax regardless of its source; or
(4) a person whose worldwide income or gain is otherwise subject to U.S.
Federal income tax on a net income basis.
Original Issue Discount on the Notes. Because the Original Notes were issued
at a substantial discount from their stated principal amount, both the
Original Notes and the New Notes will be treated as issued with original issue
discount ("OID") for U.S. Federal income tax purposes. OID is the excess of
(1) a Note's stated redemption price at maturity over (2) its issue price.
The "stated redemption price at maturity" of a Note is the sum of the
principal amount payable at maturity and all stated interest payments to be
made with respect to such Note. The "issue price" of a Note is the first price
at which a substantial amount of the Notes is sold to the public for cash
(excluding sales to bond houses, brokers or similar persons or organizations
acting in the capacity as underwriters, placement agents or wholesalers).
A U.S. Holder of a Note is required to include OID in income as ordinary
interest as it accrues under a constant yield method in advance of receipt of
cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. A U.S. Holder will not be required to report
separately as taxable income actual distributions of stated interest with
respect to a Note. In general, the amount of OID included in income by a U.S.
Holder of a Note is the sum of the daily portions of OID for each day during
the taxable year (or portion thereof) on which such U.S. Holder held such
Note. The "daily portion" is determined by allocating the OID for an accrual
period equally to each day in that accrual period. The "accrual period" for a
Note may be of any length and may vary in length over the term of the Note,
provided that no accrual period is longer than one year and each scheduled
payment of principal or interest occurs either on the first or final day of an
accrual period.
The amount of OID attributable to an accrual period is generally equal to
the product of the Note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (i.e., the discount rate that, when
applied to all payments under the Note, results in a present value equal to
the issue price). The "adjusted issue price" of a Note at the beginning of any
accrual period is the issue price of such Note, plus the amount of OID
allocable to all prior accrual periods, minus the amount of any prior payments
in respect of such Note (including payments of stated interest). Under these
rules, a U.S. Holder generally will be required to include in income an
increasingly greater amount of OID in each successive accrual period.
In determining the yield and maturity with respect to the Notes, the Company
will not be deemed to exercise any call option on the Notes. If the Company
elects to commence the accrual of cash interest on the Notes prior to December
1, 2003, the Notes may be treated solely for the purpose of applying the OID
rules as if each such Note were retired and then reissued on the date of such
election for an amount equal to its adjusted issue price on that date.
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Applicable High Yield Discount Obligation. The OID on any obligation that
constitutes an AHYDO generally is not deductible until paid, and deductions
relating to certain portions of OID may be wholly disallowed. The New Notes
will constitute AHYDOs because the Original Notes provided initial holders
with a yield to maturity in excess of a specified amount. As a result, the
Company will not be allowed a deduction for the accrual of OID on the Notes
until such interest is actually paid.
Sale, Exchange or Redemption of Notes. Upon the sale, exchange or redemption
of a Note, a U.S. Holder generally will recognize taxable gain or loss equal
to the difference between (1) the amount realized on such disposition and (2)
such U.S. Holder's adjusted tax basis in the Note.
A U.S. Holder's adjusted tax basis in a Note generally will equal the cost
of such Note increased by any OID included in income through the date of
disposition and decreased by any payments received on such Note (including
payments of stated interest).
Any gain or loss recognized on the sale or exchange of a Note generally will
constitute capital gain or loss and will constitute long-term capital gain or
loss if the underlying Note has been held by a U.S. Holder for more than 12
months as of the date of such disposition (the "Disposition Date"). For
noncorporate U.S. Holders, long-term capital gain generally will be subject to
U.S. Federal income tax at a maximum rate of 20%.
Exchange Offer. The exchange of Original Notes for New Notes pursuant to the
Exchange Offer will not constitute a taxable event for U.S. Federal income tax
purposes. As a result:
(1) a U.S. Holder of Notes will not recognize taxable gain or loss as a
result of the exchange of Original Notes for New Notes pursuant to the
Exchange Offer;
(2) the holding period of the New Notes will include the holding period of
the Original Notes surrendered in exchange therefor; and
(3) a U.S. Holder's adjusted tax basis in the New Notes will be the same as
such U.S. Holder's adjusted tax basis in the Original Notes surrendered
in exchange therefor.
Information Reporting and Backup Withholding. A noncorporate U.S. Holder of
Notes may be subject to backup withholding at a 31% rate with respect to
"reportable payments," which include interest (including OID) or principal
paid on or the gross proceeds of a sale, exchange or redemption of the Notes.
The payor of any reportable payments will be required to deduct and withhold
31% of such payments if:
(1) the payee fails to furnish a correct Taxpayer Identification Number (a
"TIN") to the payor in the prescribed manner;
(2) the IRS notifies the payor that the TIN furnished by the payee is
incorrect;
(3) the payee has failed properly to report the receipt of reportable
payments and the IRS has notified the payor that backup withholding is
required; or
(4) the payee fails to certify under penalties of perjury that such payee
is not subject to backup withholding.
If any one of these events occurs with respect to a U.S. Holder of Notes, the
Company or its paying or other withholding agent will be required to withhold
31% of any payments of principal, premium, if any, and interest (including
OID) on a Note.
Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules will be allowed as a refund or credit against such holder's
U.S. Federal income tax liability, so long as the required information is
provided to the IRS. The Company, its paying agent or other withholding agent
generally will report to a U.S. Holder of Notes and to the IRS the amount of
any reportable payments made in respect of the Notes for each calendar year
and the amount of tax withheld, if any, with respect to such payments. The
Company will report annually to the IRS and to each holder the amount of OID
accrued with respect to such Note for the calendar year.
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Non-U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a Note that is not a U.S. Holder (a "Non-
U.S. Holder").
Stated Interest and OID. Subject to the discussion of backup withholding
below, payments of interest (including OID) on a Note to a Non-U.S. Holder
generally will not be subject to U.S. Federal income or withholding tax;
provided that:
(1) the holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company that
are entitled to vote;
(2) the holder is not (A) a controlled foreign corporation that is related
to the Company through stock ownership or (B) a bank receiving interest
on a loan entered into in the ordinary course of business;
(3) such interest is not effectively connected with the conduct by the Non-
U.S. Holder of a trade or business within the United States; and
(4) the Company or its paying agent receives (A) from the Non-U.S. Holder a
properly completed Form W-8 (or substitute Form W-8) signed under
penalties of perjury, which provides the Non-U.S. Holder's name and
address and certifies that the Non-U.S. Holder is not a U.S. person or
(B) from a security clearing organization, bank or other financial
institution that holds the Notes in the ordinary course of its trade or
business (a "financial institution") on behalf of the Non-U.S. Holder
Certification under penalties of perjury that such a Form W-8 (or
substitute Form W-8) has been received by it, or by another such
financial institution, from the Non-U.S. Holder, and a copy of the Form
W-8 (or substitute Form W-8) is furnished to the payor.
Recently adopted Treasury regulations regarding information reporting and
backup withholding unify current certification procedures and forms and
clarify reliance standards and certain rules with respect to foreign
partnerships. For example, such Treasury regulations require, in the case of
Notes held by a foreign partnership, that (1) the certification described in
clause (4) above be provided by the partners rather than by the foreign
partnership and (2) the partnership provide certain information, including a
TIN. A look-through rule applies in the case of tiered partnerships. These
regulations will become effective for payments made after December 31, 1999,
subject to certain transition rules.
A Non-U.S. Holder that does not qualify for exemption from withholding under
the second preceding paragraph generally will be subject to withholding of
U.S. Federal income tax at a 30% rate (or lower applicable treaty rate) on
payments of interest (including OID) on the Notes.
If interest (including OID) on the Notes is effectively connected with the
conduct by a Non-U.S. Holder of a trade or business within the United States,
such interest will be subject to U.S. Federal income tax on a net income basis
at the rate applicable to U.S. persons generally (and, with respect to
corporate holders, may also be subject to a 30% branch profits tax). If
interest (including OID) is subject to U.S. Federal income tax on a net income
basis in accordance with these rules, such payments will not be subject to
U.S. withholding tax so long as the relevant Non-U.S. Holder provides the
Company or its paying agent with a properly executed Form 4224. See the
discussion above with regard to the certification rules under recently enacted
Treasury regulations.
Non-U.S. Holders should consult their own tax advisors regarding any
applicable income tax treaties, which may provide for a lower rate of
withholding tax, exemption from or reduction of branch profits tax, or other
rules different from those described above.
Sale, Exchange or Redemption of Notes. Subject to the discussion of backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange or
redemption of a Note generally will not be subject to U.S. Federal income tax,
unless:
(1) such gain is effectively connected with the conduct by such Non-U.S.
Holder of a trade or business within the United States;
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(2) the Non-U.S. Holder is an individual who is present in the United
States for 183 days or more in the taxable year of disposition and
certain other conditions are satisfied; or
(3) the Non-U.S. Holder is subject to tax pursuant to the provisions of
U.S. Federal income tax law applicable to certain expatriates.
Information Reporting and Backup Withholding. The Company must report
annually to the IRS and to each Non-U.S. Holder the amount of any interest
paid and OID accrued on the Notes in such year and the amount of tax withheld,
if any, with respect to such payments. Copies of those information returns
also may be made available, under the provisions of a specific treaty or
agreement, to the taxing authorities of the country in which the Non-U.S.
Holder resides.
Backup withholding and information reporting generally will not apply to
interest (including OID) payments made to a Non-U.S. Holder in respect of the
Notes if such Non-U.S. Holder furnishes the Company or its paying agent with a
properly executed certification on Form W-8 (or substitute Form W-8) signed
under penalties of perjury stating that the beneficial owner is not a U.S.
person and setting forth such Non-U.S. Holder's name and address, provided
that neither the Company nor its paying agent has actual knowledge that such
holder is a U.S. person or that the conditions of an exemption are not in fact
satisfied. See the discussion above with regard to the certification rules
under recently enacted Treasury regulations.
The payment of proceeds from a Non-U.S. Holder's disposition of Notes to or
through the U.S. office of any broker, domestic or foreign, will be subject to
information reporting and possible backup withholding unless such holder
certifies as to its non-U.S. status under penalties of perjury or otherwise
establishes an exemption, provided that the broker does not have actual
knowledge that such holder is a U.S. person or that the conditions of an
exemption are not, in fact, satisfied. The payment of the proceeds from a Non-
U.S. Holder's disposition of a Note to or through a non-U.S. office of either
a U.S. broker or a non-U.S. broker that is a U.S.-related person will be
subject to information reporting, but not backup withholding, unless such
broker has documentary evidence in its files that such Non-U.S. Holder is not
a U.S. person and the broker has no knowledge to the contrary, or the Non-U.S.
Holder establishes an exemption. For this purpose, a "U.S.-related person" is
(1) a controlled foreign corporation for U.S. Federal income tax purposes or
(2) a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of
a U.S. trade or business. Neither information reporting nor backup withholding
will apply to a payment of the proceeds of a Non-U.S. Holder's disposition of
Notes by or through a non-U.S. office of a non-U.S. broker that is not a U.S.
related person. See the discussion above with regard to the certification
rules under recently enacted Treasury regulations.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. Federal income tax liability, provided that the requisite
procedures are followed.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Original Notes
where such Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that, starting on the date of
this Prospectus and ending on the close of business on the day that is 180
days following the date of this Prospectus, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the date of this Prospectus, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (other than the expenses of counsel
for the holders of the Original Notes) other than commissions or concessions
of any brokers or dealers and will indemnify the holders of the Original Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York.
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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.
WHERE YOU CAN FIND MORE INFORMATION
The Company files 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. These documents are also
available at the public reference rooms at the SEC's regional offices in New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are
also available at the offices of the Nasdaq National Market, in Washington,
D.C.
We are "incorporating by reference" in this Prospectus the information we
file with the SEC, 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 are incorporating by reference our documents listed below and
any future filings we make with the SEC under Section 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934 prior to the termination of this
Offering.
(1) Annual Report on Form 10-K/A for the fiscal year ended December 27,
1997;
(2) Quarterly Reports on Forms 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998; and
(3) Current Reports on Forms 8-K, filed June 9, 1998, September 1,
1998, October 1, 1998, October 5, 1998, December 2, 1998 and
December 7, 1998 and on Form 8-K/A, filed April 30, 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 80027
303-926-3000
You should rely only on the information incorporated by reference or
provided in this Prospectus. 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 is accurate as of any date other than the date
on the front of those documents.
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No dealer, sales representative, or other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or the Ini-
tial Purchasers. This Prospectus does not constitute an offer to sell or a so-
licitation of an offer to buy any securities other than the securities to
which it relates, nor does it constitute an offer to sell or the solicitation
of an offer to buy such securities in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlaw-
ful to make such an offer or solicitation. Neither the delivery of this Pro-
spectus nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that information contained herein is correct as of any time
subsequent to its date.
[LOGO]
Level 3 Communications, Inc.
10 1/2% Senior Discount Notes
Due 2008
----------------
PROSPECTUS
----------------
, 1999
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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 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.
II-1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
4.1 --Indenture dated as of December 2, 1998 between the Company and
IBJ Schroder Bank & Trust Company as trustee relating to the 10
1/2% Senior Discount Notes Due 2008.
4.2 --Registration Agreement dated November 24, 1998 between the
Company and the Initial Purchasers.
5 --Opinion of Willkie Farr & Gallagher.*
8 --Opinion of Willkie Farr & Gallagher with respect to certain tax
matters.*
12 --Statement Regarding Computation of Ratio of Earnings to Fixed
Charges.
23.1 --Consent of PricewaterhouseCoopers LLP.
23.2 --Consent of PricewaterhouseCoopers LLP.
23.3 --Consent of Willkie Farr & Gallagher (included in their opinions
filed as Exhibits 5 and 8).*
24 --Power of Attorney (included on the signature pages hereto).
25 --Statement on Form T-1 of Eligibility of Trustee.*
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
99.3 --Form of Letter to Clients.
99.4 --Form of Letter to Nominees.
</TABLE>
- --------
*To be filed by amendment.
(b) Financial Statement Schedules:
All schedules have been omitted because they are not applicable or not
required or the required information is included in the financial statements
or notes thereto, which are incorporated herein by reference.
Item 22. Undertakings.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, 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
may be permitted to directors, officers and controlling persons of registrants
pursuant to the provisions described under Item 20 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities 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 court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
this Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Omaha, State of
Nebraska, on the 3rd day of February, 1999.
Level 3 Communications, Inc.
/s/ R. Douglas Bradbury
By: _________________________________
Name: R. Douglas Bradbury
Title: Executive Vice President
and Chief Financial 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
Registration Statement has been signed below by the following persons, in the
capacities and on the dates indicated.
Name Title Date
/s/ Walter Scott, Jr. Chairman of the February 3,
- ------------------------------------- Board 1999
Walter Scott, Jr.
/s/ James Q. Crowe President, Chief February 3,
- ------------------------------------- Executive Officer 1999
James Q. Crowe and Director
/s/ R. Douglas Bradbury Executive Vice February 3,
- ------------------------------------- President, Chief 1999
R. Douglas Bradbury Financial Officer
and Director
(principal
financial officer)
II-4
<PAGE>
Name Title Date
/s/ Eric J. Mortensen Controller February 3,
- ------------------------------------- (principal 1999
Eric J. Mortensen accounting officer)
/s/ William L. Grewcock Director February 3,
- ------------------------------------- 1999
William L. Grewcock
/s/ Richard R. Jaros Director February 3,
- ------------------------------------- 1999
Richard R. Jaros
/s/ Robert E. Julian Director February 3,
- ------------------------------------- 1999
Robert E. Julian
/s/ David C. McCourt Director February 3,
- ------------------------------------- 1999
David C. McCourt
/s/ Kenneth E. Stinson Director February 3,
- ------------------------------------- 1999
Kenneth E. Stinson
/s/ Michael B. Yanney Director February 3,
- ------------------------------------- 1999
Michael B. Yanney
II-5
<PAGE>
Exhibit 4.1
================================================================================
LEVEL 3 COMMUNICATIONS, INC.,
Issuer
to
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
Indenture
Dated as of December 2, 1998
$833,815,000
10-1/2% Senior Discount Notes Due 2008
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY....................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions...................................................2
Accreted Value........................................................2
Acquired Debt.........................................................3
Act...................................................................3
Affiliate.............................................................3
Affiliate Transaction.................................................3
Agent Member..........................................................3
Asset Disposition.....................................................4
Attributable Value....................................................4
Board of Directors....................................................5
Board Resolution......................................................5
Business Day..........................................................5
Capital Lease Obligation..............................................5
Capital Stock.........................................................5
Cash Equivalents......................................................5
Change of Control.....................................................6
Change of Control Triggering Event....................................6
Code..................................................................6
Commission............................................................6
Common Stock..........................................................7
Company...............................................................7
Company Order.........................................................7
Consolidated Capital Ratio............................................7
Consolidated Cash Flow Available for Fixed Charges....................8
Consolidated Income Tax Expense.......................................8
Consolidated Interest Expense.........................................8
Consolidated Net Income...............................................9
Consolidated Net Worth................................................9
Consolidated Tangible Assets..........................................9
Corporate Trust Office...............................................10
Credit Facilities....................................................10
Debt.................................................................10
Default..............................................................11
Defaulted Interest...................................................11
Depository...........................................................11
Designation..........................................................11
Disqualified Stock...................................................11
Disqualified Stock Dividends.........................................11
Eligible Receivables.................................................12
Event of Default.....................................................12
Exchange Act.........................................................12
Exchange Securities..................................................12
Excess Proceeds......................................................12
i
<PAGE>
Expiration Date......................................................12
Fair Market Value....................................................12
Federal Bankruptcy Code..............................................12
Global Security......................................................12
Government Securities................................................12
Guarantee............................................................12
Guarantor............................................................13
Holder...............................................................13
Incur................................................................13
Indenture............................................................13
Initial Foreign Purchaser............................................14
Initial Purchasers...................................................14
Initial Securities...................................................14
Institutional Accredited Investor....................................14
Institutional Accredited Investor Global Security....................14
Interest Payment Date................................................14
Interest Rate or Currency Protection Agreement.......................14
Invested Capital.....................................................14
Investment...........................................................14
Issue Date...........................................................15
Issue Date Rating....................................................15
Joint Venture........................................................15
Lien.................................................................15
Maturity.............................................................15
Measurement Date.....................................................15
Moody's..............................................................16
Net Available Proceeds...............................................16
9-1/8% Senior Notes..................................................17
9-1/8% Senior Notes Indenture........................................17
Non-Global Purchasers................................................17
Offer................................................................17
Offer to Purchase....................................................17
Officers' Certificate................................................19
Opinion of Counsel...................................................19
OECD.................................................................19
Outstanding..........................................................19
Paying Agent.........................................................20
Permitted Holders....................................................20
Permitted Interest Rate or Currency Protection Agreement.............21
Permitted Investments................................................21
Permitted Liens......................................................21
Permitted Telecommunications Capital Asset Disposition...............22
Person...............................................................22
Physical Security....................................................22
Predecessor Security.................................................22
Preferred Stock......................................................22
Preferred Stock Dividends............................................23
Private Exchange Offer...............................................23
Private Exchange Securities..........................................23
Private Placement Legend.............................................23
Property.............................................................23
Proportionate Interest...............................................23
Purchase Amount......................................................23
ii
<PAGE>
Purchase Date........................................................23
Purchase Money Debt..................................................23
Purchase Price.......................................................24
Qualified Institutional Buyer........................................24
Qualified Receivable Facility........................................24
Rating Agencies......................................................24
Rating Date..........................................................24
Rating Decline.......................................................24
Receivables..........................................................24
Redemption Date......................................................24
Redemption Price.....................................................25
Refinancing..........................................................25
Registered Exchange Offer............................................25
Registration Agreement...............................................25
Registration Default.................................................25
Regular Record Date..................................................25
Regulation S.........................................................25
Regulation S Global Security.........................................25
Required Filing Dates................................................25
Responsible Officer..................................................25
Restricted Payment...................................................25
Restricted Subsidiary................................................25
Restricted Subsidiary Guarantee......................................26
Revocation...........................................................26
Rule 144A............................................................26
Rule 144A Global Security............................................26
S&P..................................................................26
Sale and Leaseback Transaction.......................................26
Securities...........................................................26
Securities Act.......................................................26
Security Register....................................................26
Shelf Registration Statement.........................................26
Significant Subsidiary...............................................27
Special Assets.......................................................27
Special Interest.....................................................27
Special Record Date..................................................27
Stated Maturity......................................................27
Subordinated Debt....................................................27
Subsidiary...........................................................28
Telecommunications/IS Assets.........................................28
Telecommunications/IS Business.......................................29
Trust Indenture Act..................................................29
Trustee..............................................................29
Unrestricted Subsidiary..............................................29
Vice President.......................................................29
Voting Stock.........................................................29
Wholly Owned Subsidiary..............................................30
SECTION 102. Compliance Certificates and Opinions.........................30
SECTION 103. Form of Documents Delivered to Trustee.......................30
SECTION 104. Acts of Holders..............................................31
SECTION 105. Notices, etc., to Trustee and Company........................32
SECTION 106. Notice to Holders; Waiver....................................33
SECTION 107. Effect of Headings and Table of Contents.....................33
SECTION 108. Successors and Assigns.......................................34
iii
<PAGE>
SECTION 109. Separability Clause..........................................34
SECTION 110. Benefits of Indenture........................................34
SECTION 111. Governing Law................................................34
SECTION 112. Conflict with Trust Indenture Act............................34
SECTION 113. Legal Holidays...............................................34
SECTION 114. No Personal Liability of Directors, Officers, Employees and
Stockholders...........................................35
SECTION 115. Independence of Covenants....................................35
SECTION 116. Exhibits.....................................................35
SECTION 117. Counterparts.................................................35
SECTION 118. Duplicate Originals..........................................35
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally..............................................36
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms..............................................36
SECTION 302. Denominations................................................37
SECTION 303. Execution, Authentication, Delivery and Dating...............37
SECTION 304. Temporary Securities.........................................40
SECTION 305. Registration, Registration of Transfer and Exchange..........40
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.............41
SECTION 307. Payment of Interest; Interest Rights Preserved...............42
SECTION 308. Persons Deemed Owners........................................44
SECTION 309. Cancellation.................................................44
SECTION 310. Computation of Interest......................................44
SECTION 311. CUSIP Number.................................................44
SECTION 312. Book-Entry Provisions for Global Securities..................45
SECTION 313. Special Transfer Provisions..................................47
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture......................52
SECTION 402. Application of Trust Money...................................53
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................53
SECTION 502. Acceleration of Maturity; Rescission and Annulment...........55
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee................................................56
SECTION 504. Trustee May File Proofs of Claim.............................57
iv
<PAGE>
SECTION 505. Trustee May Enforce Claims Without Possession of Securities..57
SECTION 506. Application of Money Collected...............................58
SECTION 507. Limitation on Suits..........................................58
SECTION 508. Unconditional Right of Holders to Receive Accreted Value,
Premium and Interest...................................59
SECTION 509. Restoration of Rights and Remedies...........................59
SECTION 510. Rights and Remedies Cumulative...............................59
SECTION 511. Delay or Omission Not Waiver.................................59
SECTION 512. Control by Holders...........................................60
SECTION 513. Waiver of Past Defaults......................................60
SECTION 514. Waiver of Stay or Extension Laws.............................60
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities..........................61
SECTION 602. Notice of Default............................................62
SECTION 603. Certain Rights of Trustee....................................63
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
Securities.............................................64
SECTION 605. May Hold Securities..........................................64
SECTION 606. Money Held in Trust..........................................64
SECTION 607. Compensation and Reimbursement...............................64
SECTION 608. Corporate Trustee Required; Eligibility; Conflicting
Interests..............................................65
SECTION 609. Resignation and Removal; Appointment of Successor............66
SECTION 610. Acceptance of Appointment by Successor.......................67
SECTION 611. Merger, Conversion, Consolidation or Succession to Business..68
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.................68
SECTION 702. Reports by Trustee...........................................69
SECTION 703. Reports by Company...........................................69
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.........69
SECTION 802. Successor Company Substituted................................70
SECTION 803. Guarantor May Consolidate, etc., Only on Certain Terms.......71
SECTION 804. Successor Guarantor Substituted..............................72
v
<PAGE>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders...........73
SECTION 902. Supplemental Indentures With Consent of Holders..............74
SECTION 903. Execution of Supplemental Indentures.........................75
SECTION 904. Effect of Supplemental Indentures............................75
SECTION 905. Conformity with Trust Indenture Act..........................75
SECTION 906. Reference in Securities to Supplemental Indentures...........75
SECTION 907. Notice of Supplemental Indentures............................76
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Accreted Value, Premium, if any, and Interest....76
SECTION 1002. Maintenance of Office or Agency.............................76
SECTION 1003. Money for Security Payments to Be Held in Trust.............77
SECTION 1004. Corporate Existence.........................................78
SECTION 1005. Maintenance of Properties...................................78
SECTION 1006. Insurance...................................................79
SECTION 1007. Reports.....................................................79
SECTION 1008. Statement by Officers as to Default.........................79
SECTION 1009. Change of Control Triggering Event..........................80
SECTION 1010. Limitation on Consolidated Debt.............................82
SECTION 1011. Limitation on Debt of Restricted Subsidiaries...............86
SECTION 1012. Limitation on Restricted Payments...........................88
SECTION 1013. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries........91
SECTION 1014. Limitation on Liens.........................................92
SECTION 1015. Limitation on Sale and Leaseback Transactions...............94
SECTION 1016. Limitation on Asset Dispositions............................94
SECTION 1017. Limitation on Issuance and Sales of Capital Stock of
Restricted Subsidiaries...............................96
SECTION 1018. Transactions with Affiliates................................97
SECTION 1019. Limitation on Designations of Unrestricted Subsidiaries.....99
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption........................................100
SECTION 1102. Applicability of Article...................................101
SECTION 1103. Election to Redeem; Notice to Trustee......................101
SECTION 1104. Selection by Trustee of Securities to Be Redeemed..........101
vi
<PAGE>
SECTION 1105. Notice of Redemption.......................................102
SECTION 1106. Deposit of Redemption Price................................102
SECTION 1107. Securities Payable on Redemption Date......................103
SECTION 1108. Securities Redeemed in Part................................103
ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Defeasance or Covenant
Defeasance...........................................103
SECTION 1202. Defeasance and Discharge...................................104
SECTION 1203. Covenant Defeasance........................................104
SECTION 1204. Conditions to Defeasance or Covenant Defeasance............105
SECTION 1205. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions................106
SECTION 1206. Reinstatement..............................................107
vii
<PAGE>
INDENTURE, dated as of December 2, 1998 between Level 3 Communications,
Inc., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 3555
Farnam Street, Omaha, Nebraska 68131, and IBJ Schroder Bank & Trust Company, a
New York banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 10-1/2% Senior
Discount Notes Due 2008 (the "Initial Securities") and, if and when issued
pursuant to a Registered Exchange Offer or Private Exchange Offer pursuant to
the Registration Agreement for the Initial Securities, 10-1/2% Senior Discount
Notes Due 2008 (the "Exchange Securities" and, together with the Initial
Securities, the "Securities"), of substantially the tenor and amount hereinafter
set forth, and to provide therefor the Company has duly authorized the execution
and delivery of this Indenture.
All things necessary have been done to make the Securities, when executed
by the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of each of the Company and the Trustee, in accordance with their and
its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
1
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions
-----------
For all purposes of this Indenture, including the recitals set forth above,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean United States generally accepted accounting principles as
in effect on the date of this Indenture;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section, paragraph or other subdivision;
(e) unless otherwise indicated, references to Articles, Sections,
paragraphs or other subdivisions are references to such Articles, Sections,
paragraphs or other subdivisions of this Indenture; and
(f) "or" is not exclusive and "including" means including without
limitation.
"Accreted Value" of any Security as of or to any date of determination
prior to December 1, 2003, or of any other Debt issued at a price less than the
principal amount at stated maturity, means, as of any date of determination, an
amount equal to the sum of (a) the issue price of such Debt as determined in
accordance with Section 1273 of the Code or any successor provisions (which, in
the case of the Securities, will be $599.66 per $1,000 principal amount at
maturity of Securities) plus (b) the aggregate of the portions of the original
issue discount (the excess of the amounts considered as part of the "stated
redemption price at maturity" of such Debt within the meaning of Section
1273(a)(2) of the Code or any successor provisions, whether denominated as
principal or interest, over the issue price of such Debt) that shall theretofore
have accrued pursuant to Section 1272 of the Code (without regard to Section
1272(a)(7)
2
<PAGE>
of the Code) from the date of issue of such Debt to the date of determination
(which amount, in the case of the Securities, shall be amortized on a daily
basis and compounded semiannually on each June 1 and December 1 at a rate of 10-
1/2% per annum from the Issue Date through the date of determination on the
basis of a 360-day year of twelve 30-day months), minus all amounts theretofore
paid in respect of such Debt, which amounts are considered as part of the
"stated redemption price at maturity" of such Debt within the meaning of Section
1273(a)(2) of the Code or any successor provisions (whether such amounts paid
were denominated principal or interest). The Accreted Value of any Securities on
or after December 1, 2003, will mean the principal amount at maturity of such
Security. Notwithstanding the foregoing, if the Company elects to commence the
accrual of cash interest on the Securities on or after December 1, 2001 and
prior to December 1, 2003, the Securities shall cease to accrete, and the
Accreted Value and the principal amount at maturity of such Security shall be
the Accreted Value on the date of commencement of such accrual as calculated in
accordance with the first sentence of this definition.
"Acquired Debt" means, with respect to any specified Person, (i) Debt of
any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Subsidiary of such specified Person and (ii) Debt
secured by a Lien encumbering any Property acquired by such specified Person,
which Debt was not incurred in anticipation of, and was outstanding prior to,
such merger, consolidation or acquisition.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of
Sections 1016 and 1018 and the definition of "Telecommunications/IS Assets"
only, "Affiliate" shall also mean any beneficial owner of shares representing
10% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to purchase such Voting Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.
"Affiliate Transaction" has the meaning specified in Section 1018.
"Agent Member" has the meaning specified in Section 312.
3
<PAGE>
"Asset Disposition" means any transfer, conveyance, sale, lease, issuance
or other disposition by the Company or any Restricted Subsidiary in one or more
related transactions (including a consolidation or merger or other sale of any
such Restricted Subsidiary with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary of the
Company, but excluding a disposition by a Restricted Subsidiary to the Company
or a Restricted Subsidiary or by the Company to a Restricted Subsidiary) of (i)
shares of Capital Stock or other ownership interests of a Restricted Subsidiary
(other than as permitted by clause (v), (vi), (vii) or (ix) of Section 1017),
(ii) substantially all of the assets of the Company or any Restricted Subsidiary
representing a division or line of business or (iii) other Property of the
Company or any Restricted Subsidiary outside of the ordinary course of business
(excluding any transfer, conveyance, sale, lease or other disposition of
equipment that is obsolete or no longer used by or useful to the Company,
provided that the Company has delivered to the Trustee an Officers' Certificate
- --------
stating that such criteria are satisfied); provided in each case that the
--------
aggregate consideration for such transfer, conveyance, sale, lease or other
disposition is equal to $5,000,000 or more in any 12-month period. The following
shall not be Asset Dispositions: (i) Permitted Telecommunications Capital Asset
Dispositions that comply with clause (i) of the first paragraph of Section 1016,
(ii) when used with respect to the Company, any Asset Disposition permitted
pursuant to Article Eight which constitutes a disposition of all or
substantially all of the assets of the Company and the Restricted Subsidiaries
taken as a whole, (iii) Receivables sales constituting Debt under Qualified
Receivable Facilities permitted to be Incurred pursuant to Section 1010 and (iv)
any disposition that constitutes a Permitted Investment or a Restricted Payment
permitted by Section 1012.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the remaining
term thereof (including any period for which such lease has been extended) as
determined in accordance with generally accepted accounting principles,
discounted from the last date of such remaining term to the date of
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to be
paid under any such lease for any such period shall be the aggregate amount of
rent payable by the lessee with respect to such period after excluding amounts
required to be paid on account of insurance, taxes, assessments, utility,
operating and labor costs and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of penalty, such net amount shall also
include the lesser of the amount of such
4
<PAGE>
penalty (in which case no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated) or
the rent which would otherwise be required to be paid if such lease is not so
terminated. "Attributable Value" means, as to a Capital Lease Obligation, the
principal amount thereof.
"Board of Directors" means the board of directors of the Company.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amount under a lease of (or other Debt arrangements conveying
the right to use) Property of such Person which is required to be classified and
accounted for as a capital lease or a liability on the face of a balance sheet
of such Person in accordance with generally accepted accounting principles (a
"Capital Lease"). The stated maturity of such obligation shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a penalty. The principal amount of such obligation shall be the capitalized
amount thereof that would appear on the face of a balance sheet of such Person
in accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and any rights (other than debt securities convertible
or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such Person.
"Cash Equivalents" means (i) Government Securities maturing, or subject to
tender at the option of the holder thereof, within two years after the date of
acquisition thereof, (ii) time deposits and certificates of deposit of any
commercial bank organized in the United States having capital and surplus in
excess of $500,000,000 or a commercial bank organized under the law of any other
country that is a member of the OECD having total assets in excess of
$500,000,000 (or its foreign currency equivalent at the time) with a maturity
date not more than one year from the date of acquisition, (iii) repurchase
obligations
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with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with (x) any bank meeting the
qualifications specified in clause (ii) above or (y) any primary government
securities dealer reporting to the Market Reports Division of the Federal
Reserve Bank of New York, (iv) direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing, or subject to tender at the option of
the holder thereof, within 90 days after the date of acquisition thereof,
provided that, at the time of acquisition, the long-term debt of such state,
- --------
political subdivision or public instrumentality has a rating of A (or higher)
from S&P or A-2 (or higher) from Moody's (or, if at any time neither S&P nor
Moody's shall be rating such obligations, then an equivalent rating from such
other nationally recognized rating service acceptable to the Trustee), (v)
commercial paper issued by the parent corporation of any commercial bank
organized in the United States having capital and surplus in excess of
$500,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $500,000,000 (or
its foreign currency equivalent at the time), and commercial paper issued by
others having one of the two highest ratings obtainable from either S&P or
Moody's (or, if at any time neither S&P nor Moody's shall be rating such
obligations, then from such other nationally recognized rating service
acceptable to the Trustee) and in each case maturing within one year after the
date of acquisition, (vi) overnight bank deposits and bankers' acceptances at
any commercial bank organized in the United States having capital and surplus in
excess of $500,000,000 or a commercial bank organized under the laws of any
other country that is a member of the OECD having total assets in excess of
$500,000,000 (or its foreign currency equivalent at the time), (vii) deposits
available for withdrawal on demand with a commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 or a
commercial bank organized under the laws of any other country that is a member
of the OECD having total assets in excess of $500,000,000 (or its foreign
currency equivalent at the time) and (viii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (vii).
"Change of Control" has the meaning specified in Section 1009.
"Change of Control Triggering Event" has the meaning specified in Section
1009.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned
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to it under the Trust Indenture Act, then the body performing such duties at
such time.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Order" or "Company Request" means a written request or order
signed in the name of the Company by the Chairman of the Board of Directors, a
Vice Chairman of the Board of Directors, the President or a Vice President, and
by the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, an
Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee.
"Consolidated Capital Ratio" means as of the date of determination the
ratio of (i) the aggregate amount of Debt of the Company and its Restricted
Subsidiaries on a consolidated basis as at the date of determination to (ii) the
sum of (a) $2,024,000,000, (b) the aggregate net proceeds to the Company from
the issuance or sale of any Capital Stock (including Preferred Stock) of the
Company other than Disqualified Stock subsequent to the Measurement Date, (c)
the aggregate net proceeds from the issuance or sale of Debt of the Company or
any Restricted Subsidiary subsequent to the Measurement Date convertible or
exchangeable into Capital Stock of the Company other than Disqualified Stock, in
each case upon conversion or exchange thereof into Capital Stock of the Company
subsequent to the Measurement Date and (d) the after-tax gain on the sale,
subsequent to the Measurement Date, of Special Assets to the extent such Special
Assets have been sold for cash, Cash Equivalents, Telecommunications/IS Assets
or the assumption of Debt of the Company or any Restricted Subsidiary (other
than Debt that is subordinated to the Securities or any applicable Restricted
Subsidiary Guarantee) and release of the Company and all Restricted Subsidiaries
from all liability on the Debt assumed; provided, however, that, for purposes of
-------- -------
calculation of the Consolidated Capital Ratio, the net proceeds from the
issuance or sale of Capital Stock or Debt described in clause (b) or (c) above
shall not be included to the extent (x) such proceeds have been utilized to make
a Permitted Investment under clause (i) of the definition thereof or a
Restricted Payment or (y) such Capital Stock or Debt shall have been issued or
sold to the Company, a Subsidiary of the Company or an employee stock
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<PAGE>
ownership plan or trust established by the Company or any such Subsidiary for
the benefit of their employees.
"Consolidated Cash Flow Available for Fixed Charges" for any period means
the Consolidated Net Income of the Company and its Restricted Subsidiaries for
such period increased by the sum of, to the extent reducing Consolidated Net
Income for such period, (i) Consolidated Interest Expense of the Company and its
Restricted Subsidiaries for such period, plus (ii) Consolidated Income Tax
Expense of the Company and its Restricted Subsidiaries for such period, plus
(iii) consolidated depreciation and amortization expense and any other non-cash
items (other than any such non-cash item to the extent that it represents an
accrual of or reserve for cash expenditures in any future period); provided,
--------
however, that there shall be excluded therefrom the Consolidated Cash Flow
- -------
Available for Fixed Charges (if positive) of any Restricted Subsidiary
(calculated separately for such Restricted Subsidiary in the same manner as
provided above for the Company) that is subject to a restriction which prevents
the payment of dividends or the making of distributions to the Company or
another Restricted Subsidiary to the extent of such restrictions.
"Consolidated Income Tax Expense" for any period means the aggregate
amounts of the provisions for income taxes of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" for any period means the interest expense
included in a consolidated income statement (excluding interest income) of the
Company and its Restricted Subsidiaries for such period in accordance with
generally accepted accounting principles, including without limitation or
duplication (or, to the extent not so included, with the addition of), (i) the
amortization of Debt discounts and issuance costs, including commitment fees;
(ii) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities; (iii) net costs with respect to interest rate
swap or similar agreements or foreign currency hedge, exchange or similar
agreements (including fees); (iv) Preferred Stock Dividends (other than
dividends paid in shares of Preferred Stock that is not Disqualified Stock)
declared and paid or payable; (v) accrued Disqualified Stock Dividends, whether
or not declared or paid; (vi) interest on Debt guaranteed by the Company and its
Restricted Subsidiaries; (vii) the portion of any Capital Lease Obligation or
Sale and Leaseback Transaction paid during such period that is allocable to
interest expense; (viii) interest Incurred in connection with investments in
discontinued operations; and (ix) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the Company
or a Restricted Subsidiary) in connection with Debt Incurred by such plan or
trust.
8
<PAGE>
"Consolidated Net Income" for any period means the net income (or loss) of
the Company and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom (a) for purposes of Section 1012
only, the net income (or loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling-of-interests transaction for any period prior
to the date of such transaction, (b) the net income (or loss) of any Person that
is not a Restricted Subsidiary except to the extent of the amount of dividends
or other distributions actually paid to the Company or a Restricted Subsidiary
by such Person during such period (except, for purposes of Section 1012 only, to
the extent such dividends or distributions have been subtracted from the
calculation of the amount of Investments to support the actual making of
Investments), (c) gains or losses realized upon the sale or other disposition of
any Property of the Company or its Restricted Subsidiaries that is not sold or
disposed of in the ordinary course of business (it being understood that
Permitted Telecommunications Capital Asset Dispositions shall be considered to
be in the ordinary course of business), (d) gains or losses realized upon the
sale or other disposition of any Special Assets, (e) all extraordinary gains and
extraordinary losses, determined in accordance with generally accepted
accounting principles, (f) the cumulative effect of changes in accounting
principles, (g) non-cash gains or losses resulting from fluctuations in currency
exchange rates, (h) any non-cash expense related to the issuance to employees or
directors of the Company or any Restricted Subsidiary of (1) options to purchase
Capital Stock of the Company or such Restricted Subsidiary or (2) other
compensatory rights; provided, in either case, that such options or rights, by
--------
their terms can be redeemed at the option of the holder of such option or right
only for Capital Stock, and (i) with respect to a Restricted Subsidiary that is
not a Wholly Owned Subsidiary any aggregate net income (or loss) in excess of
the Company's or any Restricted Subsidiary's pro rata share of the net income
(or loss) of such Restricted Subsidiary that is not a Wholly Owned Subsidiary;
provided further that there shall further be excluded therefrom the net income
- ----------------
(but not net loss) of any Restricted Subsidiary that is subject to a restriction
which prevents the payment of dividends or the making of distributions to the
Company or another Restricted Subsidiary to the extent of such restriction.
"Consolidated Net Worth" of any Person means the stockholders' equity of
such Person, determined on a consolidated basis in accordance with generally
accepted accounting principles, less amounts attributable to Disqualified Stock
of such Person.
"Consolidated Tangible Assets" of any Person means the total amount of
assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting principles would be included on a
consolidated balance sheet of
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such Person and its Subsidiaries after deducting therefrom all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other like
intangibles, which in each case under generally accepted accounting principles
would be included on such consolidated balance sheet.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee, at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at One State Street, New York, New York 10004, except that, with respect to
presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.
"Credit Facilities" means one or more credit agreements, loan agreements or
similar facilities, secured or unsecured, providing for revolving credit loans,
term loans and/or letters of credit, including any Qualified Receivable
Facility, entered into from time to time by the Company and its Restricted
Subsidiaries, and including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same may be
amended, supplemented, modified, restated or replaced from time to time.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of Property, (iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) every obligation of such Person issued or assumed
as the deferred purchase price of Property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital Lease
Obligation of such Person and all Attributable Value in respect of Sale and
Leaseback Transactions entered into by such Person, (vi) all obligations to
redeem or repurchase Disqualified Stock issued by such Person, (vii) the
liquidation preference of any Preferred Stock (other than Disqualified Stock,
which is covered by the preceding clause (vi)) issued by any Restricted
Subsidiary of such Person, (viii) every obligation under Interest Rate or
Currency Protection Agreements of such Person and (ix) every obligation of the
type referred to in clauses (i) through (viii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has Guaranteed. The "amount" or "principal amount" of Debt at any time of
determination as used herein represented by (a) any Debt issued at a price that
is less than the principal amount at maturity thereof, shall be, except
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<PAGE>
as otherwise set forth herein, the Accreted Value of such Debt at such time or
(b) in the case of any Receivables sale constituting Debt, the amount of the
unrecovered purchase price (that is, the amount paid for Receivables that has
not been actually recovered from the collection of such Receivables) paid by the
purchaser (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company) thereof. The amount of Debt represented by an obligation under an
Interest Rate or Currency Protection Agreement shall be equal to (x) zero if
such obligation has been Incurred pursuant to clause (x) of paragraph (b) of
Section 1010 or (y) the notional amount of such obligation if not Incurred
pursuant to such clause.
"Default" means any event, act or condition the occurrence of which is, or
after notice or the passage of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designation" and "Designation Amount" have the respective meanings
specified in Section 1019.
"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final Stated Maturity of the Securities;
provided, however, that any Preferred Stock which would not constitute
- -------- -------
Disqualified Stock but for provisions thereof giving holders thereof the right
to require the Company to repurchase or redeem such Preferred Stock upon the
occurrence of a change of control occurring prior to the final Stated Maturity
of the Securities shall not constitute Disqualified Stock if the change of
control provisions applicable to such Preferred Stock are no more favorable to
the holders of such Preferred Stock than the provisions applicable to the
Securities contained in Section 1009 and such Preferred Stock specifically
provides that the Company will not repurchase or redeem any such stock pursuant
to such provisions prior to the Company's repurchase of such Securities as are
required to be repurchased pursuant to Section 1009.
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Restricted Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income tax rate (expressed as a decimal number between 1
11
<PAGE>
and 0) applicable to the Company for the period during which such dividends were
paid.
"Eligible Receivables" means, at any time, Receivables of the Company and
its Restricted Subsidiaries, as evidenced on the most recent quarterly
consolidated balance sheet of the Company as at a date at least 45 days prior to
such time, arising in the ordinary course of business of the Company or any
Restricted Subsidiary.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act), and the rules and regulations thereunder (or respective
successors thereto).
"Exchange Securities " has the meaning stated in the first recital of this
Indenture.
"Excess Proceeds" has the meaning specified in Section 1016.
"Expiration Date" has the meaning specified in "Offer to Purchase" below.
"Fair Market Value" means, with respect to any Property, the price that
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction. Unless otherwise specified herein,
Fair Market Value shall be determined by the Board of Directors acting in good
faith and shall be evidenced by a Board Resolution delivered to the Trustee.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"Global Security" means a Rule 144A Global Security, an Institutional
Accredited Investor Global Security or a Regulation S Global Security, as the
case may be.
"Government Securities" means direct obligations of, or obligations fully
and unconditionally guaranteed or insured by, the United States of America or
any agency or instrumentality thereof for the payment of which obligations or
guarantee the full faith and credit of the United States is pledged and which
are not callable or redeemable at the issuer's option (unless, for purposes of
the definition of "Cash Equivalents" only, the obligations are redeemable or
callable at a price not less than the purchase price paid by the Company or the
applicable Restricted Subsidiary, together with all accrued and unpaid interest
(if any) on such Government Securities).
"Guarantee" by any Person means any obligation, direct or indirect,
contingent or otherwise, of such Person guaranteeing,
12
<PAGE>
or having the economic effect of guaranteeing, any Debt of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, including any such obligations arising by
virtue of partnership arrangements or by agreements to keep-well, (ii) to
purchase Property or services or to take-or-pay for the purpose of assuring the
holder of such Debt of the payment of such Debt, (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such Debt or (iv)
entered into for the purpose of assuring in any other manner the obligee against
loss in respect thereof, in whole or in part (and "Guaranteed", "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
--------
however, that the Guarantee by any Person shall not include endorsements by such
- -------
Person for collection or deposit, in either case, in the ordinary course of
business.
"Guarantor" means a Restricted Subsidiary of the Company that has executed
a Restricted Subsidiary Guarantee, until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor Person.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided, however, that a
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change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt and that neither the accrual of interest nor the
accretion of original issue discount shall be deemed an Incurrence of Debt. Debt
otherwise incurred by a Person before it becomes a Subsidiary of the Company
shall be deemed to have been Incurred at the time at which it becomes a
Subsidiary.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
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"Initial Foreign Purchaser" means each non-U.S. person (within the meaning
of Regulation S) that purchased Initial Securities from the Initial Purchasers
in offshore transactions meeting the requirements of Regulation S.
"Initial Purchasers" means Salomon Smith Barney Inc., Goldman, Sachs & Co.,
Chase Securities Inc. and J.P. Morgan Securities Inc.
"Initial Securities" has the meaning stated in the first recital of this
Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Institutional Accredited Investor Global Security" has the meaning
specified in Section 303.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement or
arrangement (including caps, floors, collars and similar agreements) relating
to, or the value of which is dependent upon, interest rates or currency exchange
rates or indices.
"Invested Capital" means the sum of (a) $500,000,000, (b) the aggregate net
proceeds received by the Company from the issuance or sale of any Capital Stock,
including Preferred Stock, of the Company but excluding Disqualified Stock,
subsequent to the Measurement Date, and (c) the aggregate net proceeds from the
issuance or sale of Debt of the Company or any Restricted Subsidiary subsequent
to the Measurement Date convertible or exchangeable into Capital Stock of the
Company other than Disqualified Stock, in each case upon conversion or exchange
thereof into Capital Stock of the Company subsequent to the Measurement Date;
provided, however, that the net proceeds from the issuance or sale of Capital
- -------- -------
Stock or Debt described in clause (b) or (c) shall be excluded from any
computation of Invested Capital to the extent (i) utilized to make a Restricted
Payment or (ii) such Capital Stock or Debt shall have been issued or sold to the
Company, a Subsidiary of the Company or an employee stock ownership plan or
trust established by the Company or any such Subsidiary for the benefit of their
employees.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other Property to others or payments for Property or services for the account
or use of others, or otherwise) to, purchase, redemption, retirement or
acquisition of Capital Stock, bonds, notes, debentures or
14
<PAGE>
other securities or evidence of Debt issued by, or Incurrence of, or payment on,
a Guarantee of any obligation of, any other Person; provided that Investments
--------
shall exclude commercially reasonable extensions of trade credit. The amount, as
of any date of determination, of any Investment shall be the original cost of
such Investment, plus the cost of all additions, as of such date, thereto and
minus the amount, as of such date, of any portion of such Investment repaid to
such Person in cash as a repayment of principal or a return of capital, as the
case may be (except to the extent such repaid amount has been included in
Consolidated Net Income to support the actual making of Restricted Payments),
but without any other adjustments for increases or decreases in value, or write-
ups, write-downs or write-offs with respect to such Investment. In determining
the amount of any Investment involving a transfer of any Property other than
cash, such Property shall be valued at its Fair Market Value at the time of such
transfer.
"Issue Date" means the date on which the Initial Securities are initially
issued.
"Issue Date Rating" means B-3 in the case of Moody's and B in the case of
S&P, which are the respective ratings assigned to the Securities by the Rating
Agencies on the Issue Date.
"Joint Venture" means a Person in which the Company or a Restricted
Subsidiary holds not more than 50% of the shares of Voting Stock.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest, lien,
charge, easement (other than any easement not materially impairing usefulness),
encumbrance, preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such Property
(including any Capital Lease Obligation, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing and any Sale and Leaseback Transaction). For purposes of this
definition the sale, lease, conveyance or other transfer by the Company or any
of its Subsidiaries of, including the grant of indefeasible rights of use or
equivalent arrangements with respect to, dark or lit communications fiber
capacity or communications conduit shall not constitute a Lien.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption or otherwise.
"Measurement Date" means April 28, 1998, the date the 9-1/8% Senior Notes
were originally issued.
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"Moody's" means Moody's Investors Service, Inc. or, if Moody's Investors
Service, Inc. shall cease rating debt securities having a maturity at original
issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, however,
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that if Moody's Investors Service, Inc. ceases rating debt securities having a
maturity at original issuance of at least one year and its ratings business with
respect thereto shall not have been transferred to any successor Person, then
"Moody's" shall mean any other national recognized rating agency (other than
S&P) that rates debt securities having a maturity at original issuance of at
least one year and that shall have been designated by the Trustee by a written
notice given to the Company.
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or cash equivalents received (including amounts received by way of sale or
discounting of any note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiror of Debt or other obligations relating to such Property) therefrom by
such Person, net of (i) all legal, title and recording taxes, expenses and
commissions and other fees and expenses (including appraisals, brokerage
commissions and investment banking fees) Incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Disposition, (ii) all payments made by such Person or
its Subsidiaries on any Debt which is secured by such Property in accordance
with the terms of any Lien upon or with respect to such Property or which must
by the terms of such Lien, or in order to obtain a necessary consent to such
Asset Disposition or by applicable law, be repaid out of the proceeds from such
Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or Joint Ventures of such
Person as a result of such Asset Disposition and (iv) appropriate amounts to be
provided by such Person or any Subsidiary thereof, as the case may be, as a
reserve in accordance with generally accepted accounting principles against any
liabilities associated with such Property and retained by such Person or any
Subsidiary thereof, as the case may be, after such Asset Disposition, including
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the board of directors of such Person, in its reasonable good
faith judgment evidenced by a Board Resolution filed with the Trustee; provided,
--------
however, that any reduction in such reserve within twelve months following the
- -------
consummation of such Asset Disposition will be, for all purposes of this
Indenture and the Securities, treated as a new Asset Disposition at the time of
such reduction with Net Available Proceeds equal to the amount of such
reduction; provided further, however, that, in the event that any consideration
---------------- -------
for a transaction (which would otherwise constitute Net Available Proceeds) is
required to be held in escrow pending determination of whether a purchase price
adjustment will be made, at such time
16
<PAGE>
as such portion of the consideration is released to such Person or its
Restricted Subsidiary from escrow, such portion shall be treated for all
purposes of this Indenture and the Securities as a new Asset Disposition at the
time of such release from escrow with Net Available Proceeds equal to the amount
of such portion of consideration released from escrow.
"9-1/8% Senior Notes" means the Company's 9-1/8% Senior Notes Due 2008 in
an aggregate principal amount not to exceed $2,000,000,000, originally issued on
April 28, 1998.
"9-1/8% Senior Notes Indenture" means the Indenture dated as of April 28,
1998, as amended, supplemented or modified from time to time, between the
Company and IBJ Schroder Bank & Trust Company, as trustee, relating to the
9-1/8% Senior Notes.
"Non-Global Purchasers" has the meaning specified in Section 303.
"Offer" has the meaning specified in "Offer to Purchase" below.
"Offer to Purchase" means a written offer (the "Offer") sent by the Company
by first-class mail, postage prepaid, to each Holder of Securities at its
address appearing in the Security Register on the date of the Offer offering to
purchase up to the principal amount at maturity of Securities specified in such
Offer at the purchase price specified in such Offer (as determined pursuant to
this Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not less
than 30 days or more than 60 days after the date of such Offer and a settlement
date (the "Purchase Date") for purchase of Securities within five Business Days
after the Expiration Date. The Company shall notify the Trustee at least 15
Business Days (or such shorter period as is acceptable to the Trustee) prior to
the mailing of the Offer of the Company's obligation to make an Offer to
Purchase, and the Offer shall be mailed by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The Offer
shall contain information concerning the business of the Company and its
Subsidiaries which the Company in good faith believes will enable such Holders
to make an informed decision with respect to the Offer to Purchase (which at a
minimum will include (i) the most recent annual and quarterly financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the documents required to be filed with the
Trustee pursuant to this Indenture (which requirements may be satisfied by
delivery of such documents together with the Offer), (ii) a description of
material developments in the Company's business subsequent to the date of the
latest of such financial statements referred to in clause (i) (including a
description of the events requiring the Company to make the Offer to Purchase),
(iii) if
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<PAGE>
applicable, appropriate pro forma financial information concerning the
Offer to Purchase and the events requiring the Company to make the Offer to
Purchase and (iv) any other information required by applicable law to be
included therein). The Offer shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Offer to
Purchase. The Offer shall also state:
a. the Section of this Indenture pursuant to which the Offer to Purchase
is being made;
b. the Expiration Date and the Purchase Date;
c. the aggregate principal amount at maturity of the Outstanding
Securities offered to be purchased by the Company pursuant to the Offer to
Purchase (including, if less than 100% of the Outstanding Securities, the manner
by which such has been determined pursuant to the Section hereof requiring the
Offer to Purchase) (the "Purchase Amount");
d. the purchase price to be paid by the Company for $1,000 aggregate
principal amount at maturity of Securities accepted for payment (as specified
pursuant to this Indenture) (the "Purchase Price");
e. that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal amount at
maturity;
f. the place or places where Securities are to be surrendered for tender
pursuant to the Offer to Purchase;
g. that any Securities not tendered or tendered but not purchased by the
Company will continue to accrue interest or accrete principal, as the case may
be;
h. that on the Purchase Date the Purchase Price will become due and
payable upon each Security being accepted for payment pursuant to the Offer to
Purchase and that interest thereon, if any, shall cease to accrue or the
principal thereon shall cease to accrete, as the case may be, on and after the
Purchase Date;
i. that each Holder electing to tender a Security pursuant to the Offer
to Purchase will be required to surrender such Security at the place or places
specified in the Offer prior to the close of business on the Expiration Date
(such Security being, if the Company or the Trustee so requires, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing);
j. that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or the Paying
18
<PAGE>
Agent) receives, not later than the close of business on the Expiration Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount at maturity of the Security the Holder tendered,
the certificate number of the Security the Holder tendered and a statement that
such Holder is withdrawing all or a portion of his tender;
k. that (i) if Securities in an aggregate principal amount at maturity
less than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (ii) if Securities in an aggregate principal amount at maturity
in excess of the Purchase Amount are tendered and not withdrawn pursuant to the
Offer to Purchase, the Company shall purchase Securities having an aggregate
principal amount at maturity equal to the Purchase Amount on a pro rata basis
--- ----
(with such adjustments as may be deemed appropriate so that only Securities in
denominations of $1,000 principal amount at maturity or integral multiples
thereof shall be purchased); and
l. that in the case of any Holder whose Security is purchased only in
part, the Company shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a new Security or
Securities, of any authorized denomination as requested by such Holder, in an
aggregate principal amount at maturity equal to and in exchange for the
unpurchased portion of the Security so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, a Vice Chairman of the Board of Directors, the President or
a Vice President, and by the Chief Financial Officer, the Chief Accounting
Officer, the Treasurer, an Assistant Treasurer, the Controller, the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee, which shall
comply with this Indenture.
"Opinion of Counsel" means an opinion of counsel acceptable to the Trustee
(who may be counsel to the Company, including an employee of the Company).
"OECD" shall mean the Organization for Economic Cooperation and
Development.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
19
<PAGE>
(ii) on and after any maturity or redemption date, Securities, or
portions thereof, for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that (a) the Trustee or the Paying
Agent, as applicable, is not prohibited from paying such money to the
Holders and (b) if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture;
(iii) Securities, except to the extent provided in Sections 1202 and
1203, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Twelve; and
(iv) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount at maturity of Outstanding Securities have given any request,
demand, authorization, direction, consent, notice or waiver hereunder, and for
the purpose of making the calculations required by TIA Section 313, Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which any
Responsible Officer of the Trustee knows to be so owned or as to which the
Trustee has received written notice shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or such other obligor.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the Accreted Value of (and premium, if
any) or interest on any Securities on behalf of the Company.
"Permitted Holders" means the members of the Company's Board of Directors
on the Measurement Date and their respective
20
<PAGE>
estates, spouses, ancestors, and lineal descendants, the legal representatives
of any of the foregoing and the trustees of any bona fide trusts of which the
foregoing are the sole beneficiaries or the grantors, or any Person of which the
foregoing "beneficially owns" (as defined in Rule 13d-3 under the Exchange Act)
at least 66-2/3% of the total voting power of the Voting Stock of such Person.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and not for purposes of
speculation and which, in the case of an interest rate agreement, shall have a
notional amount no greater than the principal amount at maturity due with
respect to the Debt being hedged thereby.
"Permitted Investments" means (a) Cash Equivalents; (b) investments in
prepaid expenses; (c) negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (d)
loans, advances or extensions of credit to employees and directors made in the
ordinary course of business and consistent with past practice; (e) obligations
under Permitted Interest Rate or Currency Protection Agreements; (f) bonds,
notes, debentures and other securities received as a result of Asset
Dispositions pursuant to and in compliance with Section 1016; (g) Investments in
any Person as a result of which such Person becomes a Restricted Subsidiary; (h)
Investments made prior to the Measurement Date; (i) Investments made after the
Measurement Date in Persons engaged in the Telecommunications/IS Business in an
aggregate amount not to exceed Invested Capital; and (j) additional Investments
in an aggregate amount not to exceed $200,000,000.
"Permitted Liens" means (a) Liens for taxes, assessments, governmental
charges, levies or claims which are not yet delinquent or which are being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor; (b) other Liens
incidental to the conduct of the Company's and its Restricted Subsidiaries'
businesses or the ownership of its Property not securing any Debt, and which do
not in the aggregate materially detract from the value of the Company's and its
Restricted Subsidiaries' Property when taken as a whole, or materially impair
the use thereof in the operation of its business; (c) Liens, pledges and
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of statutory obligations;
(d) Liens, pledges or deposits made to secure the performance of tenders, bids,
leases, public or statutory obligations, sureties, stays, appeals, indemnities,
performance
21
<PAGE>
or other similar bonds and other obligations of like nature incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money, the obtaining of advances or credit or the payment of the
deferred purchase price of Property and which do not in the aggregate materially
impair the use of Property in the operation of the business of the Company and
the Restricted Subsidiaries taken as a whole); (e) zoning restrictions,
servitudes, easements, rights-of-way, restrictions and other similar charges or
encumbrances incurred in the ordinary course of business which, in the
aggregate, do not materially detract from the value of the Property subject
thereto or materially interfere with the ordinary conduct of the business of the
Company or its Restricted Subsidiaries; and (f) any interest or title of a
lessor in the Property subject to any lease other than a Capital Lease.
"Permitted Telecommunications Capital Asset Disposition" means the
transfer, conveyance, sale, lease or other disposition of optical fiber and/or
conduit and any related equipment used in a Segment (as defined) of the
Company's communications network that (i) constitute capital assets in
accordance with generally accepted accounting principles and (ii) after giving
effect to such disposition, would result in the Company retaining at least
either (A) 24 optical fibers per route mile on such Segment as deployed at the
time of such disposition or (B) 12 optical fibers and one empty conduit per
route mile on such Segment as deployed as such time. "Segment" means (x) with
respect to the Company's intercity network, the through-portion of such network
between two local networks (i.e., Omaha to Denver) and (y) with respect to a
local network of the Company (i.e., Dallas), the entire through-portion of such
network, excluding the spurs which branch off the through-portion.
"Person" means any individual, corporation, company, partnership, joint
venture, limited liability company, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Physical Security" has the meaning specified in Section 303.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution
22
<PAGE>
of assets upon any voluntary or involuntary liquidation, dissolution or winding-
up of such Person, to shares of Capital Stock of any other class of such Person.
"Preferred Stock Dividends" means all dividends with respect to Preferred
Stock of Restricted Subsidiaries held by Persons other than the Company or a
Wholly Owned Restricted Subsidiary. The amount of any such dividend shall be
equal to the quotient of such dividend divided by the difference between one and
the maximum statutory federal income rate (expressed as a decimal number between
1 and 0) applicable to the issuer of such Preferred Stock for the period during
which such dividends were paid.
"Private Exchange Offer" means the offer by the Company, pursuant to
Section 2(f) of the Registration Agreement, to issue and deliver to certain
purchasers, in exchange for the Initial Securities held by such purchasers as
part of their initial distribution, a like aggregate principal amount at
maturity of Private Exchange Securities.
"Private Exchange Securities" means the Exchange Securities to be issued
pursuant to this Indenture in connection with a Private Exchange Offer pursuant
to the Registration Agreement.
"Private Placement Legend" means the third paragraph of the legend set
forth in the Securities in the form set forth in Exhibit A.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including Capital Stock in, and other securities of, any other
Person. For purposes of any calculation required pursuant to this Indenture, the
value of any Property shall be its Fair Market Value.
"Proportionate Interest" in any issuance of Capital Stock of a Restricted
Subsidiary means a ratio (i) the numerator of which is the aggregate amount of
all Capital Stock of such Restricted Subsidiary beneficially owned by the
Company and the Restricted Subsidiaries and (ii) the denominator of which is the
aggregate amount of Capital Stock of such Restricted Subsidiary beneficially
owned by all Persons (excluding, in the case of this clause (ii), any Investment
made in connection with such issuance).
"Purchase Amount" has the meaning specified in "Offer to Purchase" above.
"Purchase Date" has the meaning specified in "Offer to Purchase" above.
"Purchase Money Debt" means Debt (including Acquired Debt and Capital Lease
Obligations, mortgage financings and purchase
23
<PAGE>
money obligations) incurred for the purpose of financing all or any part of the
cost of construction, installation, acquisition, lease, development or
improvement by the Company or any Restricted Subsidiary of any
Telecommunications/IS Assets of the Company or any Restricted Subsidiary and
including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, as the same may be amended,
supplemented, modified or restated from time to time.
"Purchase Price" has the meaning specified in "Offer to Purchase" above.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in Rule
144A.
"Qualified Receivable Facility" means Debt of the Company or any Subsidiary
Incurred from time to time pursuant to either (x) credit facilities secured by
Receivables or (y) Receivables purchase facilities, and including any related
notes, Guarantees, collateral documents, instruments and agreements executed in
connection therewith, as the same may be amended, supplemented, modified or
restated from time to time.
"Rating Agencies" mean Moody's and S&P.
"Rating Date" means the earlier of the date of public notice of the
occurrence of a Change of Control or of the intention of the Company to effect a
Change of Control.
"Rating Decline" shall be deemed to have occurred if, no later than 90 days
after the Rating Date (which period shall be extended so long as the rating of
the Securities is under publicly announced consideration for possible downgrade
by any of the Rating Agencies), either of the Rating Agencies assigns or
reaffirms a rating to the Securities that is lower than the applicable Issue
Date Rating (or the equivalent thereof). If, prior to the Rating Date, either of
the ratings assigned to the Securities by the Rating Agencies is lower than the
applicable Issue Date Rating, then a Rating Decline will be deemed to have
occurred if such rating is not changed by the 90th day following the Rating
Date. A downgrade within rating categories, as well as between rating
categories, will be considered a Rating Decline.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money and proceeds
and products thereof in each case generated in the ordinary course of business.
"Redemption Date", when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
24
<PAGE>
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"refinancing" has the meaning specified in Section 1010(b)(viii).
"Registered Exchange Offer" means the offer by the Company, pursuant to the
Registration Agreement, to certain Holders of Initial Securities, to issue and
deliver to such Holders, in exchange for the Initial Securities, a like
aggregate principal amount at maturity of Exchange Securities registered under
the Securities Act.
"Registration Agreement" means the Registration Agreement dated April 23,
1998, between the Company and the Initial Purchasers relating to the Initial
Securities.
"Registration Default" has the meaning specified in Exhibit A.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in Section 303.
"Required Filing Dates" has the meaning specified in Section 1007.
"Responsible Officer", when used with respect to the Trustee, means any
officer within the Trustee's Corporate Trust Office, including any vice
president, the Managing Director, the secretary, any assistant secretary, any
assistant treasurer, or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated officers,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Payment" has the meaning specified in Section 1012.
"Restricted Subsidiary" means (a) a Subsidiary of the Company or of a
Restricted Subsidiary that has not been designated or classified as an
Unrestricted Subsidiary pursuant to and in compliance with Section 1019 and (b)
an Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary
pursuant to such Section.
25
<PAGE>
"Restricted Subsidiary Guarantee" means a supplemental indenture to this
Indenture in substantially the form set forth in Exhibit B hereto, providing for
an unconditional Guarantee of payment in full of the Accreted Value of, premium,
if any, and interest on the Securities. Any such Restricted Subsidiary Guarantee
shall not be subordinate to any Debt of the Restricted Subsidiary providing the
Restricted Subsidiary Guarantee.
"Revocation" has the meaning specified in Section 1019.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Global Security" has the meaning specified in Section 303.
"S&P" means Standard & Poor's Ratings Service or, if Standard & Poor's
Ratings Service shall cease rating debt securities having a maturity at original
issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, however,
-------- -------
that if Standard & Poor's Rating Service ceases rating debt securities having a
maturity at original issuance of at least one year and its ratings business with
respect thereto shall not have been transferred to any successor Person, then
"S&P" shall mean any other national recognized rating agency (other than
Moody's) that rates debt securities having a maturity at original issuance of at
least one year and that shall have been designated by the Trustee by a written
notice given to the Company.
"Sale and Leaseback Transaction" of any Person means any direct or indirect
arrangement pursuant to which any Property is sold or transferred by such Person
or a Restricted Subsidiary of such person and is thereafter leased back from the
purchaser or transferee thereof by such Person or one of its Restricted
Subsidiaries. The stated maturity of such arrangement shall be the date of the
last payment of rent or any other amount due under such arrangement prior to the
first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor act), and the rules and regulations thereunder (or respective
successors thereto).
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Shelf Registration Statement" means a registration statement issued by the
Company in connection with the offer and
26
<PAGE>
sale of Initial Securities pursuant to the Registration Agreement.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the Commission.
"Special Assets" means (a) the Capital Stock or assets of Cable Michigan,
Inc., RCN Corporation, Commonwealth Telephone Enterprises, Inc., KCP, Inc. and
California Private Transportation Company, L.P. (and any intermediate holding
companies or other entities formed solely for the purpose of owning such Capital
Stock or assets) owned, directly or indirectly, by the Company or any Restricted
Subsidiary on the Measurement Date, and (b) any Property, other than cash, Cash
Equivalents and Telecommunications/IS Assets, received as consideration for the
disposition after the Measurement Date of Special Assets (as contemplated by the
first proviso in Section 1016).
"Special Interest" has the meaning specified in Exhibit A.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity" when used with respect to a Security or any installment
of interest thereon, means the date specified in such Security as the fixed date
on which the Accreted Value of such Security or such installment of interest is
due and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such Security at the
option of the Holder thereof upon the happening of any contingency beyond the
control of the Company unless such contingency has occurred).
"Subordinated Debt" means Debt of the Company (a) that is not secured by
any Lien on or with respect to any Property now owned or acquired after the
Measurement Date and (b) as to which the payment of principal of (and premium,
if any) and interest and other payment obligations in respect of such Debt shall
be subordinate to the prior payment in full in cash of the Securities to at
least the following extent: (i) no payments of principal of (or premium, if any)
or interest on or otherwise due (including by acceleration or for additional
amounts) in respect of, or repurchases, redemptions or other retirements of,
such Debt (collectively, "payments of such Debt") may be permitted for so long
as any default (after giving effect to any applicable grace periods) in the
payment of principal (or premium, if any) or interest on the Securities exists,
including as a result of acceleration; (ii) in the event that any other Default
exists with respect to the Securities, upon notice by Holders of 25% or more in
aggregate principal amount of the Securities to the Trustee, the Trustee shall
have the right to give notice to the
27
<PAGE>
Company and the holders of such Debt (or trustees or agents therefor) of a
payment blockage, and thereafter no payments of such Debt may be made for a
period of 179 days from the date of such notice, provided that not more than one
--------
such payment blockage notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to the Securities during
such period; (iii) if payment of such Debt is accelerated when any Securities
are Outstanding, no payments of such Debt may be made until three Business Days
after the Trustee receives notice of such acceleration and, thereafter, such
payments may only be made to the extent the terms of such Debt permit payment at
that time; and (iv) such Debt may not (x) provide for payments of principal of
such Debt at the stated maturity thereof or by way of a sinking fund applicable
thereto or by way of any mandatory redemption, defeasance, retirement or
repurchase thereof by the Company (including any redemption, retirement or
repurchase which is contingent upon events or circumstances but excluding any
retirement required by virtue of acceleration of such Debt upon an event of
default thereunder), in each case prior to the final Stated Maturity of the
Securities or (y) permit redemption or other retirement (including pursuant to
an offer to purchase made by the Company) of such other Debt at the option of
the holder thereof prior to the final Stated Maturity of the Securities, other
than, in the case of clause (x) or (y), any such payment, redemption or other
retirement (including pursuant to an offer to purchase made by the Company)
which is conditioned upon (A) a change of control of the Company pursuant to
provisions substantially similar to those described Section 1009 (and which
shall provide that such Debt will not be repurchased pursuant to such provisions
prior to the Company's repurchase of the Securities required to be repurchased
by the Company pursuant to the provisions described in Section 1009) or (B) a
sale or other disposition of assets pursuant to provisions substantially similar
to those described in Section 1016 (and which shall provide that such Debt will
not be repurchased pursuant to such provisions prior to the Company's repurchase
of the Securities required to be repurchased by the Company pursuant to the
provision described in Section 1016).
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Telecommunications/IS Assets" means (a) any Property (other than cash,
cash equivalents and securities) to be owned by the Company or any Restricted
Subsidiary and used in the Telecommunications/IS Business; (b) for purposes of
Sections 1010
28
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and 1014 only, Capital Stock of any Person; or (c) for all other purposes of
this Indenture, Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary from any Person other than an Affiliate of the Company;
provided, however, that, in the case of clause (b) or (c), such Person is
- -------- -------
primarily engaged in the Telecommunications/IS Business.
"Telecommunications/IS Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) constructing, creating, developing
or marketing communications networks, related network transmission equipment,
software and other devices for use in a communications business, (iii) computer
outsourcing, data center management, computer systems integration, reengineering
of computer software for any purpose (including, without limitation, for the
purposes of porting computer software from one operating environment or computer
platform to another or to address issues commonly referred to as "Year 2000
issues") or (iv) evaluating, participating or pursuing any other activity or
opportunity that is primarily related to those identified in (i), (ii) or (iii)
above; provided that the determination of what constitutes a
--------
Telecommunications/IS Business shall be made in good faith by the Board of
Directors.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided in
Section 905.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (a) 91 Holding Corp.; (b) any Subsidiary of
an Unrestricted Subsidiary; and (c) any Subsidiary of the Company designated as
such pursuant to and in compliance with Section 1019 and not thereafter
redesignated as a Restricted Subsidiary as permitted pursuant thereto.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only for so long as
no senior class of securities has such voting power by reason of any
contingency.
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"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Voting Stock or other ownership interests (other than
directors' qualifying shares) of which shall at the time be owned by such Person
or by one or more Wholly Owned Subsidiaries of such Person or by such Person and
one or more Wholly Owned Subsidiaries of such Person.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person
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may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated (with
proper identification of each matter covered therein) and form one instrument.
SECTION 104. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of
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the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner that the Trustee
deems sufficient.
(c) The principal amount at maturity and serial numbers of Securities held
by any Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders of Securities any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
--------
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security. However, any such Holder or future Holder may revoke the request,
demand, authorization, direction, notice, consent, waiver or other Act of the
Holder as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date such Act becomes effective.
SECTION 105. Notices, etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or
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permitted by this Indenture to be made upon, given or furnished to, or filed
with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Finance Department, or
(2) the Company or any Guarantor by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to the Company or such Guarantor addressed to it (in the case of a
Guarantor, in care of the Company) at the address of the Company's
principal office specified in the first paragraph of this Indenture, or at
any other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice of any event to Holders by the
Company or the Trustee, such notice shall be given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at the address of such Holder as it appears
in the Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Notices shall be
effective only upon receipt. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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SECTION 108. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 110. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto, any Paying Agent, any
Security Registrar and their successors hereunder and the Holders any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 112. Conflict with Trust Indenture Act.
---------------------------------
The Trust Indenture Act shall apply as a matter of contract to this
Indenture for purposes of interpretation, construction and defining the rights
and obligations hereunder. If any provision hereof limits, qualifies or
conflicts with any provision of the Trust Indenture Act or another provision
which is required or deemed to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such provision or requirement of the
Trust Indenture Act shall control.
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or excluded,
as the case may be.
SECTION 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, or Stated
Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of Accreted Value (or premium, if any) or interest need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date or Redemption Date or
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at the Stated Maturity or Maturity; provided that no interest shall accrue for
--------
the period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
SECTION 114. No Personal Liability of Directors, Officers, Employees and
-----------------------------------------------------------
Stockholders.
- ------------
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or any Guarantor under the Securities or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation,
solely by reason of its status as a director, officer, employee, incorporator or
stockholder of the Company or a Guarantor. By accepting a Security, each Holder
waives and releases all such liability (but only such liability). The waiver
and release are part of the consideration for issuance of the Securities.
SECTION 115. Independence of Covenants.
-------------------------
All covenants and agreements in this Indenture shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition exists.
SECTION 116. Exhibits.
--------
SECTION 117. Counterparts.
------------
All exhibits attached hereto are by this reference made a part hereof with
the same effect as if herein set forth in full.
This Indenture may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same instrument.
SECTION 118. Duplicate Originals.
-------------------
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
---------------
The Securities and the Trustee's certificate of authentication with respect
thereto shall be in substantially the form set forth in Exhibit A hereto, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or system
on which the Securities may be listed or eligible for trading or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange or system on which the Securities may be listed
or eligible for trading, all as determined by the officers of the Company
executing such Securities, as evidenced by their execution of such Securities.
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
---------------
The aggregate principal amount at maturity of Securities which may be
authenticated and delivered under this Indenture is limited to $833,815,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 906, 1009, 1016 or 1108.
The Securities shall be known and designated as the "10-1/2% Senior
Discount Notes Due 2008" of the Company. Their Stated Maturity shall be
December 1, 2008. The Securities shall be issued at a discount of 59.966% of
their aggregate principal amount at maturity, and shall accrete at a rate of 10-
1/2% per annum, compounded semiannually, to 100% of their aggregate principal
amount at maturity by December 1, 2003. On December 1, 2003, cash interest
shall commence accruing at a rate of 10-1/2% per annum, which shall be payable
semiannually in arrears on June 1 and December 1 in each year, commencing on
June 1, 2003, and at said Stated Maturity, until the principal thereof is paid
or duly provided for. Notwithstanding the foregoing, with
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<PAGE>
respect to Initial Securities, if there has been a Registration Default the
Initial Securities shall from the date of such Registration Default bear Special
Interest up to but excluding the date on which such Registration Default is
cured, as set forth or referred to in the text of the Securities appearing in
Exhibit A hereto. Accrued Special Interest, if any, shall be paid in cash in
arrears semi-annually on June 1 and December 1 in each year, and the amount of
accrued Special Interest shall be determined on the basis of the number of days
actually elapsed. In addition, the Company may elect, upon not less than 60 days
prior notice given in the manner provided for in Section 106, to commence the
accrual of cash interest on all Outstanding Securities on or after December 1,
2001, in which case the outstanding principal amount at maturity of each
Security shall on such commencement date be reduced to the Accreted Value of
such Security as of such commencement date and cash interest shall be payable
with respect to such Security on each June 1 and December 1 thereafter, as set
forth or referred to in the text of the Securities.
Accreted Value of, premium, if any, and interest on the Securities will be
payable, and the Securities may be exchanged or transferred, at the office or
agency of the Company in The City of New York, which, unless otherwise provided
by the Company, will be the offices of the Trustee. At the option of the
Company, interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Security Register.
The interest rate on the Securities is subject to increase by the addition
of Special Interest and otherwise, all as set forth or referred to in the text
of the Securities appearing in Exhibit A hereto.
The Securities shall be redeemable as provided in Article Eleven.
At the election of the Company, the entire Debt on the Securities or
certain of the Company's obligations and covenants and certain Events of Default
thereunder may be defeased as provided in Article Twelve.
SECTION 302. Denominations.
-------------
The Securities will be issued without coupons and in fully registered form
only, in minimum denominations of $1,000 principal amount at maturity and
integral multiples thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its Chairman,
its President or a Vice President, under its corporate seal reproduced thereon
and attested by its Secretary
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or an Assistant Secretary. The signature of any of these officers on the
Securities may be manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise reproduced on the
Securities.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and deliver such Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
The Trustee shall authenticate and deliver (1) initially one or more Global
Securities for original issue in an aggregate principal amount at maturity not
to exceed $833,815,000 and (2) Exchange Securities for issue only in a
Registered Exchange Offer or a Private Exchange Offer pursuant to the
Registration Agreement, for a like principal amount at maturity of Initial
Securities, upon receipt of a Company Order, which shall specify the amount of
Securities to be authenticated, whether the Securities are to be Initial
Securities or Exchange Securities, the date on which such Securities are to be
authenticated and direct the Trustee to authenticate such Securities.
Except as described below, the Securities will be deposited with, or on
behalf of, the Depository, and registered in the name of Cede & Co. as the
Depository's nominee in the form of a global note certificate substantially in
the form of Exhibit A (the "Rule 144A Global Security"), for credit to the
respective accounts of the beneficial owners of the Securities represented
thereby.
Securities purchased by persons outside the United States pursuant to sales
in accordance with Regulation S under the Securities Act shall be deposited
with, or on behalf of, the
38
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Depository, and registered in the name of Cede & Co. as the Depository's nominee
in the form of one or more global note certificates substantially in the form of
Exhibit A (each a "Regulation S Global Security"), for credit to the respective
accounts of the beneficial owners of the Securities represented thereby,
provided that upon such deposit all such Securities shall be credited to or
- --------
through accounts maintained at the Depository by or on behalf of the Euroclear
System or Cedel Bank, societe anonyme.
Securities transferred to Institutional Accredited Investors will be
deposited with, or on behalf of, the Depository, and registered in the name of
Cede & Co. as the Depository's nominee in the form of one or more global note
certificates substantially in the form of Exhibit A (each a "Institutional
Accredited Investor Global Security"), for credit to the respective accounts of
the beneficial owners of the Securities represented thereby.
Securities transferred to any persons who are not Qualified Institutional
Buyers or Institutional Accredited Investors (other than persons outside the
United States pursuant to sales or transfers in accordance with Regulation S
under the Securities Act) (collectively, "Non-Global Purchasers") will be issued
in registered definitive form without coupons substantially in the form of
Exhibit A (the "Physical Securities"). Upon the transfer to a Qualified
Institutional Buyer, an Institutional Accredited Investor or to a person outside
the United States pursuant to a sale or transfer in accordance with Regulation S
under the Securities Act of Physical Securities initially issued to a Non-Global
Purchaser, such Physical Security will be exchanged for an interest in a Global
Security representing the principal amount at maturity of Securities being
transferred.
In case the Company, pursuant to Article Eight, shall be consolidated or
merged with or into any other Person or shall transfer, sell, lease, convey or
otherwise dispose of all or substantially all its assets to any other Person,
and the successor Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the Person which
shall have received a transfer, sale, lease, conveyance or other disposition as
aforesaid, shall have executed an indenture supplemental hereto with the Trustee
pursuant to Article Eight, any of the Securities authenticated or delivered
prior to such consolidation, merger, transfer, sale, lease, conveyance or other
disposition may, from time to time, at the request of the successor Person, be
exchanged for other Securities executed in the name of the successor Person with
such changes in phraseology and form as may be appropriate, but otherwise in
substance of like tenor as the Securities surrendered for such exchange and of
like principal amount at maturity; and the Trustee, upon Company Request of the
successor Person, shall authenticate and deliver Securities as specified in such
request for the purpose of such exchange. If Securities shall at any time be
authenticated and delivered in any new name
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<PAGE>
of a successor Person pursuant to this Section in exchange or substitution for
or upon registration of transfer of any Securities, such successor Person, at
the option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.
SECTION 304. Temporary Securities
--------------------
Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 1002,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount at
maturity of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as the Company may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Security
Register shall be in written form or any other form capable of being converted
into written form within a reasonable time. At all reasonable times, the
Security Register shall be open to inspection by the Trustee. The Trustee is
hereby initially appointed as security registrar (the "Security Registrar") for
the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated pursuant to
40
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Section 1002, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denomination or denominations of a like
aggregate principal amount at maturity.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination and of a like aggregate principal
amount at maturity, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Security Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any transfer tax or other similar governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1009, 1016 or
1108 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Security during a period beginning at the opening of business 15
days before the selection of Securities to be redeemed under Section 1104 and
ending at the close of business on the day of such mailing of the relevant
notice of redemption or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities
------------------------------------------------
If (i) any mutilated Security is surrendered to the Trustee or (ii) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity sufficient to save each of
them harmless,
41
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then, in the absence of actual notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and deliver, in exchange
for any such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount at maturity, bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other similar
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved
----------------------------------------------
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest at the office or
agency of the Company maintained for such purpose pursuant to Section 1002;
provided, however, that each installment of interest may at the Company's option
- -------- -------
be paid by mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 308, to the address of
such Person as it appears in the Security Register.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of such Holder having
been a Holder on the Regular Record Date, and such defaulted interest and (to
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the extent lawful) interest on such defaulted interest at the rate borne by the
Securities (such defaulted interest and interest thereon herein collectively
called "Defaulted Interest") may be paid by the Company, at its election in each
case, as provided in paragraph (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date, and in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given in the
manner provided for in Section 106, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so given, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following paragraph (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange or system on which the Securities may be listed or
eligible for trading, and upon such notice as may be required by such
exchange or system, if, after notice given by the Company to the Trustee of
the proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Trustee in its sole discretion.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security
43
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shall carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
SECTION 308. Persons Deemed Owners
---------------------
Prior to the due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of Accreted Value of (and premium,
if any) and (subject to Sections 305 and 307) interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue, and none
of the Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly cancelled by the Trustee. If
the Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities held by the
Trustee shall be disposed of by the Trustee in accordance with its customary
procedures and certification of their disposal delivered to the Company unless
by Company Order the Company shall direct that cancelled Securities be returned
to it.
SECTION 310. Computation of Interest
-----------------------
Interest on the Securities shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 311. CUSIP Number
------------
The Company in issuing the Securities may use a "CUSIP" number (if then
generally in use), and if so, the Trustee may use the CUSIP numbers in notices
of redemption or exchange as a convenience to Holders; provided, however, that
-------- -------
any such notice may state that no representation is made as to the correctness
or
44
<PAGE>
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly notify the Trustee in writing of any
change in the CUSIP number of the Securities.
SECTION 312. Book-Entry Provisions for Global Securities
-------------------------------------------
(a) The Global Securities initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be deposited with the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit A.
Members of, or participants in, the Depository ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Security, and the Depository may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of the Global Security
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall (i) prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or (ii) impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Rule 144A Global Security may be transferred
or exchanged for interests in an Institutional Accredited Investor Global
Security or a Regulation S Global Security, interests of beneficial owners in an
Institutional Accredited Investor Global Security may be transferred or
exchanged for interests in a Rule 144A Global Security or a Regulation S Global
Security and interests of beneficial owners in a Regulation S Global Security
may be transferred or exchanged for interests in a Rule 144A Global Security or
an Institutional Accredited Investor Global Security, in each case in accordance
with the rules and procedures of the Depository and the provisions of Section
313. Interests of beneficial owners in the Global Securities may be transferred
or exchanged for Physical Securities in accordance with the rules and procedures
of the Depository and the provisions of Section 313. In addition, Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Security if (i) the Depository notifies the
Company that it is unwilling or unable to continue as a depository for such
Global Security or if at any time the Depository ceases to be a clearing agency
registered under the Exchange Act, and a successor depository is not appointed
by the Company within 90 days, (ii) the Company
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<PAGE>
executes and delivers to the Trustee a notice that such Global Security shall be
so transferable, registrable and exchangeable, and such transfer shall be
registrable, or (iii) there shall have occurred and be continuing a Default or
Event of Default with respect to the Securities represented by such Global
Security.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Security Registrar shall (if one or more Physical Securities
are to be issued) reflect on its books and records the date and a decrease in
the principal amount at maturity of the Global Security in an amount equal to
the principal amount at maturity of the beneficial interest in the Global
Security to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Securities of like tenor and
principal amount at maturity of authorized denominations.
(d) In connection with the transfer of Global Securities as an entirety
to beneficial owners pursuant to paragraph (b), the Global Securities shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Securities, an equal aggregate principal amount at maturity of
Physical Securities of like tenor of authorized denominations.
(e) Any Physical Security delivered in exchange for an interest in a
Global Security pursuant to paragraph (b) or (c) of this Section 312 shall,
except as otherwise provided by paragraph (d) of Section 313, bear the legend
regarding transfer restrictions applicable to the Physical Securities set forth
in Exhibit A.
(f) The Holder of any Global Security may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
(g) In the event that a Global Security is exchanged for Physical
Securities pursuant to this Section 312 prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration Statement
with respect to such Securities, such Securities may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of Sections 312 and 313 (including the certification requirements set
forth on the reverse of the Initial Securities intended to ensure that such
transfers comply with Rule 144A, Regulation S or such other applicable exemption
from registration under the Securities Act, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
46
<PAGE>
SECTION 313. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors. The
--------------------------------------------------------
following provisions shall apply with respect to the registration of any
proposed transfer of a Security to any Institutional Accredited Investor which
is not a QIB (excluding transfers to non-U.S. persons):
(1) The Security Registrar shall register the transfer of any
Security if (x) the requested transfer is not prior to that date which is
two years (or such shorter period as may be prescribed by Rule 144(k) under
the Securities Act or any successor provision thereunder) after the later
of the original issue date of such Security (or of any Predecessor
Security) or three months after the last day on which the Company or any
Affiliate of the Company was the owner of such Security or any Predecessor
Security or (y) such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Security stating, or who
has otherwise advised the Company and the Security Registrar in writing,
that the transfer has been made to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act)
and the proposed transferee has delivered to the Security Registrar a
certificate containing certain representations and agreements (the form of
which certificate can be obtained from the Trustee or the Company),
provided that no Initial Foreign Purchaser or any foreign purchaser who has
purchased Securities from an Initial Foreign Purchaser or from any person
other than a QIB or an Institutional Accredited Investor pursuant to
paragraph (b) below shall be permitted to transfer any Securities so
purchased by it to an Institutional Accredited Investor pursuant to this
paragraph (a) prior to the date that is 40 days following the Issue Date.
(2) Subject to paragraph (1) above, if (i) the proposed transferee is
an Agent Member, and the Securities to be transferred consist of Physical
Securities which after transfer are to be evidenced by an interest in the
Institutional Accredited Investor Global Security, upon receipt by the
Security Registrar of instructions given in accordance with the
Depository's and the Security Registrar's procedures, the Security
Registrar shall reflect on the Security Register the date and an increase
in the principal amount at maturity of the Institutional Accredited
Investor Global Security in an amount equal to the principal amount at
maturity of the Physical Securities to be transferred, and the Trustee
shall cancel the Physical Securities so transferred, and (ii) the proposed
transferor is an Agent Member holding a beneficial interest in a Rule 144A
Global Security or a Regulation S Global Security, upon receipt by the
Security Registrar of instructions given in accordance with the
Depository's and the Security
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<PAGE>
Registrar's procedures, the Security Registrar shall reflect on its books
and records the date of such transfer and (A) a decrease in the principal
amount at maturity of such Rule 144A Global Security or Regulation S Global
Security, as the case may be, in an amount equal to the principal amount at
maturity of the beneficial interest in a Global Security to be transferred,
and (B) an increase in the principal amount at maturity of an Institutional
Accredited Investor Global Security in an amount equal to the principal
amount at maturity to be transferred.
(b) Transfers to Non-U.S. Persons. The following provisions shall apply
------------------------------
with respect to the registration of any proposed transfer of a Security to any
non-U.S. person:
(1) The Security Registrar shall register the transfer of any
Security if (x) the requested transfer is not prior to that date which is
two years (or such shorter period as may be prescribed by Rule 144(k) under
the Securities Act or any successor provision thereunder) after the later
of the original issue date of such Security (or of any Predecessor
Security) or three months after the last day on which the Company or any
Affiliate of the Company was the owner of such Security or any Predecessor
Security or (y) such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Security stating, or who
has otherwise advised the Company and the Security Registrar in writing,
that the transfer has been made outside the U.S. in an offshore transaction
within the meaning of Regulation S in compliance with the exemption from
registration under the Securities Act provided by Rule 904 under the
Securities Act, provided that, if such transfer is being effected by an
Initial Foreign Purchaser or any foreign purchaser who has purchased
Securities from an Initial Foreign Purchaser or from any person other than
a QIB or an Institutional Accredited Investor pursuant to this paragraph
(b) prior to the date that is 40 days following the Issue Date, the
transferee shall have certified to the Company and the Trustee that such
transferee is a non-U.S. person (within the meaning of Regulation S) and
that such transferee is acquiring the Securities in an offshore transaction
(within the meaning of Regulation S).
(2) Subject to paragraph (1) above, if (i) the proposed transferee is
an Agent Member, and the Securities to be transferred consist of Physical
Securities which after transfer are to be evidenced by an interest in the
Regulation S Global Security, upon receipt by the Security Registrar of
instructions given in accordance with the Depository's and the Security
Registrar's procedures, the Security Registrar shall reflect on the
Security Register the date and an increase in the principal amount at
maturity of the Regulation S Global Security in an amount equal to the
principal amount of at maturity the Physical Securities
48
<PAGE>
to be transferred, and the Trustee shall cancel the Physical Securities so
transferred, and (ii) the proposed transferor is an Agent Member holding a
beneficial interest in a Rule 144A Global Security or an Institutional
Accredited Investor Global Security, upon receipt by the Security Registrar
of instructions given in accordance with the Depository's and the Security
Registrar's procedures, the Security Registrar shall reflect on its books
and records the date of such transfer and (A) a decrease in the principal
amount at maturity of such Rule 144A Global Security or Institutional
Accredited Investor Global Security, as the case may be, in an amount equal
to the principal amount at maturity to be transferred and (B) an increase
in the principal amount at maturity of a Regulation S Global Security in an
amount equal to the principal amount at maturity to be transferred.
(c) Transfers to QIBs. The following provisions shall apply with respect
------------------
to the registration of any proposed transfer of a Security to any QIB (excluding
transfers to non-U.S. persons):
(1) The Security Registrar shall register the transfer of any
Security if (x) the requested transfer is not prior to that date which is
two years (or such shorter period as may be prescribed by Rule 144(k) under
the Securities Act or any successor provision thereunder) after the later
of the original issue date of such Security (or of any Predecessor
Security) or three months after the last day on which the Company or any
Affiliate of the Company was the owner of such Security or any Predecessor
Security or (y) such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Security stating, or who
has otherwise advised the Company and the Security Registrar in writing,
that the transfer has been made in compliance with the exemption from
registration under the Securities Act provided under Rule 144A to a
transferee who has signed the certification provided for on the form of
Security stating, or has otherwise advised the Company and the Security
Registrar in writing, that such transferee represents and warrants that it
is purchasing the Security for its own account or an account with respect
to which it exercises sole investment discretion and that each of it and
any such account is a QIB within the meaning of Rule 144A and is aware that
the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon the foregoing
representations in order to claim the exemption from registration provided
by Rule 144A.
(2) Subject to paragraph (1) above, if (i) the proposed transferee is
an Agent Member, and the Securities
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<PAGE>
to be transferred consist of Physical Securities which after transfer are
to be evidenced by an interest in the Rule 144A Global Security, upon
receipt by the Security Registrar of instructions given in accordance with
the Depository's and the Security Registrar's procedures, the Security
Registrar shall reflect on the Security Register the date and an increase
in the principal amount at maturity of the Rule 144A Global Security in an
amount equal to the principal amount at maturity of the Physical Securities
to be transferred, and the Trustee shall cancel the Physical Securities so
transferred, and (ii) the proposed transferor is an Agent Member holding a
beneficial interest in an Institutional Accredited Investor Global Security
or a Regulation S Global Security, upon receipt by the Security Registrar
of instructions given in accordance with the Depository's and the Security
Registrar's procedures, the Security Registrar shall reflect on its books
and records the date of such transfer and (A) a decrease in the principal
amount at maturity of such Institutional Accredited Investor Global
Security or Regulation S Global Security, as the case may be, in an amount
equal to the principal amount at maturity to be transferred and (B) an
increase in the principal amount at maturity of a Rule 144A Global Security
in an amount equal to the principal amount at maturity to be transferred.
(d) Private Placement Legend. (1) Upon the registration of transfer,
-------------------------
exchange or replacement of Securities, the Security Registrar shall deliver only
Securities that bear the Private Placement Legend unless (i) the transfer or
exchange of Initial Securities contemplated by paragraph (d)(2) or (d)(3) below
has occurred or (ii) (x) the circumstances contemplated by clause (a)(1)(x),
(b)(1)(x) or (c)(1)(x) of this Section 313 exist and (y) there is delivered to
the Security Registrar and the Trustee an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(2) After a transfer of any Initial Securities during the period of
the effectiveness of a Shelf Registration Statement with respect to such
Initial Securities, all requirements pertaining to legends on such Initial
Security will cease to apply, the requirements requiring that any such
Initial Security be issued in global form will cease to apply, and an
Initial Security in certificated or global form without legends will be
available to the transferee of the Holder of such Initial Securities upon
exchange of such transferring Holder's certificated Initial Security. Upon
the occurrence of any of the circumstances described in this paragraph, the
Company will deliver an Officers' Certificate to the Trustee instructing
the Trustee to issue Securities without legends.
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(3) Upon the consummation of a Registered Exchange Offer with respect
to the Initial Securities pursuant to which certain Holders of such Initial
Securities are offered Exchange Securities (other than Private Exchange
Securities) in exchange for their Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities be issued in
global form will cease to apply, and certificated Initial Securities with
the Private Placement Legend will be available to Holders of such Initial
Securities that do not exchange their Initial Securities, and Exchange
Securities in certificated or global form will be available to Holders that
exchange such Initial Securities in such Registered Exchange Offer. Upon
the occurrence of any of the circumstances described in this paragraph, the
Company will deliver an Officers' Certificate to the Trustee instructing
the Trustee to issue Securities without legends.
(4) Upon the consummation of a Private Exchange Offer with respect to
the Initial Securities pursuant to which Holders of such Initial Securities
are offered Private Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
continue to apply, and Private Exchange Securities in global form will be
available to Holders that exchange such Initial Securities in such Private
Exchange Offer.
(e) Other Transfers. If a Holder proposes to transfer a Security pursuant
----------------
to any exemption from the registration requirements of the Securities Act other
than as provided for by Sections 313(a), 313(b) and 313(c) and other than
pursuant to Section 313(d)(4), the Security Registrar shall only register such
transfer or exchange if such transferor delivers to the Security Registrar and
the Trustee an Opinion of Counsel satisfactory to the Company and the Security
Registrar that such transfer is in compliance with the Securities Act and the
terms of this Indenture.
(f) General. By its acceptance of any Security bearing the Private
--------
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Security Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 312 or this Section
313 for a period of two years, during which time such letters, notices and other
written communications shall at the written request of the Company be delivered
to the Company. After retaining any such copies of letters, notices and other
written communications for a period of at least two years,
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<PAGE>
all such copies may be destroyed by the Trustee. The Company shall have the
right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable prior
written notice to the Security Registrar.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (subject to Section 1206
and except as to surviving rights of registration of transfer, transfer,
exchange and replacement of Securities expressly provided for herein or pursuant
hereto) and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
(1) either
(a) all Outstanding Securities have been delivered to the Trustee
for cancellation; or
(b) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable within one year, or
(iii) are to be called for redemption within one year
under irrevocable arrangements satisfactory to the Trustee in its
sole discretion for the giving of notice of redemption by the
Trustee in the name and at the expense of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee funds
in an amount sufficient to pay and discharge the entire indebtedness
on the Securities not theretofore delivered to the Trustee for
cancellation, for Accreted Value of (and premium, if any, on), and
interest on, the Securities to Maturity or the Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums payable
by the Company hereunder; and
52
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(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations under Sections 607 and 609 and, if money shall have been deposited
with the Trustee pursuant to clause (1)(b) of this Section 401, the obligations
of the Trustee under Section 402 and the last paragraph of Section 1003 shall
survive.
SECTION 402. Application of Trust Money
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the Accreted Value (and premium,
if any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) failure to pay Accreted Value of (or premium, if any, on) any
Security when due; or
(2) failure to pay any interest on any Security when due, continued
for 30 days; or
(3) default in the payment of Accreted Value of (and premium, if any)
and interest on Securities required to be purchased pursuant to an Offer to
Purchase pursuant to Section 1009 when due and payable; or
(4) failure to perform or comply with the provisions of Section 801,
803 or 1016; or
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(5) failure to perform any covenant or agreement of the Company or
any Guarantor in this Indenture or in any Security (other than a covenant a
default in whose performance is elsewhere in this Section specifically
dealt with) continued for 60 days after written notice to the Company by
the Trustee or Holders of at least 25% in aggregate principal amount at
maturity of the Outstanding Securities, which notice shall specify the
default and state that such notice is a "Notice of Default" hereunder; or
(6) default under the terms of any instrument evidencing or securing
Debt of the Company or any Restricted Subsidiary having an outstanding
principal amount of not less than $25,000,000 or its foreign currency
equivalent at the time which default results in the acceleration of the
payment of such indebtedness or constitutes the failure to pay such
indebtedness when due (after expiration of any applicable grace period); or
(7) the rendering of a judgment or judgments against the Company or
any Restricted Subsidiary in an aggregate amount in excess of $25,000,000
or its foreign currency equivalent at the time and shall not be waived,
satisfied or discharged for any period of 45 consecutive days during which
a stay of enforcement shall not be in effect; or
(8) any Restricted Subsidiary Guarantee ceases to be in full force
and effect (other than in accordance with the terms of such Restricted
Subsidiary Guarantee) or any Guarantor denies or disaffirms its obligations
under its Restricted Subsidiary Guarantee; or
(9) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company or any Significant Subsidiary a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under the Federal Bankruptcy Code
or any other applicable federal, state or foreign law, or appointing a
receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Company or any Significant Subsidiary or of
any substantial part of its Property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(10) the institution by the Company or any Significant Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it
to the institution of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal Bankruptcy Code or any other applicable
federal, state or foreign law, or
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the consent by it to the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Company or any Significant Subsidiary or of
any substantial part of its Property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due.
SECTION 502. Acceleration of Maturity; Rescission and Annulment
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in Section
501(9) or 501(10) with respect to the Company) shall occur and be continuing,
the Trustee or the Holders of not less than 25% in aggregate principal amount at
maturity of the Outstanding Securities may declare the Accreted Value, premium,
if any, and accrued and unpaid interest in respect of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such Accreted Value,
premium, if any, and accrued and unpaid interest shall become immediately due
and payable. If an Event of Default specified in Section 501(9) or 501(10)
occurs with respect to the Company, the Accreted Value, premium, if any, and
accrued and unpaid interest in respect of all the Securities shall ipso facto
---- -----
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter provided in this Article Five, the Holders of a majority in
aggregate principal amount at maturity of the Outstanding Securities, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Outstanding Securities,
(B) all unpaid Accreted Value of (and premium, if any, on) any
Outstanding Securities which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid Accreted
Value at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the Securities, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the nonpayment of amounts of
Accreted Value of (or premium, if any, on) Securities which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee
- -------
The Company covenants that if
(a) default is made in the payment of any interest on any Security when
due, continued for 30 days, or
(b) default is made in the payment of the Accreted Value of (or premium,
if any, on) any Security when due,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Securities the whole amount then due and payable on such
Securities for Accreted Value (and premium, if any) and interest, and interest
on any overdue Accreted Value (and premium, if any) and, to the extent that
payment of such interest shall be legally enforceable, upon any overdue
installment of interest, at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
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exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the Property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Accreted Value of the
Securities shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue Accreted Value, premium, if any, or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of Accreted Value
(and premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee and its agents and counsel) and of the Holders allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator or sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without
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the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name and as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected
------------------------------
Any money collected by the Trustee pursuant to this Article Five shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of Accreted Value (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for Accreted
Value of (and premium, if any) and interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for Accreted Value (and premium, if any) and
interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. Limitation on Suits
-------------------
No Holder of any Securities shall have any right to institute any
proceeding with respect to this Indenture or for any other remedy hereunder,
unless
(1) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal amount at
maturity of the Outstanding Securities shall have made written request and
offered reasonable indemnity to the Trustee to institute such proceeding as
trustee; and
(3) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount at maturity of the Outstanding
Securities a direction inconsistent with such request and shall have failed
to institute such proceeding within 60 days;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Accreted Value,
---------------------------------------------------------
Premium and Interest.
- --------------------
Notwithstanding any other provision in this Indenture, including Section
507, the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment as provided herein (including, if applicable,
Article Twelve) and in such Security of the Accreted Value of (and premium, if
any) and (subject to Section 307) interest on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event
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of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article Five or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
SECTION 512. Control by Holders.
------------------
The Holders of a majority in aggregate principal amount at maturity of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting.
SECTION 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount at maturity of
the Outstanding Securities may, on behalf of the Holders of all the Securities,
waive any past Default hereunder and its consequences, except a Default
(1) in the payment of the Accreted Value of (or premium, if any) or
interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
The Company shall deliver to the Trustee an Officers' Certificate stating
that the requisite majority have consented to such waiver and attaching such
consents upon which, subject to Section 104, the Trustee may conclusively rely.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, or plead, or in
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any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but, in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section 601;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
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(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount at maturity of the
Outstanding Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or indemnity reasonably satisfactory to it
against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
601.
SECTION 602. Notice of Default.
-----------------
If a Default occurs and is continuing, the Trustee shall transmit, in the
manner and to the extent provided in TIA Section 313(c), notice of such Default
within 60 days after it is known to any Responsible Officer of the Trustee or
written notice of it is received by the Trustee; provided, however, that, except
-------- -------
in the case of a Default in the payment of the Accreted Value of (or premium, if
any) or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee, a
trust committee of directors or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders.
The Trustee is not required to take notice or deemed to have notice of
any Event of Default with respect to the Securities, except an Event of Default
under Section 501(1), (2), (3) or (4) hereof (provided that in the case of
Section 501(4), such Event of Default constitutes a failure to purchase
Securities pursuant to an Offer to Purchase pursuant to Section 1016), unless
the Trustee shall have received written notice at its Corporate Trust Office
(which notice shall reference the Securities, the Company and the Indenture) of
such Event of Default from the Company or any Holder or unless a Responsible
Officer of the Trustee shall otherwise have knowledge thereof.
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SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to Section 601 and to the provisions of TIA Sections 315(a) through
315(d):
(1) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, receive and rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee may act through counsel, agents, custodians and
nominees and shall not be responsible for the misconduct or negligence of
any such person appointed and supervised with due care and in good faith;
(6) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(7) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts
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or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
---------------------------------------------------
Securities.
- ----------
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
-------------------
The Trustee, any Paying Agent, any Security Registrar or any other agent of
the Company or of the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to TIA Sections 310(b)
and 311, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence,
willful misconduct or bad faith; and
(3) to indemnify the Trustee and its directors, officers, employees
and agents for, and to hold them harmless against, any loss, liability or
expense incurred without negligence, willful misconduct or bad faith on the
part of any of them, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself or themselves against any claim or liability in connection with the
exercise or performance of any of its or their powers or duties hereunder.
The obligations of the Company under this Section 607 to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of Accreted Value of (and premium, if
any, on) or interest on particular Securities.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(9) or (10), the expenses (including
the reasonable charges and expenses of its counsel) of and the compensation for
such services are intended to constitute expenses of administration under any
applicable federal, state or foreign bankruptcy, insolvency or other similar
law.
The provisions of this Section 607 shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 608. Corporate Trustee Required; Eligibility; Conflicting
----------------------------------------------------
Interests.
- ---------
(a) There shall be at all times a Trustee hereunder which shall be subject
to and comply with the provisions of Section 310(a)(1) of the Trust Indenture
Act and shall have a combined capital and surplus of at least $50,000,000. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then,
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for the purposes of this Section 608, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time a Responsible
Officer of the Trustee shall have actual knowledge that the Trustee ceases to be
eligible in accordance with the provisions of this Section 608, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article Six.
(b) The Trustee shall be subject to and comply with Section 310(b) of the
Trust Indenture Act.
SECTION 609. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article Six shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 610.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 610 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of not
less than a majority in aggregate principal amount at maturity of the
Outstanding Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 608(a) and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
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then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If the
Company does not promptly appoint a successor Trustee after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
shall be appointed by Act of the Holders of a majority in aggregate principal
amount at maturity of the Outstanding Securities delivered to the Company and
the retiring Trustee. In either case, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of
Securities in the manner provided for in Section 106. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust Office.
(g) The retiring Trustee shall not be liable for any of the acts or
omissions of any successor Trustee appointed hereunder.
SECTION 610. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder. Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
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and confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article Six.
SECTION 611. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder; provided that such Person shall be
--------
otherwise qualified and eligible under this Article Six, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion,
consolidation or transfer of assets to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
In case at that time any of the Securities shall not have been authenticated,
any successor Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee. In all such
cases such certificates shall have the full force and effect which this
Indenture provides that the certificate of authentication of the Trustee shall
have; provided, however, that the right to adopt the certificate of
-------- -------
authentication of any predecessor Trustee or to authenticate Securities in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion, consolidation or transfer of assets.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
--------------------------------------------
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that none of the Company or the Trustee or any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
TIA Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
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SECTION 702. Reports by Trustee.
------------------
Within 60 days after May 15 of each year commencing with the first May 15
after the first issuance of Securities, the Trustee shall transmit to the
Holders, in the manner and to the extent provided in TIA Section 313(c), a brief
report dated as of such May 15 if required by TIA Section 313(a).
A copy of each such report at the time of its mailing to Holders shall be
filed with the Commission and the principal national securities exchange (if
any) on which the Securities are listed.
The Company shall notify a Responsible Officer of the Trustee if the
Securities become listed on any national securities exchange or of any delisting
thereof.
SECTION 703. Reports by Company.
------------------
The Company shall file with the Trustee and deliver to the Holders of
Securities the reports and other information required to be provided by it
pursuant to Section 1007.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not, in a single transaction or a series of related
transactions, (i) consolidate with or merge into any other Person or Persons or
permit any other Person to consolidate with or merge into the Company or (ii)
directly or indirectly, transfer, sell, lease, convey or otherwise dispose of
all or substantially all its assets to any other Person or Persons, unless:
(1) in a transaction in which the Company is not the surviving Person
or in which the Company transfers, sells, leases, conveys or otherwise
disposes of all or substantially all of its assets to any other Person, the
resulting, surviving or transferee Person (the "successor entity") is
organized under the laws of the United States of America or any State
thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture executed and delivered to the Trustee in form
satisfactory to the Trustee, all of the Company's obligations under this
Indenture;
(2) immediately before and after giving effect to such transaction
and treating any Debt which becomes an obligation of the Company (or the
successor entity) or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Company or such Restricted
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Subsidiary at the time of the transaction, no Default or Event of Default
shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Company (or the successor entity) is equal to
or greater than that of the Company immediately prior to the transaction;
(4) immediately after giving effect to such transaction and treating
any Debt which becomes an obligation of the Company (or the successor
entity) or a Restricted Subsidiary as a result of such transaction as
having been Incurred by the Company or such Restricted Subsidiary at the
time of the transaction, the Company (or the successor entity) could Incur
at least $1.00 of additional Debt pursuant to the provisions of paragraph
(a) of Section 1010;
(5) if, as a result of any such transaction, Property of the Company
(or the successor entity) or any Restricted Subsidiary would become subject
to a Lien prohibited by the provisions of Section 1014, the Company (or the
successor entity) shall have secured the Securities as required by said
covenant;
(6) in the case of a transfer, sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company, such
assets shall have been transferred as an entirety or virtually as an
entirety to one Person and such Person shall have complied with all the
provisions of this paragraph; and
(7) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each in form and substance reasonably
satisfactory to the Trustee, stating that such consolidation, merger,
transfer, sale, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, complies with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with, and, with respect to such Officers' Certificate,
setting forth the manner of determination of the Consolidated Net Worth, in
accordance with clause (3) of this Section 801, of the Company or, if
applicable, of the successor entity as required pursuant to the foregoing.
SECTION 802. Successor Company Substituted.
-----------------------------
Upon any consolidation of the Company with or merger of the Company with or
into any other Person or any transfer, sale, lease, conveyance or other
disposition of all or substantially all the assets of the Company to any Person
or Persons in
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accordance with Section 801, the successor Person formed by such consolidation
or into which the Company is merged or to which such transfer, sale, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
herein, and the predecessor Company (which term shall for this purpose mean the
Person named as the "Company" in the first paragraph of this Indenture or any
successor Person which shall have become such in the manner described in Section
801), except in the case of a lease, shall be released from all its obligations
and covenants under this Indenture and the Securities and may be dissolved and
liquidated.
SECTION 803. Guarantor May Consolidate, etc., Only on Certain Terms.
------------------------------------------------------
The Company shall not permit any Guarantor to, in a single transaction or a
series of related transactions, (i) consolidate with or merge into any other
Person or Persons (other than the Company or another Guarantor) or permit any
other Person (other than the Company or another Guarantor) to consolidate with
or merge into such Guarantor or (ii) directly or indirectly, transfer, sell,
lease, convey or otherwise dispose of all or substantially all its assets to any
other Person or Persons (other than the Company or another Guarantor), unless:
(1) in a transaction in which such Guarantor is not the surviving
Person or in which such Guarantor transfers, sells, leases, conveys or
otherwise disposes of all or substantially all of its assets to any other
Person, the resulting, surviving or transferee Person (the "successor
guarantor") is organized under the laws of the United States of America or
any State thereof or the District of Columbia and shall expressly assume,
by a supplemental indenture executed and delivered to the Trustee in form
satisfactory to the Trustee, all of such Guarantor's obligations under this
Indenture;
(2) immediately before and after giving effect to such transaction
and treating any Debt which becomes an obligation of the Company or a
Restricted Subsidiary (including the successor guarantor) as a result of
such transaction as having been Incurred by the Company or such Restricted
Subsidiary at the time of the transaction, no Default or Event of Default
shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Company is equal to or greater than that of
the Company immediately prior to the transaction;
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(4) immediately after giving effect to such transaction and treating
any Debt which becomes an obligation of the Company or a Restricted
Subsidiary (including the successor guarantor) as a result of such
transaction as having been Incurred by the Company or such Restricted
Subsidiary at the time of the transaction, the Company could Incur at least
$1.00 of additional Debt pursuant to the provisions of paragraph (a) of
Section 1010;
(5) if, as a result of any such transaction, Property of the Company
or any Restricted Subsidiary (including the successor guarantor) would
become subject to a Lien prohibited by the provisions of Section 1014, the
Company shall have secured the Securities as required by said covenant;
(6) in the case of a transfer, sale, lease, conveyance or other
disposition of all or substantially all of the assets of such Guarantor,
such assets shall have been transferred as an entirety or virtually as an
entirety to one Person and such Person shall have complied with all the
provisions of this paragraph; and
(7) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each in form and substance reasonably
satisfactory to the Trustee, stating that such consolidation, merger,
transfer, sale, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, complies with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with, and, with respect to such Officers' Certificate,
setting forth the manner of determination of the Consolidated Net Worth, in
accordance with clause (3) of this Section 803, of such Guarantor or, if
applicable, of the successor guarantor as required pursuant to the
foregoing.
SECTION 804. Successor Guarantor Substituted.
-------------------------------
Upon any consolidation of a Guarantor with or merger of a Guarantor with or
into any other Person or any transfer, sale, lease, conveyance or other
disposition of all or substantially all the assets of a Guarantor to any Person
or Persons in accordance with Section 803, the successor Person formed by such
consolidation or into which such Guarantor is merged or to which such transfer,
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, such Guarantor under
this Indenture with the same effect as if such successor Person had been named
as a Guarantor herein, and the predecessor Guarantor (which term shall for this
purpose mean the Person named as the "New Guarantor" in the first paragraph of
the applicable supplemental indenture or any successor Person which shall have
become such in
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the manner described in Section 803), except in the case of a lease, shall be
released from all its obligations and covenants under its Restricted Subsidiary
Guarantee and the Securities and may be dissolved and liquidated.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
The Company and the Trustee may, at any time and from time to time, without
notice to or consent of any Holders of Securities, enter into one or more
indentures supplemental hereto:
(1) to evidence the succession of another Person to the Company or a
Guarantor and the assumption by such successor of the covenants of the
Company or such Guarantor herein and in the Securities; or
(2) to add to the covenants of the Company, for the benefit of the
Holders, or to surrender any right or power conferred upon the Company
hereby; or
(3) to add any additional Events of Default; or
(4) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
(5) to evidence and provide for the acceptance of appointment
hereunder of a successor Trustee pursuant to the requirements of
Section 610; or
(6) to secure the Securities; or
(7) to comply with the Trust Indenture Act or the Securities Act
(including Regulation S promulgated thereunder); or
(8) to add additional Guarantees with respect to the Securities or to
release Guarantors from Restricted Subsidiary Guarantees as provided by the
terms of this Indenture; or
(9) to cure any ambiguity herein, to correct or supplement any
provision herein which may be inconsistent with any other provision herein,
or to add any other provision with respect to matters or questions arising
under this Indenture; provided such actions shall not adversely affect the
--------
interests of the Holders in any material respect.
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SECTION 902. Supplemental Indentures With Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than a majority in principal
amount at maturity of the Outstanding Securities, by Act of such Holders
delivered to the Company and the Trustee, the Company and the Trustee may enter
into one or more indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or waiving or otherwise modifying in any manner the rights of the
Holders, provided that no such supplemental indenture shall, without the consent
--------
of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the Accreted Value of, or any
installment of interest on, any Security, or reduce the Accreted Value
thereof or the interest thereon that would be due and payable upon the
Stated Maturity thereof, or change the place of payment where, or the coin
or currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof; or
(2) reduce the percentage in principal amount at maturity of the
Outstanding Securities, the consent of whose Holders is necessary for any
such supplemental indenture or required for any waiver of compliance with
certain provisions of this Indenture or certain Defaults hereunder; or
(3) subordinate in right of payment, or otherwise subordinate, the
Securities to any other Debt; or
(4) except as otherwise provided herein, release any security
interest that may have been granted in favor of the Holders of the
Securities; or
(5) reduce the premium payable upon the redemption of any Security
nor change the time at which any Security may be redeemed, as described in
Exhibit A; or
(6) reduce the premium payable upon a Change of Control Triggering
Event or, at any time after a Change of Control Triggering Event has
occurred, change the time at which the Offer to Purchase relating thereto
must be made or at which the Securities must be repurchased pursuant to
such Offer to Purchase; or
(7) at any time after the Company is obligated to make an Offer to
Purchase with the Net Available Proceeds from Asset Dispositions, change
the time at which such Offer to Purchase must be made or at which the
Securities must be repurchased pursuant thereto; or
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(8) make any change in any Restricted Subsidiary Guarantee that would
adversely affect the Holders of the Securities;
(9) modify any provision of the Indenture relating to the calculation
of Accreted Value with respect to the Securities; or
(10) modify any provision of this Section 902 (except to increase any
percentage set forth herein).
It shall not be necessary for any Act of Holders under this Section 902 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Nine or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture and an Officers' Certificate stating that all
conditions precedent to the execution of such supplemental indenture have been
fulfilled. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article Nine,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article Nine shall
conform as a matter of contract or law to the requirements of the Trust
Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Nine may bear a notation in form
approved by the Trustee and the Company as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to
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conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
SECTION 907. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to this Article Nine, the Company shall give
notice thereof to the Holders of each Outstanding Security affected, in the
manner provided for in Section 106, setting forth in general terms the substance
of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Accreted Value, Premium, if any, and Interest.
--------------------------------------------------------
The Company covenants and agrees for the benefit of the Holders that it
shall duly and punctually pay the Accreted Value of (and premium, if any) and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in The City of New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Corporate Trust Office of the Trustee shall be
such office or agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such purposes. The
Company shall give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; provided, however, that no such designation or
-------- -------
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
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rescission and any change in the location of any such other office or agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
-----------------------------------------------
If the Company shall at any time act as its own Paying Agent, it shall, on
or before each due date of the Accreted Value of (or premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the Accreted Value of
(or premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and shall promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it shall, on or before each due date of the Accreted Value of (or
premium, if any) or interest on any Securities, deposit with a Paying Agent a
sum sufficient to pay the Accreted Value (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such Accreted Value, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of such
action or any failure so to act.
The Company shall cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 1003,
that such Paying Agent shall:
(1) hold all sums held by it for the payment of the Accreted Value
of, premium, if any, or interest on Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of Accreted
Value, premium, if any, or interest;
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(4) indemnify the Trustee and its officers, directors, employees and
agents against any loss, cost or liability caused by, or incurred as a
result of, such Paying Agent's acts or omissions.
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The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the Accreted Value of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
Accreted Value, premium or interest has become due and payable shall be paid to
the Company on Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
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required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. Corporate Existence.
-------------------
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and each
Subsidiary of the Company; provided, however, that the Company shall not be
-------- -------
required to preserve, with respect to the Company, any such right or franchise
or, with respect to any such Subsidiary (subject to all the other covenants in
this Indenture), any such corporate existence, right or franchise, if the Board
of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries as
a whole and that the loss thereof is not disadvantageous in any material respect
to the Holders.
SECTION 1005. Maintenance of Properties.
-------------------------
The Company shall cause all properties owned by the Company or any
Restricted Subsidiary or used or held for use in the conduct of its business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair
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and working order and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
-------- -------
Section 1005 shall prevent the Company from discontinuing the maintenance of any
of such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders.
SECTION 1006. Insurance.
---------
The Company shall at all times keep all of its and its Restricted
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company to be responsible, against loss or damage to the extent
that property of similar character is usually so insured by companies similarly
situated and owning like properties.
SECTION 1007. Reports.
-------
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall file with
the Commission the annual reports, quarterly reports and other documents which
the Company would have been required to file with the Commission pursuant to
such Section 13(a) or 15(d) or any successor provision thereto if the Company
were subject thereto, such documents to be filed with the Commission on or prior
to the respective dates (the "Required Filing Dates") by which the Company would
have been required to file them. The Company shall also in any event (a) within
15 days of each Required Filing Date (i) transmit by mail to all Holders, as
their names and addresses appear in the Security Register, without cost to such
Holders, and (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents (without exhibits) which the Company would have been
required to file with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act or any successor provisions thereto if the Company were subject
thereto and (b) if filing such documents by the Company with the Commission is
not permitted under the Exchange Act, promptly upon written request, supply
copies of such documents (without exhibits) to any prospective Holder.
SECTION 1008. Statement by Officers as to Default.
-----------------------------------
(a) The Company shall deliver to the Trustee, on the date of delivery of
each annual report to be delivered pursuant to Section 1007, a brief certificate
from the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of the Company's compliance during
the period covered by such report with all conditions and covenants under this
Indenture. If the signer has knowledge of
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any noncompliance that occurred during such period, the certificate shall
describe its status and what action the Company has taken or is taking or
proposes to take with respect thereto. For purposes of this Section 1008(a),
such compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.
(b) When any Default has occurred and is continuing under this Indenture,
or if the trustee for or the holder of any other evidence of Debt of the Company
or any Restricted Subsidiary gives any notice or takes any other action with
respect to a claimed default (other than with respect to Debt in the principal
amount of less than $25,000,000 or its foreign currency equivalent at the time),
the Company shall, within 30 days of such occurrence, notice or other action,
deliver to the Trustee by registered or certified mail or by telegram, telex or
facsimile transmission an Officers' Certificate specifying such event, notice or
other action, its status and what action the Company is taking or purposes to
take with respect thereto.
SECTION 1009. Change of Control Triggering Event.
----------------------------------
(a) Upon the occurrence of a Change of Control Triggering Event, each
Holder shall have the right to require that the Company repurchase such Holder's
Securities in whole or in part in integral multiples of $1,000 principal amount
at maturity, in accordance with the procedures set forth in this Section 1009
and this Indenture.
(b) Within 30 days of the occurrence of both a Change of Control and a
Rating Decline with respect to the Securities (a "Change of Control Triggering
Event"), the Company will be required to make an Offer to Purchase all
Outstanding Securities at a price in cash equal to 101% of the Accreted Value of
the Securities on the purchase date, plus accrued and unpaid interest (if any)
to such purchase date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
(c) The Company and the Trustee shall perform their respective obligations
for the Offer to Purchase as specified in the Offer. Prior to the Purchase
Date, the Company shall (i) accept for payment Securities or portions thereof
tendered pursuant to the Offer, (ii) irrevocably deposit with the Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) money sufficient to pay the Purchase Price of
all Securities or portions thereof so accepted (provided that such deposit may
be made no later than 11:00 A.M. New York City time on the Purchase Date if the
Company elects) and (iii) deliver or cause to be delivered to the Trustee all
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so
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accepted payment in an amount equal to the Purchase Price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Security or
Securities equal in principal amount at maturity to any unpurchased portion of
the principal amount at maturity of the Security surrendered as requested by the
Holder. Any Security not accepted for payment shall be promptly mailed or
delivered by the Company to the Holder thereof. In the event that the aggregate
Purchase Price is less than the amount delivered by the Company to the Trustee
or the Paying Agent, the Trustee or the Paying Agent, as the case may be, shall
deliver the excess to the Company immediately after the Purchase Date.
(d) A "Change of Control" means the occurrence of any of the following
events:
(i) if any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act or any successor provisions to either
of the foregoing), including any group acting for the purpose of acquiring,
holding, voting or disposing of securities within the meaning of Rule 13d-
5(b)(1) under the Exchange Act, other than any one or more of the Permitted
Holders, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of 35% or more of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
-------- -------
Holders are the "beneficial owners" (as defined in Rule 13d-3 under the
Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, in the aggregate of a lesser percentage of
the total voting power of the Voting Stock of the Company than such other
person or group (for purposes of this clause (i), such person or group
shall be deemed to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the "parent
corporation") so long as such person or group beneficially owns, directly
or indirectly, in the aggregate a majority of the total voting power of the
Voting Stock of such parent corporation); or
(ii) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets
of the Company and the Restricted Subsidiaries, considered as a whole
(other than a disposition of such assets as an entirety or virtually as an
entirety to a Wholly Owned Restricted Subsidiary or one or more Permitted
Holders) shall have occurred; or
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(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election or appointment by such board or whose
nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors then in office; or
(iv) the shareholders of the Company shall have approved any plan
of liquidation or dissolution of the Company.
(e) The Company shall not be required to make an Offer to Purchase upon a
Change of Control Triggering Event if a third party makes the Offer to Purchase
in the manner, at the times and otherwise in compliance with the requirements
set forth in this Indenture applicable to an Offer to Purchase made by the
Company and purchases all Securities validly tendered and not withdrawn under
such Offer to Purchase.
(f) In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section by
virtue thereof.
SECTION 1010. Limitation on Consolidated Debt.
-------------------------------
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, Incur any Debt, unless, after giving pro forma
effect to such Incurrence and the receipt and application of the net proceeds
thereof, no Default or Event of Default would occur as a consequence of such
Incurrence or be continuing following such Incurrence and either (i) the ratio
of (A) the aggregate consolidated principal amount (or, in the case of Debt
issued at a discount, the then-Accreted Value) of Debt of the Company
outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the Incurrence of such Debt and any other Debt
Incurred or repaid since such balance sheet date and the receipt and application
of the net proceeds thereof, to (B) Consolidated Cash Flow Available for Fixed
Charges for the four full fiscal quarters next preceding the Incurrence of such
Debt for which consolidated financial statements are available, would be less
than 5.0 to 1.0, or (ii) the Company's Consolidated Capital Ratio as of the most
recent available quarterly or annual balance
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sheet, after giving pro forma effect to (x) the Incurrence of such Debt and any
other Debt Incurred or repaid since such balance sheet date, (y) the issuance of
any Capital Stock (other than Disqualified Stock) of the Company since such
balance sheet date, including the issuance of any Capital Stock to be issued
concurrently with the Incurrence of such Debt, and (z) the receipt and
application of the net proceeds of such Debt or Capital Stock, as the case may
be, is less than 2.25 to 1.0.
(b) Notwithstanding the foregoing limitation, the Company or any
Restricted Subsidiary may Incur any and all of the following (each of which
shall be given independent effect):
(i) Debt under the Securities, this Indenture or any Restricted
Subsidiary Guarantee;
(ii) Debt under Credit Facilities in an aggregate principal amount
outstanding or available (together with all refinancing Debt outstanding or
available pursuant to clause (viii) below in respect of Debt previously
Incurred pursuant to this clause (ii)) at any one time not to exceed the
greater of (x) $750,000,000, which amount shall be permanently reduced by
the amount of Net Available Proceeds used to repay Debt under the Credit
Facilities, and not reinvested in Telecommunications/IS Assets or used to
purchase Securities or repay other Debt, pursuant to and as permitted by
Section 1016, and (y) 85% of the Eligible Receivables;
(iii) Purchase Money Debt, provided that the amount of such Purchase
--------
Money Debt does not exceed 100% of the cost of the construction,
installation, acquisition, lease, development or improvement of the
applicable Telecommunications/IS Assets;
(iv) Subordinated Debt of the Company; provided, however, that the
-------- -------
aggregate principal amount of such Debt, together with any other
outstanding Debt Incurred pursuant to this clause (iv), shall not exceed
$500,000,000 at any one time (which amount shall be permanently reduced by
the amount of Net Available Proceeds used to repay Subordinated Debt of the
Company, and not reinvested in Telecommunications/IS Assets or used to
purchase Securities or repay other Debt, pursuant to and as permitted by
Section 1016), except to the extent such Debt in excess of $500,000,000 (A)
is subordinated to all other Debt of the Company other than Debt Incurred
pursuant to this clause (iv) in excess of such $500,000,000 limitation, (B)
does not provide for the payment of cash interest on such Debt prior to the
Stated Maturity of the Securities and (C) (1) does not provide for payments
of principal of such Debt at stated maturity or by way of a sinking fund
applicable thereto or by way of any mandatory redemption, defeasance,
retirement or repurchase thereof by the Company (including any
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redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of the
acceleration of any payment with respect to such Debt upon any event of
default thereunder), in each case on or prior to the Stated Maturity of the
Securities, and (2) does not permit redemption or other retirement
(including pursuant to an offer to purchase made by the Company) of such
Debt at the option of the holder thereof on or prior to the Stated Maturity
of the Securities;
(v) Debt outstanding on the Measurement Date;
(vi) Debt owed by the Company to any Restricted Subsidiary of the
Company or Debt owed by a Restricted Subsidiary of the Company to the
Company or a Restricted Subsidiary of the Company; provided, however, that
-------- -------
(x) upon the transfer, conveyance or other disposition by such Restricted
Subsidiary or the Company of any Debt so permitted to a Person other than
the Company or another Restricted Subsidiary of the Company or (y) if for
any reason such Restricted Subsidiary ceases to be a Restricted Subsidiary,
the provisions of this clause (vi) shall no longer be applicable to such
Debt and such Debt shall be deemed to have been Incurred by the issuer
thereof at the time of such transfer, conveyance or other disposition or
when such Restricted Subsidiary ceases to be a Restricted Subsidiary;
(vii) Debt Incurred by a Person prior to the time (A) such Person
became a Restricted Subsidiary, (B) such Person merges into or consolidates
with a Restricted Subsidiary or (C) another Restricted Subsidiary merges
into or consolidates with such Person (in a transaction in which such
Person becomes a Restricted Subsidiary), which Debt was not Incurred in
anticipation of such transaction and was outstanding prior to such
transaction;
(viii) Debt Incurred to renew, extend, refinance, defease, repay,
prepay, repurchase, redeem, retire, exchange or refund (each, a
"refinancing") Debt Incurred pursuant to clause (i), (ii), (iii), (v),
(vii) or (xii) of this paragraph (b) or this clause (viii), in an aggregate
principal amount (or if issued at a discount, the then-Accreted Value) not
to exceed the aggregate principal amount (or if issued at a discount, the
then-Accreted Value) of and accrued interest on the Debt so refinanced plus
the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Debt so refinanced or the amount
of any premium reasonably determined by the Board of Directors as necessary
to accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Company Incurred in
connection with such refinancing; provided,
--------
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however, that (A) the refinancing Debt shall not be senior in right of
-------
payment to the Debt that is being refinanced and (B) in the case of any
refinancing of Debt Incurred pursuant to clause (i), (v), (vii) or (xii)
or, if such Debt previously refinanced Debt Incurred pursuant to any such
clause, this clause (viii), the refinancing Debt by its terms, or by the
terms of any agreement or instrument pursuant to which such Debt is issued,
(x) does not provide for payments of principal of such Debt at stated
maturity or by way of a sinking fund applicable thereto or by way of any
mandatory redemption, defeasance, retirement or repurchase thereof by the
Company (including any redemption, retirement or repurchase which is
contingent upon events or circumstances, but excluding any retirement
required by virtue of the acceleration of any payment with respect to such
Debt upon any event of default thereunder), in each case prior to the time
the same are required by the terms of the Debt being refinanced and (y)
does not permit redemption or other retirement (including pursuant to an
offer to purchase made by the Company) of such Debt at the option of the
holder thereof prior to the time the same are required by the terms of the
Debt being refinanced, other than, in the case of clause (x) or (y), any
such payment, redemption or other retirement at the option of the holder of
such Debt (including pursuant to an offer to purchase made by the Company)
which is conditioned upon a change of control pursuant to provisions
substantially similar to those described under Section 1009;
(ix) Debt (A) in respect of performance, surety or appeal bonds,
Guarantees, letters of credit or reimbursement obligations Incurred or
provided in the ordinary course of business securing the performance of
contractual, franchise, lease, self-insurance or license obligations and
not in connection with the Incurrence of Debt or (B) in respect of
customary agreements providing for indemnification, adjustment of purchase
price after closing, or similar obligations, or from Guarantees or letters
of credit, surety bonds or performance bonds securing any such obligations
of the Company or any of its Restricted Subsidiaries pursuant to such
agreements, Incurred in connection with the disposition of any business,
assets or Restricted Subsidiary of the Company (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary of the Company for the purpose of
financing such acquisition) and in an aggregate principal amount not to
exceed the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition;
(x) Debt consisting of Permitted Interest Rate or Currency
Protection Agreements;
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(xi) Debt not otherwise permitted to be Incurred pursuant to clauses
(i) through (x) above or clause (xii) below, which, together with any other
outstanding Debt Incurred pursuant to this clause (xi), has an aggregate
principal amount not in excess of $50,000,000 at any time outstanding; and
(xii) Debt under the 9-1/8% Senior Notes, the 9-1/8% Senior Notes
Indenture or restricted subsidiary guarantees issued in accordance with the
9-1/8% Senior Notes Indenture.
(c) Notwithstanding any other provision of this Section 1010, the maximum
amount of Debt that the Company or a Restricted Subsidiary may Incur pursuant to
this Section 1010 shall not be deemed to be exceeded due solely to the result of
fluctuations in the exchange rates of currencies.
(d) For purposes of determining any particular amount of Debt under this
Section 1010, (i) Guarantees, Liens or obligations with respect to letters of
credit supporting Debt otherwise included in the determination of such
particular amount shall not be included and (ii) any Liens granted for the
benefit of the Securities pursuant to the provisions referred to in the first
paragraph of Section 1014 shall not be treated as Debt. For purposes of
determining compliance with this Section 1010, in the event that an item of Debt
meets the criteria of more than one of the types of Debt described in the above
clauses, the Company, in its sole discretion, shall classify such item of Debt
and only be required to include the amount and type of such Debt in one of such
clauses.
SECTION 1011. Limitation on Debt of Restricted Subsidiaries.
---------------------------------------------
The Company shall not permit any Restricted Subsidiary that is not a
Guarantor to Incur any Debt except any and all of the following (each of which
shall be given independent effect):
(i) Restricted Subsidiary Guarantees;
(ii) Debt outstanding on the Measurement Date;
(iii) Debt of Restricted Subsidiaries under Credit Facilities permitted to
be Incurred pursuant to clause (ii) of paragraph (b) of Section 1010;
(iv) Purchase Money Debt of Restricted Subsidiaries permitted to be
Incurred pursuant to clause (iii) of paragraph (b) of Section 1010;
(v) Debt owed by a Restricted Subsidiary to the Company or a Restricted
Subsidiary of the Company permitted to be Incurred pursuant to clause
(vi) of paragraph (b) of Section 1010;
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(vi) Debt of Restricted Subsidiaries consisting of Permitted Interest Rate
or Currency Protection Agreements permitted to be Incurred pursuant to
clause (x) of paragraph (b) of Section 1010;
(vii) Debt of Restricted Subsidiaries permitted to be Incurred under clause
(vii) of paragraph (b) of Section 1010;
(viii) Debt of Restricted Subsidiaries permitted to be Incurred under clause
(ix) or (xi) of paragraph (b) of Section 1010; and
(ix) Debt which is Incurred to refinance any Debt of a Restricted
Subsidiary permitted to be Incurred pursuant to clauses (i), (ii),
(iii), (iv) and (vii) of this paragraph or this clause (ix), in an
aggregate principal amount (or if issued at a discount, the then-
Accreted Value) not to exceed the aggregate principal amount (or if
issued at a discount, the then-Accreted Value) of the Debt so
refinanced, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Debt so
refinanced or the amount of any premium reasonably determined by the
Board of Directors as necessary to accomplish such refinancing by
means of a tender offer or privately negotiated repurchase, plus the
amount of expenses of the Company and the applicable Restricted
Subsidiary Incurred in connection therewith; provided, however, that,
in the case of any refinancing of Debt Incurred pursuant to clause
(i), (ii) or (vii) or, if such Debt previously refinanced Debt
Incurred pursuant to any such clause, this clause (ix), the
refinancing Debt by its terms, or by the terms of any agreement or
instrument pursuant to which such Debt is Incurred, (x) does not
provide for payments of principal at the stated maturity of such Debt
or by way of a sinking fund applicable to such Debt or by way of any
mandatory redemption, defeasance, retirement or repurchase of such
Debt by the Company or any Restricted Subsidiary (including any
redemption, retirement or repurchase which is contingent upon events
or circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in
each case prior to the time the same are required by the terms of the
Debt being refinanced and (y) does not permit redemption or other
retirement (including pursuant to an offer to purchase made by the
Company or a Restricted Subsidiary) of such Debt at the option of the
holder thereof prior to the stated maturity of the Debt being
refinanced, other than, in the case of clause (x) or (y), any such
payment, redemption or other retirement (including pursuant to an
offer to purchase made by the Company or a
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Restricted Subsidiary) which is conditioned upon the change of control
of the Company pursuant to provisions substantially similar to those
contained in Section 1009.
Notwithstanding any other provision of this Section 1011, the maximum
amount of Debt that a Restricted Subsidiary may Incur pursuant to this Section
1011 shall not be deemed to be exceeded due solely as the result of fluctuations
in the exchange rates of currencies.
For purposes of determining any particular amount of Debt under this
Section 1011, Guarantees, Liens or obligations with respect to letters of credit
supporting Debt otherwise included in the determination of such particular
amount shall not be included. For purposes of determining compliance with this
Section 1011, in the event that an item of Debt meets the criteria of more than
one of the types of Debt described in the above clauses, the Company, in its
sole discretion, shall classify such item of Debt and only be required to
include the amount and type of such Debt in one of such clauses.
SECTION 1012. Limitation on Restricted Payments.
---------------------------------
(a) The Company (i) shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, declare or pay any dividend, or make any
distribution, in respect of its Capital Stock or to the holders thereof,
excluding any dividends or distributions which are made solely to the Company or
a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly
Owned Subsidiary, to the other stockholders of such Restricted Subsidiary on a
pro rata basis or on a basis that results in the receipt by the Company or a
Restricted Subsidiary of dividends or distributions of greater value than it
would receive on a pro rata basis) or any dividends or distributions payable
solely in shares of Capital Stock of the Company (other than Disqualified Stock)
or in options, warrants or other rights to acquire Capital Stock of the Company
(other than Disqualified Stock); (ii) shall not, and shall not permit any
Restricted Subsidiary to, purchase, redeem, or otherwise retire or acquire for
value (x) any Capital Stock of the Company or any Restricted Subsidiary of the
Company or (y) any options, warrants or rights to purchase or acquire shares of
Capital Stock of the Company or any Restricted Subsidiary or any securities
convertible or exchangeable into shares of Capital Stock of the Company or any
Restricted Subsidiary, except, in any such case, any such purchase, redemption
or retirement or acquisition for value (A) paid to the Company or a Restricted
Subsidiary (or, in the case of any such purchase, redemption or other retirement
or acquisition for value with respect to a Restricted Subsidiary that is not a
Wholly Owned Subsidiary, to the other stockholders of such Restricted Subsidiary
on a pro rata basis or on a basis that results in the receipt by the Company or
a Restricted Subsidiary of payments of greater value than it would receive on
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a pro rata basis) or (B) paid solely in shares of Capital Stock (other than
Disqualified Stock) of the Company; (iii) shall not make, or permit any
Restricted Subsidiary to make, any Investment (other than an Investment in the
Company or a Restricted Subsidiary or a Permitted Investment) in any Person,
including the Designation of any Restricted Subsidiary as an Unrestricted
Subsidiary, or the Revocation of any such Designation, according to Section
1019; (iv) shall not, and shall not permit any Restricted Subsidiary to, redeem,
defease, repurchase, retire or otherwise acquire or retire for value, prior to
any scheduled maturity, repayment or sinking fund payment, Debt of the Company
which is subordinate in right of payment to the Securities (other than any
redemption, defeasance, repurchase, retirement or other acquisition or
retirement for value made in anticipation of satisfying a scheduled maturity,
repayment or sinking fund obligation due within one year thereof); and (v) shall
not, and shall not permit any Restricted Subsidiary to, issue, transfer, convey,
sell or otherwise dispose of Capital Stock of any Restricted Subsidiary to a
Person other than the Company or another Restricted Subsidiary if the result
thereof is that such Restricted Subsidiary shall cease to be a Restricted
Subsidiary, in which event the amount of such "Restricted Payment" shall be the
Fair Market Value of the remaining interest, if any, in such former Restricted
Subsidiary held by the Company and the other Restricted Subsidiaries (each of
clauses (i) through (v) being a "Restricted Payment") if: (1) an Event of
Default, or an event that with the passing of time or the giving of notice, or
both, would constitute an Event of Default, shall have occurred and be
continuing, or (2) upon giving effect to such Restricted Payment, the Company
could not Incur at least $1.00 of additional Debt pursuant to paragraph (a) of
Section 1010, or (3) upon giving effect to such Restricted Payment, the
aggregate of all Restricted Payments made on or after the Measurement Date,
including Restricted Payments made pursuant to clause (A) or (B) of the proviso
at the end of this sentence, and Permitted Investments made on or after the
Measurement Date pursuant to clause (i) or (j) of the definition thereof (the
amount of any such Restricted Payment or Permitted Investment, if made other
than in cash, to be based upon Fair Market Value) exceeds the sum of: (a) 50% of
cumulative Consolidated Net Income (or, in the case that Consolidated Net Income
shall be negative, 100% of such negative amount) since the end of the last full
fiscal quarter prior to the Measurement Date through the last day of the last
full fiscal quarter ending at least 45 days prior to the date of such Restricted
Payment and (b) plus, in the case of any Revocation made after the Measurement
Date, an amount equal to the lesser of the portion (proportionate to the
Company's equity interest in the Subsidiary to which such Revocation relates) of
the Fair Market Value of the net assets of such Subsidiary at the time of
Revocation and the amount of Investments previously made (and treated as a
Restricted Payment) by the Company or any Restricted Subsidiary in such
Subsidiary; provided, however, that the Company or a Restricted Subsidiary of
-------- -------
the Company may, without regard to the limitations in clause (3) but subject to
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clauses (1) and (2), make (A) Restricted Payments in an aggregate amount not to
exceed the sum of $50,000,000 and the aggregate net cash proceeds received after
the Measurement Date (i) as capital contributions to the Company, from the
issuance (other than to a Subsidiary or an employee stock ownership plan or
trust established by the Company or any such Subsidiary for the benefit of their
employees) of Capital Stock (other than Disqualified Stock) of the Company, and
(ii) from the issuance or sale of Debt of the Company or any Restricted
Subsidiary (other than to a Subsidiary, the Company or an employee stock
ownership plan or trust established by the Company or any such Subsidiary for
the benefit of their employees) that after the Measurement Date has been
converted into or exchanged for Capital Stock (other than Disqualified Stock) of
the Company and (B) Investments in Persons engaged in the Telecommunications/IS
Business in an aggregate amount not to exceed the after-tax gain on the sale,
after the Measurement Date, of Special Assets to the extent sold for cash, Cash
Equivalents, Telecommunications/IS Assets or the assumption of Debt of the
Company or any Restricted Subsidiary (other than Debt that is subordinated to
the Securities or any applicable Restricted Subsidiary Guarantee) and release of
the Company and all Restricted Subsidiaries from all liability on the Debt
assumed. The aggregate net cash proceeds referred to in the immediately
preceding clauses (A)(i) and (A)(ii) shall not be utilized to make Restricted
Payments pursuant to such clauses to the extent such proceeds have been utilized
to make Permitted Investments under clause (i) of the definition of "Permitted
Investments."
(b) Notwithstanding the foregoing limitation, (i) the Company may pay any
dividend on Capital Stock of any class of the Company within 60 days after the
declaration thereof if, on the date when the dividend was declared, the Company
could have paid such dividend in accordance with the foregoing provisions;
provided, however, that at the time of such payment of such dividend, no other
- -------- -------
Event of Default shall have occurred and be continuing (or result therefrom);
(ii) the Company may repurchase any shares of its Common Stock or options to
acquire its Common Stock from Persons who were formerly directors, officers or
employees of the Company or any of its Subsidiaries or other Affiliates in an
amount not to exceed $3,000,000 in any 12-month period; (iii) the Company and
any Restricted Subsidiary may refinance any Debt otherwise permitted by clause
(viii) of paragraph (b) of Section 1010 or clause (ix) of Section 1011; (iv) the
Company and any Restricted Subsidiary may retire or repurchase any Capital Stock
of the Company or of any Restricted Subsidiary or any Subordinated Debt of the
Company in exchange for, or out of the proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any such Subsidiary for the benefit
of their employees) of, Capital Stock (other than Disqualified Stock) of the
Company, provided that the proceeds from any such exchange or sale of Capital
--------
Stock shall be excluded from any calculation pursuant to clause (A)(i) in the
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proviso at the end of paragraph (a) above or pursuant to clause (b) of the
definition of "Invested Capital"; and (v) the Company may pay cash dividends in
any amount not in excess of $50,000,000 in any 12-month period in respect of
Preferred Stock of the Company (other than Disqualified Stock). The Restricted
Payments described in the foregoing clauses (i), (ii) and (v) shall be included
in the calculation of Restricted Payments; the Restricted Payments described in
clauses (iii) and (iv) shall be excluded in the calculation of Restricted
Payments.
SECTION 1013. Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries.
- ---------------------------------
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction (other than pursuant
to law or regulation) on the ability of any Restricted Subsidiary (i) to pay
dividends (in cash or otherwise) or make any other distributions in respect of
its Capital Stock owned by the Company or any other Restricted Subsidiary or pay
any Debt or other obligation owed to the Company or any other Restricted
Subsidiary, (ii) to make loans or advances to the Company or any other
Restricted Subsidiary or (iii) to transfer any of its Property to the Company or
any other Restricted Subsidiary.
(b) Notwithstanding the foregoing limitation, the Company may, and may
permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist (i) any encumbrance or restriction pursuant to any agreement in effect on
the Measurement Date, (ii) any customary (as conclusively determined in good
faith by the Chief Financial Officer of the Company) encumbrance or restriction
applicable to a Restricted Subsidiary that is contained in an agreement or
instrument governing or relating to Debt contained in any Credit Facilities or
Purchase Money Debt, provided that such encumbrances and restrictions permit the
--------
distribution of funds to the Company in an amount sufficient for the Company to
make the timely payment of interest, premium (if any) and principal (whether at
stated maturity, by way of a sinking fund applicable thereto, by way of any
mandatory redemption, defeasance, retirement or repurchase thereof, including
upon the occurrence of designated events or circumstances or by virtue of
acceleration upon an event of default, or by way of redemption or retirement at
the option of the holder of the Debt, including pursuant to offers to purchase)
according to the terms of this Indenture and the Securities and other Debt that
is solely an obligation of the Company, but provided further that such agreement
----------------
may nevertheless contain customary (as so determined) net worth, leverage,
invested capital and other financial covenants, customary (as so determined)
covenants regarding the merger of or sale of all or any substantial part of the
assets of the Company or any Restricted Subsidiary, customary (as so determined)
restrictions on transactions with affiliates and customary (as so determined)
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subordination provisions governing Debt owed to the Company or any Restricted
Subsidiary, (iii) any encumbrance or restriction pursuant to an agreement
relating to any Acquired Debt, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person so acquired, (iv) any encumbrance or restriction pursuant to an
agreement effecting a refinancing of Debt Incurred pursuant to an agreement
referred to in clause (i), (ii) or (iii) of this paragraph (b), provided,
--------
however, that the provisions contained in such agreement relating to such
- -------
encumbrance or restriction are no more restrictive (as so determined) in any
material respect than the provisions contained in the agreement the subject
thereof, (v) in the case of clause (iii) of paragraph (a) above, any encumbrance
or restriction contained in any security agreement (including a Capital Lease
Obligation) securing Debt of the Company or a Restricted Subsidiary otherwise
permitted under this Indenture, but only to the extent such restrictions
restrict the transfer of the Property subject to such security agreement, (vi)
in the case of clause (iii) of paragraph (a) above, customary provisions (A)
that restrict the subletting, assignment or transfer of any Property that is a
lease, license, conveyance or similar contract, (B) contained in asset sale or
other asset disposition agreements limiting the transfer of the Property being
sold or disposed of pending the closing of such sale or disposition or (C)
arising or agreed to in the ordinary course of business, not relating to any
Debt, and that do not, individually or in the aggregate, detract from the value
of Property of the Company or any Restricted Subsidiary in any manner material
to the Company or any Restricted Subsidiary, (vii) any encumbrance or
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or Property of such Restricted
Subsidiary, provided that the consummation of such transaction would not result
--------
in a Default or an Event of Default, that such restriction terminates if such
transaction is abandoned and that the consummation or abandonment of such
transaction occurs within one year of the date such agreement was entered into,
and (viii) any encumbrance or restriction pursuant to this Indenture and the
Securities.
SECTION 1014. Limitation on Liens
-------------------
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur or suffer to exist any Lien on or with respect to
any Property now owned or acquired after the Measurement Date to secure any Debt
without making, or causing such Restricted Subsidiary to make, effective
provision for securing the Securities (x) equally and ratably with such Debt as
to such Property for so long as such Debt will be so secured or (y) in the event
such Debt is Debt of the Company or a Guarantor which is subordinate in right of
payment to the Securities or the applicable Restricted Subsidiary Guarantee,
prior to such Debt as to such Property for so long as such Debt will be so
secured.
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The foregoing restrictions shall not apply to: (i) Liens existing on
the Measurement Date and securing Debt outstanding on the Measurement Date or
Incurred by the Company or a Restricted Subsidiary on or after the Measurement
Date pursuant to any Credit Facility to secure Debt permitted to be Incurred by
the Company or such Restricted Subsidiary pursuant to clause (ii) of paragraph
(b) under Section 1010; (ii) Liens securing Debt in an amount which, together
with the aggregate amount of Debt then outstanding or available under all Credit
Facilities (together with all refinancing Debt then outstanding or available
pursuant to clause (viii) of paragraph (b) of Section 1010 in respect of Debt
previously Incurred under Credit Facilities), does not exceed 1.5 times the
Company's Consolidated Cash Flow Available for Fixed Charges for the four full
fiscal quarters preceding the Incurrence of such Lien for which the Company's
consolidated financial statements are available, determined on a pro forma basis
as if such Debt had been Incurred and the proceeds thereof had been applied at
the beginning of such four fiscal quarters; (iii) Liens in favor of the Company
or any Restricted Subsidiary; provided, however, that any subsequent issue or
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transfer of Capital Stock or other event that results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of
the Debt secured by any such Lien (except to the Company or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such
Lien by the issuer thereof; (iv) Liens Incurred by the Company or a Restricted
Subsidiary to secure Purchase Money Debt permitted to be Incurred by the Company
or such Restricted Subsidiary pursuant to clause (iii) of paragraph (b) under
Section 1010, provided that any such Lien may not extend to any Property other
--------
than the Telecommunications/IS Assets installed, constructed, acquired, leased,
developed or improved with the proceeds of such Purchase Money Debt and any
improvements or accessions thereto (it being understood that all Debt to any
single lender or group of related lenders or outstanding under any single credit
facility, and in any case relating to the same group or collection of
Telecommunications/IS Assets financed thereby, shall be considered a single
Purchase Money Debt, whether drawn at one time or from time to time); (v) Liens
to secure Acquired Debt, provided that (a) such Lien attaches to the acquired
--------
Property prior to the time of the acquisition of such Property and (b) such Lien
does not extend to or cover any other Property; (vi) Liens to secure Debt
Incurred to refinance, in whole or in part, Debt secured by any Lien referred to
in the foregoing clauses (i), (iv) and (v) or this clause (vi) so long as such
Lien does not extend to any other Property (other than improvements and
accessions to the original Property) and the principal amount of Debt so secured
is not increased except as otherwise permitted under clause (viii) of paragraph
(b) of Section 1010 or clause (ix) of Section 1011; (vii) Liens not otherwise
permitted by the foregoing clauses (i) through (vi) securing Debt in an
aggregate amount not to exceed 5% of the Company's Consolidated Tangible Assets;
(viii) Liens granted after the Issue Date pursuant to
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this Section 1014 to secure the Securities; and (ix) Permitted Liens.
SECTION 1015. Limitation on Sale and Leaseback Transactions.
---------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into, assume, Guarantee or otherwise become
liable with respect to any Sale and Leaseback Transaction, unless (i) the
Company or such Restricted Subsidiary would be entitled to Incur (a) Debt in an
amount equal to the Attributable Value of the Sale and Leaseback Transaction
pursuant to Section 1010 and (b) a Lien pursuant to Section 1014, equal in
amount to the Attributable Value of the Sale and Leaseback Transaction, without
also securing the Securities, and (ii) the Sale and Leaseback Transaction is
treated as an Asset Disposition and all of the conditions of Section 1016
(including the provisions concerning the application of Net Available Proceeds)
are satisfied with respect to such Sale and Leaseback Transaction, treating all
of the consideration received in such Sale and Leaseback Transaction as Net
Available Proceeds for purposes of such Section 1015.
SECTION 1016. Limitation on Asset Dispositions.
--------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Disposition unless: (i) the Company or the Restricted
Subsidiary, as the case may be, receives consideration for such disposition at
least equal to the Fair Market Value for the Property sold or disposed of as
determined by the Board of Directors in good faith and evidenced by a Board
Resolution filed with the Trustee; and (ii) at least 75% of the consideration
for such disposition consists of cash or Cash Equivalents or the assumption of
Debt of the Company or any Restricted Subsidiary (other than Debt that is
subordinated to the Securities or any applicable Restricted Subsidiary
Guarantee) and release of the Company and all Restricted Subsidiaries from all
liability on the Debt assumed (or if less than 75%, the remainder of such
consideration consists of Telecommunications/IS Assets); provided, however,
-------- -------
that, to the extent such disposition involves Special Assets, all or any portion
of the consideration may, at the Company's election, consist of Property other
than cash, Cash Equivalents, the assumption of Debt or Telecommunications/IS
Assets.
The Net Available Proceeds (or any portion thereof) from Asset
Dispositions may be applied by the Company or a Restricted Subsidiary, to the
extent the Company or such Restricted Subsidiary elects (or is required by the
terms of any Debt): (1) to the permanent repayment or reduction of Debt then
outstanding under any Credit Facility, to the extent such Credit Facility would
require such application or prohibit payments pursuant to the Offer to Purchase
described in the following paragraph (other than Debt owed to the Company or any
Affiliate of the Company);
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or (2) to reinvest in Telecommunications/IS Assets (including by means of an
Investment in Telecommunications/IS Assets by a Restricted Subsidiary with Net
Available Proceeds received by the Company or another Restricted Subsidiary).
Any Net Available Proceeds from an Asset Disposition not applied in
accordance with the preceding paragraph within 360 days (or, in the case of a
disposition of Special Assets identified in clause (a) of the definition thereof
in which the Net Available Proceeds exceed $500,000,000, 540 days) from the date
of the receipt of such Net Available Proceeds shall constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10,000,000, the
Company will be required to make an Offer to Purchase with such Excess Proceeds
on a pro rata basis according to principal amount (or, in the case of Debt
issued at a discount, the then-Accreted Value) for (x) Outstanding Securities at
a price in cash equal to 100% of the Accreted Value of the Securities on the
purchase date plus accrued and unpaid interest (if any) thereon (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) and (y) any other Debt of the Company or
any Guarantor that is pari passu with the Securities, or any Debt of a
---- -----
Restricted Subsidiary that is not a Guarantor, at a price no greater than 100%
of the principal amount thereof plus accrued and unpaid interest (if any) to the
purchase date (or 100% of the then-Accreted Value plus accrued and unpaid
interest (if any) to the purchase date in the case of original issue discount
Debt), to the extent, in the case of this clause (y), required under the terms
thereof (other than Debt owed to the Company or any Affiliate of the Company).
To the extent there are any remaining Excess Proceeds following the completion
of the Offer to Purchase, the Company shall apply such Excess Proceeds to the
repayment of other Debt of the Company or any Restricted Subsidiary, to the
extent permitted or required under the terms thereof. Any other remaining Excess
Proceeds may be applied to any use as determined by the Company which is not
otherwise prohibited by this Indenture, and the amount of Excess Proceeds shall
be reset to zero.
The Company and the Trustee shall perform their respective obligations
for the Offer to Purchase as specified in the Offer. Prior to the Purchase Date,
the Company shall (i) accept for payment Securities or portions thereof tendered
pursuant to the Offer, (ii) irrevocably deposit with the Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) money sufficient to pay the Purchase Price of all
Securities or portions thereof so accepted (provided that such deposit may be
made no later than 11:00 A.M. New York City time on the Purchase Date if the
Company elects) and (iii) deliver or cause to be delivered to the Trustee all
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal
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to the Purchase Price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security or Securities equal in principal amount
at maturity to any unpurchased portion of the principal amount at maturity of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Company to the Holder
thereof. In the event that the aggregate Purchase Price is less than the amount
delivered by the Company to the Trustee or the Paying Agent, the Trustee or the
Paying Agent, as the case may be, shall deliver the excess to the Company
immediately after the Purchase Date.
Not later than the date upon which written notice of an Offer to
Purchase is delivered to the Trustee, the Company shall deliver to the Trustee
an Officers' Certificate as to (i) the amount of the Offer, (ii) the allocation
of the Net Available Proceeds from the Asset Disposition pursuant to which such
Offer is being made and (iii) the compliance of such allocation with the
provisions of this Section 1016.
In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section by
virtue thereof.
SECTION 1017. Limitation on Issuance and Sales of Capital Stock of
----------------------------------------------------
Restricted Subsidiaries.
- -----------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, issue, transfer, convey, sell or otherwise dispose of any shares of Capital
Stock of a Restricted Subsidiary or securities convertible or exchangeable into,
or options, warrants, rights or any other interest with respect to, Capital
Stock of a Restricted Subsidiary to any Person other than the Company or a
Restricted Subsidiary except (i) a sale of all of the Capital Stock of such
Restricted Subsidiary owned by the Company and any Restricted Subsidiary that
complies with the provisions of Section 1016 to the extent such provisions
apply, (ii) in a transaction that results in such Restricted Subsidiary becoming
a Joint Venture, provided (x) such transaction complies with the provisions of
--------
Section 1016 to the extent such provisions apply and (y) the remaining interest
of the Company or any other Restricted Subsidiary in such Joint Venture would
have been permitted as a new Restricted Payment or Permitted Investment under
the provisions of Section 1012, (iii) the issuance, transfer, conveyance, sale
or other disposition of shares of such Restricted Subsidiary so long as after
giving effect to such transaction such Restricted Subsidiary remains a
Restricted Subsidiary and such transaction complies with the provisions of
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Section 1016 to the extent such provisions apply, (iv) the transfer, conveyance,
sale or other disposition of shares required by applicable law or regulation,
(v) if required, the issuance, transfer, conveyance, sale or other disposition
of directors' qualifying shares, (vi) Disqualified Stock issued in exchange for,
or upon conversion of, or the proceeds of the issuance of which are used to
refinance, shares of Disqualified Stock of such Restricted Subsidiary, provided
--------
that the amounts of the redemption obligations of such Disqualified Stock shall
not exceed the amounts of the redemption obligations of, and such Disqualified
Stock shall have redemption obligations no earlier than those required by, the
Disqualified Stock being exchanged, converted or refinanced, (vii) in a
transaction where the Company or a Restricted Subsidiary acquires at the same
time not less than its Proportionate Interest in such issuance of Capital Stock,
(viii) Capital Stock issued and outstanding on the Measurement Date, (ix)
Capital Stock of a Restricted Subsidiary issued and outstanding prior to the
time that such Person becomes a Restricted Subsidiary so long as such Capital
Stock was not issued in contemplation of such Person's becoming a Restricted
Subsidiary or otherwise being acquired by the Company and (x) an issuance of
Preferred Stock of a Restricted Subsidiary (other than Preferred Stock
convertible or exchangeable into Common Stock of any Restricted Subsidiary)
otherwise permitted by this Indenture. In the event of (a) the consummation of a
transaction referred to in any of the foregoing clauses that results in a
Guarantor no longer being a Restricted Subsidiary and (b) the execution and
delivery of a supplemental indenture providing for such release in form
satisfactory to the Trustee, any such Guarantor shall be released from all its
obligations under its Restricted Subsidiary Guarantee.
SECTION 1018. Transactions with Affiliates.
----------------------------
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, sell, lease, transfer, or otherwise
dispose of any of its Property to, or purchase any Property from, or enter into
any contract, agreement, understanding, loan, advance, Guarantee or transaction
(including the rendering of services) with or for the benefit of, any Affiliate
(each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate
Transaction or series of Affiliate Transactions is (i) in the best interest of
the Company or such Restricted Subsidiary and (ii) on terms that are no less
favorable to the Company or such Restricted Subsidiary than those that would
have been obtained in a comparable arm's-length transaction by the Company or
such Restricted Subsidiary with a Person that is not an Affiliate (or, in the
event that there are no comparable transactions involving Persons who are not
Affiliates of the Company or the relevant Restricted Subsidiary to apply for
comparative purposes, is otherwise on terms that, taken as a whole, the Company
has determined to be fair to the Company or the relevant Restricted Subsidiary)
and (b) the Company delivers to the Trustee (i) with respect to any Affiliate
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Transaction or series of Affiliate Transactions involving aggregate payments in
excess of $10,000,000 but less than $15,000,000, a certificate of the chief
executive, operating or financial officer of the Company evidencing such
officer's determination that such Affiliate Transaction or series of Affiliate
Transactions complies with clause (a) above and (ii) with respect to any
Affiliate Transaction or series of Affiliate Transactions involving aggregate
payments equal to or in excess of $15,000,000, a Board Resolution certifying
that such Affiliate Transaction or series of Affiliate Transactions complies
with clause (a) above and that such Affiliate Transaction or series of Affiliate
Transactions has been approved by the Board of Directors, including a majority
of the disinterested members of the Board of Directors, provided that, in the
--------
event that there shall not be at least two disinterested members of the Board of
Directors with respect to the Affiliate Transaction, the Company shall, in
addition to such Board Resolution, file with the Trustee a written opinion from
an investment banking firm of national standing in the United States which, in
the good faith judgment of the Board of Directors, is independent with respect
to the Company and its Affiliates and qualified to perform such task, which
opinion shall be to the effect that the consideration to be paid or received in
connection with such Affiliate Transaction is fair, from a financial point of
view, to the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, the following shall not be deemed
Affiliate Transactions: (i) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with industry practice; (ii) any agreement or arrangement with
respect to the compensation of a director or officer of the Company or any
Restricted Subsidiary approved by a majority of the disinterested members of the
Board of Directors and consistent with industry practice; (iii) transactions
between or among the Company and its Restricted Subsidiaries, provided that no
--------
more than 5% of the Voting Stock (on a fully diluted basis) of any such
Restricted Subsidiary is owned by an Affiliate of the Company (other than a
Restricted Subsidiary); (iv) Restricted Payments and Permitted Investments
permitted by Section 1012 (other than Investments in Affiliates that are not the
Company or Restricted Subsidiaries); (v) transactions pursuant to the terms of
any agreement or arrangement as in effect on the Measurement Date; and (vi)
transactions with respect to wireline or wireless transmission capacity, the
lease or sharing or other use of cable or fiber optic lines, equipment,
rights-of-way or other access rights, between the Company (or any Restricted
Subsidiary) and any other Person, provided that, in the case of this clause
--------
(vi), such transaction complies with clause (a) in the immediately preceding
paragraph.
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SECTION 1019. Limitation on Designations of Unrestricted Subsidiaries.
-------------------------------------------------------
The Company shall not designate any Subsidiary of the Company (other
than a newly created Subsidiary in which no Investment has previously been made)
as an "Unrestricted Subsidiary" under this Indenture (a "Designation") unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(b) immediately after giving effect to such Designation, the Company
would be able to Incur $1.00 of Debt under paragraph (a) of Section 1010;
and
(c) the Company would not be prohibited under any provision of this
Indenture from making an Investment at the time of Designation (assuming
the effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the portion (proportionate to the Company's equity
interest in such Restricted Subsidiary) of the Fair Market Value of the net
assets of such Restricted Subsidiary on such date.
In the event of any such Designation, the Company shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to Section
1012 for all purposes of this Indenture in the Designation Amount; provided,
--------
however, that, upon a Revocation of any such Designation of a Subsidiary, the
- -------
Company shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary of an amount (if positive) equal to (i) the Company's
"Investment" in such Subsidiary at the time of such Revocation less (ii) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the Fair Market Value of the net assets of such Subsidiary at the time of such
Revocation. At the time of any Designation of any Subsidiary as an Unrestricted
Subsidiary, such Subsidiary shall not own any Capital Stock of the Company or
any Restricted Subsidiary. In addition, neither the Company nor any Restricted
Subsidiary shall at any time (x) provide credit support for, or a Guarantee of,
any Debt of any Unrestricted Subsidiary (including any undertaking, agreement or
instrument evidencing such Debt); provided that the Company or a Restricted
--------
Subsidiary may pledge Capital Stock or Debt of any Unrestricted Subsidiary on a
nonrecourse basis such that the pledgee has no claim whatsoever against the
Company other than to obtain such pledged Capital Stock or Debt, (y) be directly
or indirectly liable for any Debt of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Debt which provides that the holder
thereof may (upon notice, lapse of time or both) declare a default thereon or
cause the payment thereof to be accelerated or payable prior to its final
scheduled maturity upon the occurrence of a default with respect to any Debt,
Lien or
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other obligation of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except in the case of
clause (x) or (y) to the extent permitted under Sections 1012 and 1018.
Unless Designated as an Unrestricted Subsidiary, any Person that becomes a
Subsidiary of the Company will be classified as a Restricted Subsidiary;
provided, however, that such Subsidiary shall not be designated as a Restricted
- -------- -------
Subsidiary and shall be automatically classified as an Unrestricted Subsidiary
if either of the requirements set forth in clauses (a) and (b) of the
immediately following paragraph will not be satisfied immediately following such
classification. Except as provided in the first sentence of this Section 1019,
no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.
A Designation may be revoked (a "Revocation") by a Board Resolution
delivered to the Trustee, provided that the Company will not make any Revocation
--------
unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(b) all Liens and Debt of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if Incurred at such time, have
been permitted to be Incurred at such time for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Board Resolutions
delivered to the Trustee (i) certifying compliance with the foregoing provisions
and (ii) giving the effective date of such Designation or Revocation, such
delivery to the Trustee to occur within 45 days after the end of the fiscal
quarter of the Company in which such Designation or Revocation is made (or, in
the case of a Designation or Revocation made during the last fiscal quarter of
the Company's fiscal year, within 90 days after the end of such fiscal year).
Upon Designation of a Restricted Subsidiary as an Unrestricted Subsidiary in
compliance with this Section 1019, such Restricted Subsidiary shall, by delivery
of a supplemental indenture providing for such release in form satisfactory to
the Trustee, be released from any Restricted Subsidiary Guarantee previously
made by such Subsidiary.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
-------------------
The Securities will be subject to redemption at the option of the Company,
in whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' prior notice, on the terms and at the redemption prices
(expressed as
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percentages of Accreted Value) set forth in the second and third paragraphs on
the reverse of the form of Security, plus accrued and unpaid interest thereon
(if any) to the Redemption Date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date).
SECTION 1102. Applicability of Article.
------------------------
This Article shall govern any redemption of the Securities pursuant to
Section 1101.
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities pursuant to Section
1101 shall be evidenced by a Board Resolution. The Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the Accreted Value of Securities to be redeemed and shall deliver to
the Trustee such documentation and records as shall enable the Trustee to select
the Securities to be redeemed pursuant to Section 1104. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, in compliance with the requirements of the principal
national securities exchange, if any, on which the Securities are listed, or, if
the Securities are not so listed, on a pro rata basis, by lot or by such other
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions of the Accreted Value of Securities;
provided, however, that no such partial redemption shall reduce the portion of
- -------- -------
the principal amount at maturity of a Security not redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount at maturity thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
Accreted Value of such Security which has been or is to be redeemed.
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SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided for in Section
106 not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Securities to be redeemed.
Each notice of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a partial redemption, the principal amounts
at maturity) of the particular Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, that on and after
the Redemption Date, upon surrender of such Security, the Holder will receive,
without charge, a new Security or Securities of authorized denominations for the
Accreted Value thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and unpaid and
accrued interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Security, or the portion
thereof, to be redeemed, and that, unless the Company defaults in making such
redemption payment or the Trustee or the Paying Agent is prohibited from making
such payment, interest thereon will cease to accrue on and after said date, and
(6) the place or places where such Securities are to be presented and
surrendered for payment of the Redemption Price and accrued interest, if any.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
---------------------------
On or prior to any Redemption Date (and if on any Redemption Date, before
11:00 A.M. New York City time, on such date), the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and unpaid and accrued interest
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant
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interest payment date) on, all the Securities which are to be redeemed on that
date.
SECTION 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with unpaid and accrued interest,
if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest or the Trustee or the Paying Agent shall be prohibited from making such
payment) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with unpaid and accrued
interest, if any, to the Redemption Date; provided, however, that installments
-------- -------
of interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the Accreted Value (and premium, if any) shall, until
paid, bear interest from the Redemption Date at the rate borne by the
Securities.
SECTION 1108. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder, in aggregate Accreted Value equal to and in exchange for the
unredeemed portion of the Accreted Value of the Security so surrendered.
ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Defeasance or Covenant Defeasance.
------------------------------------------------------------
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 1202 or Section 1203 be
applied to all Outstanding
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Securities upon compliance with the conditions set forth below in this Article
Twelve.
SECTION 1202. Defeasance and Discharge.
------------------------
Upon the Company's exercise under Section 1201 of the option applicable to
this Section 1202, the Company shall be deemed to have been discharged from its
obligations with respect to all Outstanding Securities on the date the
conditions set forth in Section 1204 are satisfied (hereinafter, "defeasance").
For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Outstanding
Securities, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 1205 and the other Sections of this Indenture referred to in
clauses (A) and (B) below, and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the Company's obligations with
respect to such Securities under Sections 304, 305, 306, 1002 and 1003 and the
Company's rights under Section 1101, (B) rights of Holders to receive payment of
Accreted Value of, premium, if any, and interest on such Securities (but not the
Purchase Price referred to under Section 1009 or 1016) and any rights of the
Holders with respect to such amounts, (C) the rights, obligations and immunities
of the Trustee under the Indenture and (D) this Article Twelve. Subject to
compliance with this Article Twelve, the Company may exercise its option under
this Section 1202 notwithstanding the prior exercise of its option under Section
1203 with respect to the Securities. If the Company exercises its option under
this Section 1202, each Guarantor, if any, shall be released from all its
obligations under its Restricted Subsidiary Guarantee.
SECTION 1203. Covenant Defeasance.
-------------------
Upon the Company's exercise under Section 1201 of the option applicable to
this Section 1203, the Company shall be released from its obligations under any
covenant contained in Sections 801(3), (4) and (5), in Sections 803, 1005, 1006
and 1007 and Sections 1009 through 1019 and from the operation of Sections
501(6), (7), (8), (9) and (10) (but, in the case of Sections 501(9) and (10),
with respect only to Significant Subsidiaries), with respect to the Outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities shall thereafter be
deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent, declaration or other Act of Holders (and the consequences of any
thereof) in connection with such provisions, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities, the
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Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such provision, whether directly
or indirectly, by reason of any reference elsewhere herein to any such provision
or by reason of any reference in any such provision to any other provision
herein or in any other document and such omission to comply shall not constitute
a Default or an Event of Default under Section 501(3), (4), (5), (6), (7), (8),
(9) or (10) (but, in the case of Section 501(9) or (10), with respect only to
Significant Subsidiaries) but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. If the Company
exercises its option under this Section 1203, each Guarantor, if any, shall be
released from all its obligations under its Restricted Subsidiary Guarantee.
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section 1202
or Section 1203 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 608
who shall agree to comply with the provisions of this Article Twelve applicable
to it) as trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of such Securities, at any time prior to the Maturity of the
Securities: (A) money in an amount, or (B) Government Securities which through
the payment of interest and principal will provide, not later than one day
before the due date of payment in respect of the Securities, money in an amount,
or (C) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge the
Accreted Value of (and premium, if any, on) and interest on, the Outstanding
Securities on the Stated Maturity (or Redemption Date, if applicable); provided
that the Trustee (or such other trustee) shall have been irrevocably instructed
in writing to apply such money or the proceeds of such Government Securities to
said payments with respect to the Securities. Before such a deposit, the Company
may give to the Trustee, in accordance with Section 1103, a notice of its
election to redeem all of the Outstanding Securities at a future date in
accordance with Article Eleven, which notice shall be irrevocable. Such
irrevocable redemption notice, if given, shall be given effect in applying the
foregoing.
(2) No Default or Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit or, insofar as
paragraphs (9) and (10) of Section 501 are concerned with respect to the
Company, at any
105
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time during the period ending on the 123rd day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) Such defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it is bound.
(4) In the case of an election under Section 1202, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (x) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (y) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred.
(5) In the case of an election under Section 1203, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of
the Outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not occurred.
(6) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1202 or
the covenant defeasance under Section 1203 (as the case may be) have been
complied with.
(7) The Company shall have delivered to the Trustee an Opinion of Counsel
acceptable to the Trustee to the effect that such defeasance will not result in
the trust relating thereto or the Trustee being subject to regulation under the
Investment Company Act of 1940.
SECTION 1205. Deposited Money and Government Securities to Be Held in
-------------------------------------------------------
Trust; Other Miscellaneous Provisions.
- -------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all money
and Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
1205, the "Trustee") pursuant to Section 1204 in respect of the Outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying
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Agent (including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of Accreted Value, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required by
law or to the extent the Company acts as its own Paying Agent.
The Company shall pay and indemnify the Trustee and (if applicable) its
officers, directors, employees and agents against any tax, fee or other charge
imposed on or assessed against the Government Securities deposited pursuant to
Section 1204 or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the Outstanding Securities.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Securities held by it as provided in Section
1204 which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance, as
applicable, in accordance with this Article Twelve.
SECTION 1206. Reinstatement.
-------------
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 401 or 1205 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and any Guarantor's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 401, 1202 or 1203, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance therewith; provided, however, that if the Company or any
-------- -------
Guarantor makes any payment of Accreted Value of, premium, if any, or interest
on any Security following the reinstatement of its obligations, the Company or
such Guarantor shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money held by the Trustee or Paying
Agent.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
LEVEL 3 COMMUNICATIONS, INC.
By:
/s/ R. DOUGLAS BRADBURY
--------------------------
Name: R. Douglas Bradbury
Title: Executive Vice
President and Chief
Financial Officer
Attest:
/s/ THOMAS C. STORTZ
---------------------------
Name: Thomas C. Stortz
Title: Senior Vice President and
General Counsel
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
By:
/s/ LUIS PEREZ
--------------------------
Name: Luis Perez
Title: Assistant Vice
President
Attest:
/s/ STEVE GIURLANDO
---------------------------
Name: Steve Giurlando
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
Form of Face of Security
------------------------
[If a Global Security, then insert:] THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
[If a Global Security, then insert:] UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[Private Placement Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS
AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE
DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG
AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS
A-1
<PAGE>
SECURITY), PROVIDED THAT, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW) PRIOR TO THE DATE THAT
IS 40 DAYS FOLLOWING THE ISSUE DATE, A CERTIFICATE THE FORM OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE THE FORM OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE (PROVIDED THAT CERTAIN TRANSFERORS SPECIFIED IN THE
INDENTURE MAY NOT TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE (4) PRIOR TO
THE DATE THAT IS 40 DAYS FOLLOWING THE ISSUE DATE), (5) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE)
UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED
INVESTOR HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
[If a Physical Security, then insert:] IN CONNECTION WITH ANY TRANSFER, THE
HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
A-2
<PAGE>
LEVEL 3 COMMUNICATIONS, INC.
10-1/2% Senior Discount Note Due 2008
CUSIP No.
No. [if a Global security, insert: up to] $
Level 3 Communications, Inc., a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_____________, or registered assigns, the principal sum of [if a Global
Security, then insert: up to] _________ Dollars [if a Global Security, then
insert: (the outstanding principal amount at maturity of which shall be
reflected in the attached Schedule of Increases or Decreases in Global Security
and the records of the Trustee which, taken together with the outstanding
principal amounts at maturity of all other Outstanding Securities, shall not
exceed $833,815,000 in the aggregate at any time)] on December 1, 2008, at the
office or agency of the Company referred to below, and to pay interest thereon,
in cash in arrears semiannually on June 1 and December 1 in each year, with
payment commencing on June 1, 2004, and cash interest accruing from December 1,
2003, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, at the rate of 10-1/2% per annum, until the principal
amount at maturity hereof is paid or duly provided for; provided that no cash
interest shall accrue on the Accreted Value of this Security prior to December
1, 2003, and no cash interest shall be paid on this Security prior to June 1,
2004, except [delete text in brackets if an Exchange Security (other than a
Private Exchange Security): (a) as provided in the next paragraph and (b)] that
the Company may elect, upon not less than 60 days prior notice given in the
manner provided for in the Indenture, to commence the accrual of cash interest
(at the rate shown above) on all Outstanding Securities on or after December 1,
2001, in which case the outstanding principal amount at maturity of this
Security shall on such commencement date be reduced to the Accreted Value of
this Security as of such commencement date and cash interest shall be payable
with respect to this Security on each June 1 and December 1 thereafter. The
Company shall pay interest on overdue Accreted Value at the rate borne by the
Securities, and it shall pay interest on overdue installments of interest at the
same rate to the extent lawful.
[Delete this paragraph if an Exchange Security (other than a Private Exchange
Security).] The Holder of this Security is entitled to the benefits of a
Registration Agreement, dated as of November 24, 1998, between the Company and
the Purchasers named therein (the "Registration Agreement"). Capitalized terms
used in this paragraph but not defined herein have the meanings assigned to them
in the Registration Agreement. In the event that (i) neither the Exchange Offer
Registration Statement nor the Shelf Registration Statement has been filed with
the Commission on or prior to the 90th day following the date of the original
issuance of the Securities, (ii) neither the Exchange
A-3
<PAGE>
Offer Registration Statement nor the Shelf Registration Statement has been
declared effective on or prior to the 150th day following the date of the
original issuance of the Securities, (iii) neither the Registered Exchange Offer
has been consummated nor the Shelf Registration Statement has been declared
effective on or prior to the 180th day following the date of the original
issuance of the Securities, or (iv) after the Shelf Registration Statement has
been declared effective, such Registration Statement thereafter ceases to be
effective or usable in connection with resales of the Securities at any time
that the Company is obligated to maintain the effectiveness thereof pursuant to
the Registration Agreement (each such event referred to in clauses (i) through
(iv) above being referred to herein as a "Registration Default"), interest (the
"Special Interest") shall accrue (in addition to stated interest, if any, on the
Securities) from and including the date on which the first such Registration
Default shall occur to but excluding the date on which all Registration Defaults
have been cured, at a rate per annum equal to 0.50% of the Accreted Value of the
Securities; provided, however, that such rate per annum shall increase by 0.25%
-------- -------
per annum from and including the 91st day after the first such Registration
Default (and each successive 91st day thereafter) unless and until all
Registration Defaults have been cured; provided further, however, that in no
---------------- -------
event shall the Special Interest accrue at a rate in excess of 1.00% per annum.
Accrued Special Interest, if any, shall be paid in cash in arrears semiannually
on June 1 and December 1 in each year; and the amount of accrued Special
Interest shall be determined on the basis of the number of days actually elapsed
and the Accreted Value for each such day. Any accrued and unpaid interest
(including Special Interest) on this Security upon the issuance of an Exchange
Security in exchange for this Security shall cease to be payable to the Holder
hereof but such accrued and unpaid interest (including Special Interest) shall
be payable on the next Interest Payment Date for such Exchange Security to the
Holder thereof on the related Regular Record Date.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the May 15 or November 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and such defaulted interest,
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Securities, may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may
A-4
<PAGE>
be paid at any time in any other lawful manner, all as more fully provided in
said Indenture. Payment of the Accreted Value of (and premium, if any) and
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in The City of New York, or at such other office or
agency of the Company as may be maintained for such purpose, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
-------- -------
of interest may be made at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
A-5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: LEVEL 3 COMMUNICATIONS, INC.
---------------------------
By:
---------------------------
Authorized Signatory
Attest:
---------------------------
A-6
<PAGE>
Form of Reverse of Security
---------------------------
This Security is one of a duly authorized issue of securities of the
Company designated as its 10-1/2% Senior Discount Notes Due 2008 (herein called
the "Securities"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount at maturity to $833,815,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of December 2, 1998 between the Company and IBJ Schroder Bank & Trust Company,
as trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Trustee and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption at the option of the Company, in
whole or in part, at any time or from time to time on or after December 1, 2003,
upon not less than 30 nor more than 60 days' prior notice, at the redemption
prices (expressed as percentages of Accreted Value) set forth below, plus
accrued and unpaid interest thereon (if any) to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date), if redeemed during the twelve months
beginning December 1 of the years indicated below:
Year Redemption Price
---- ----------------
2003.................................................105.250%
2004.................................................103.500%
2005.................................................101.750%
2006 and thereafter..................................100.000%
In addition, at any time or from time to time prior to December 1, 2001,
the Company may redeem up to 35% of the original aggregate principal amount at
maturity of the Securities at a redemption price equal to 110.500% of the
Accreted Value of the Securities so redeemed, plus accrued and unpaid interest
thereon (if any) to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), with the net cash proceeds of one or more private
placements to Persons other than Affiliates of the Company or underwritten
public offerings of Common Stock of the Company resulting in gross proceeds of
at least $100,000,000 in the aggregate; provided that at least 65% of the
--------
original aggregate principal amount at maturity of the Securities would remain
outstanding immediately after giving effect to any such redemption. Any such
redemption shall be made within 90 days of any such private placement or public
offering upon not less than 30 nor more than 60 days' prior notice.
A-7
<PAGE>
Upon the occurrence of a Change of Control Triggering Event, the Holder of
this Security may require the Company, subject to certain limitations provided
in the Indenture, to repurchase this Security at a purchase price in cash in an
amount equal to 101% of the Accreted Value thereof, plus accrued and unpaid
interest (if any) to the purchase date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
or accrete principal, as the case may be, from and after the Redemption Date.
In the event of redemption of this Security in part only, a new Security or
Securities for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
To guarantee the due and punctual payment of the Accreted Value, premium
(if any) and interest on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be due
and payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Guarantors, if any, will
unconditionally guarantee such obligations on a senior unsecured basis pursuant
to the terms of the Indenture.
If an Event of Default shall occur and be continuing, the Accreted Value of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security and (b) certain restrictive
covenants and Defaults and Events of Default, upon compliance by the Company
with certain conditions set forth therein, which provisions apply to this
Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount at maturity of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount at maturity of the
Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to
A-8
<PAGE>
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Without the
consent of any Holder of Securities, the Company and the Trustee may amend or
modify the Indenture for certain purposes specified therein, including the
release of Guarantors, if any, from Restricted Subsidiary Guarantees as provided
by the terms of the Indenture. Any such consent or waiver by or on behalf of the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the Accreted Value of (and premium, if any)
and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount at maturity, will be issued to the designated transferee or
transferees. The Securities are issuable only in registered form without coupons
in denominations of $1,000 principal amount at maturity and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate Accreted Value of Securities of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange of the Securities, but the Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by notice to the
contrary.
A-9
<PAGE>
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
A-10
<PAGE>
Form of Trustee's Certificate of Authentication
-----------------------------------------------
The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:
------------------------------
This is one of the Securities referred to in the within-mentioned
Indenture.
[NAME OF TRUSTEE], as Trustee
By:
---------------------------------
Authorized Signatory
A-11
<PAGE>
Assignment Form
---------------
If you, the holder, want to assign this Security, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Security to _________________________________
________________________________________________________________________________
(Insert assignee's social security or tax ID number)
___________________________________________
(Print or type assignee's name, address and zip code)
_______________________________________
_______________________________________
_______________________________________
and irrevocably appoint __________________________________
of ______________________________________
______________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for such agent.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the date that is two years (or such shorter
period as may be prescribed by Rule 144(k) under the Securities Act or any
successor provision thereunder) after the later of the date of original issuance
of such Securities (or any Predecessor Security) or three months after the last
date, if any, on which such Securities (or any Predecessor Security) were owned
by the Company or any Affiliate of the Company, the undersigned confirms that
such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [_] inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that such
transfer is being made in reliance on Rule 144A, in each case
pursuant to and in
A-12
<PAGE>
compliance with Rule 144A under the Securities Act of 1933; or
(4) [_] outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933,
provided that, if such transfer is being effected by certain
transferors specified in the Indenture prior to the date that is
40 days following the Issue Date, a certificate which may be
obtained from the Company or the Trustee is delivered by the
transferee to the Company and the Trustee; or
(5) [_] to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee or the Company),
provided that certain transferors specified in the Indenture may
not transfer this Security pursuant to this clause (5) prior to
the date that is 40 days following the Issue Date; or
(6) [_] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4), (5) or
-------- -------
(6) is checked, the Trustee may require, prior to registering any such transfer
of the Securities, such legal opinions, certifications and other information as
the Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.
Dated: Your signature:
------------------- ---------------------------
(Sign exactly as your
name appears on the other side of this
Security)
By:
---------------------------------------
NOTICE: To be executed by an
executive officer
Signature Guarantee:
-----------------------------------------------------------
A-13
<PAGE>
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED:
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A (including the information
specified in Rule 144A(d)(4)) or has determined not to request such information
and that it is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Dated:
--------------------------------- --------------------------------
NOTICE: To be executed by an
executive officer
Option of Holder to Elect Purchase
----------------------------------
If you wish to have this Security purchased by the Company pursuant to
Section 1009 or 1016 of the Indenture, check the box: [_]
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 1009 or 1016 of the Indenture, state the amount: $ _______ .
Dated: Your Signature:
--------------------------------
(Sign exactly as your name appears on the other
side of this Security)
A-14
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount at maturity of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount at Signature of
Transfer in Principal Amount in Principal Amount Maturity of this authorized signatory
at Maturity of this at Maturity of this Global Security of Trustee or
Global Security Global Security following such Security Registrar
decrease or increase
</TABLE>
A-15
<PAGE>
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
_________________________, among [GUARANTOR] (the "New Guarantor"), a
subsidiary of Level 3 Communications, Inc. (or its successor), a Delaware
corporation (the "Company"), LEVEL 3 COMMUNICATIONS, INC., on behalf of
itself and the Guarantors (the "Existing Guarantors"), if any, under the
Indenture referred to below, and IBJ SCHRODER BANK & TRUST COMPANY, a New
York banking corporation, as trustee under the indenture referred to below
(the "Trustee").
W I T N E S S E T H :
WHEREAS the Company has heretofore executed and delivered to the Trustee an
Indenture dated as of December 2, 1998 (the "Indenture"; capitalized terms used
but not defined herein having the meanings assigned thereto in the Indenture),
providing for the issuance of an aggregate principal amount at maturity of up to
$833,815,000 of 10-1/2% Senior Discount Notes Due 2008 (the "Securities");
WHEREAS the Indenture permits the New Guarantor to execute and deliver to
the Trustee a supplemental indenture pursuant to which the New Guarantor shall
unconditionally guarantee all the Company's obligations under the Securities
pursuant to a Guarantee on the terms and conditions set forth herein;
WHEREAS the Guarantee contained in this Supplemental Indenture shall
constitute a "Restricted Subsidiary Guarantee", and the New Guarantor shall
constitute a "Guarantor", for all purposes of the Indenture; and
WHEREAS pursuant to Section 901 of the Indenture, the Trustee and the
Company are authorized to execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the
Securities as follows:
1. Guaranties. The New Guarantor hereby unconditionally guarantees, jointly
----------
and severally, to each Holder and to the Trustee and its successors and assigns
(a) the full
B-1
<PAGE>
and punctual payment of Accreted Value of (and premium, if any) and interest on
the Securities when due, whether at Stated Maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Company under
the Indenture and the Securities and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Company under
the Indenture and the Securities (all the foregoing being hereinafter
collectively called the "Obligations"). The New Guarantor further agrees that
the Obligations may be extended or renewed, in whole or in part, without notice
or further assent from the New Guarantor and that the New Guarantor will remain
bound under this Supplemental Indenture notwithstanding any extension or renewal
of any Obligation.
The New Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The New Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of the New Guarantor hereunder
shall not be affected by (a) the failure of any Holder or the Trustee to assert
any claim or demand or to enforce any right or remedy against the Company or any
other Person under the Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of the
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or the Trustee to exercise any right or remedy
against any other guarantor of the Obligations; or (f) any change in the
ownership of the New Guarantor.
The New Guarantor further agrees that its Guarantee herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Obligations.
Except as expressly set forth in Sections 803, 1017, 1019, 1202 and 1203 of
the Indenture, the obligations of the New Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the New Guarantor herein shall
not be discharged or impaired or otherwise affected by the failure of any Holder
or the Trustee to assert any claim or demand or to enforce any remedy under the
Indenture, the Securities or any other agreement, by any waiver or modification
of any thereof, by any default, failure or delay, willful or otherwise, in the
B-2
<PAGE>
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of the New Guarantor or would otherwise operate as a
discharge of the New Guarantor as a matter of law or equity.
The New Guarantor further agrees that its Guarantee herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of Accreted Value of (or premium, if any) or interest on any
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against the New
Guarantor by virtue hereof, upon the failure of the Company to pay the Accreted
Value of (or premium, if any) or interest on any Obligation when and as the same
shall become due, whether at Stated Maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Obligation, the New Guarantor
hereby promises to and will, upon receipt of written demand by the Trustee,
forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an
amount equal to the sum of (i) the unpaid amount of such Obligations, (ii)
accrued and unpaid interest on such Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary Obligations of the Company to
the Holders and the Trustee.
The New Guarantor agrees that it shall not be entitled to any right of
subrogation in respect of any Obligations guaranteed hereby until payment in
full in cash of all Obligations. The New Guarantor further agrees that, as
between it, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article Five of the Indenture for the purposes of the New
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Five of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
New Guarantor for the purposes of this Section.
The New Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section 1.
2. Contribution. Each of the Company and the New Guarantor (a "Contributing
------------
Party") agrees that, in the event a payment shall be made by any other Guarantor
under any Restricted Subsidiary Guarantee (the "Claiming Guarantor"), the
Contributing
B-3
<PAGE>
Party shall indemnify the Claiming Guarantor in an amount equal to the amount of
such payment multiplied by a fraction, the numerator of which shall be the net
worth of the Contributing Party (which, in the case of the Company, shall be
measured on the Issue Date, and in the case of the New Guarantor, on the date
hereof) and the denominator of which shall be the aggregate net worth of the
Company on the Issue Date and the Guarantors on respective dates of the
Supplemental Indentures executed and delivered by such Guarantors.
3. Successors and Assigns. This Supplemental Indenture shall be binding
----------------------
upon the New Guarantor and its successors and assigns and shall enure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in the Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
4. No Waiver. Neither a failure nor a delay on the part of either the
---------
Trustee or the Holders in exercising any right, power or privilege under this
Supplemental Indenture, the Indenture or the Securities shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. The rights, remedies
and benefits of the Trustee and the Holders herein and therein expressly
specified are cumulative and not exclusive of any other rights, remedies or
benefits which either may have under this Supplemental Indenture, the Indenture
or the Securities at law, in equity, by statute or otherwise.
5. Modification. No modification, amendment or waiver of any provision of
------------
this Supplemental Indenture, nor the consent to any departure by the New
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the New Guarantor in any case shall entitle the New
Guarantor to any other or further notice or demand in the same, similar or other
circumstances.
6. Opinion of Counsel. Concurrently with the execution and delivery of this
------------------
Supplemental Indenture, the Company shall deliver to the Trustee an Opinion of
Counsel to the effect that this Supplemental Indenture has been duly authorized,
executed and delivered by each of the New Guarantor and the Company and that,
subject to the application of bankruptcy, insolvency, moratorium, fraudulent
conveyance or transfer and other similar laws relating to creditors' rights
generally and to the principles of equity, whether considered in a proceeding at
law or in equity, the Guarantee of the New Guarantor is a legal, valid and
binding obligation of the New Guarantor, enforceable against the New Guarantor
in accordance with its terms.
B-4
<PAGE>
7. Ratification of Indenture; Supplemental Indentures Part of Indenture.
--------------------------------------------------------------------
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall remain
in full force and effect. This Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby.
8. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
9. Counterparts. The parties may sign any number of copies of this
------------
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
B-5
<PAGE>
10. Effect of Headings. The Section headings herein are for convenience
------------------
only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR],
by
-------------------------------
Name:
Title:
LEVEL 3 COMMUNICATIONS, INC.,
on behalf of itself and the Existing
` Guarantors, if any,
by
-------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY, as
Trustee,
by
-------------------------------
Name:
Title:
<PAGE>
Exhibit 4.2
LEVEL 3 COMMUNICATIONS, INC.
$833,815,000
10-1/2% Senior Discount Notes Due 2008
REGISTRATION AGREEMENT
New York, New York
November 24, 1998
To: SALOMON SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
CHASE SECURITIES INC.
J.P. MORGAN & CO.
In care of:
Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Level 3 Communications, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to certain purchasers (the "Purchasers"), upon the
terms set forth in a purchase agreement dated the date hereof (the "Purchase
Agreement"), $833,815,000 aggregate principal amount at maturity of its 10-1/2%
Senior Discount Notes Due 2008 (the "Securities") (the "Initial Placement"). As
an inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Company agrees
with you, (i) for your benefit and the benefit of the other Purchasers and (ii)
for the benefit of the holders from time to time of the Securities (including
you and the other Purchasers) (each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
"Affiliate" of any specified person means any other person which,
---------
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether
<PAGE>
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Exchange Offer Registration Period" means the 180-day period
----------------------------------
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement
-------------------------------------
of the Company on an appropriate form under the Securities Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include the
-----------------
Purchasers) which is a broker-dealer electing to exchange Securities acquired
for its own account as a result of market-making activities or other trading
activities for New Securities.
"Holder" has the meaning set forth in the preamble hereto.
------
"Indenture" means the Indenture relating to the Securities and the New
---------
Securities to be dated as of December 2, 1998, between the Company and IBJ
Schroder Bank & Trust Company, as trustee, as the same may be amended from time
to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
-----------------
"Majority Holders" means the Holders of a majority of the aggregate
----------------
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment
---------------------
bankers and manager or managers that shall administer an offering of securities
under a Shelf Registration Statement.
"New Securities" means debt securities of the Company identical in all
--------------
material respects to the Securities (except that the interest rate step-up
provisions and the transfer restrictions will be modified or eliminated, as
appropriate), to be issued under the Indenture.
"Prospectus" means the prospectus included in any Registration
----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the
2
<PAGE>
terms of the offering of any portion of the Securities or the New Securities,
covered by such Registration Statement, and all amendments and supplements to
the Prospectus, including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
-------------------------
issue and deliver to such Holders, in exchange for the Securities, a like
principal amount of the New Securities.
"Registration Securities" has the meaning set forth in Section 3(a)
-----------------------
hereof.
"Registration Statement" means any Exchange Offer Registration
----------------------
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, all amendments
and supplements to such registration statement, including, without limitation,
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Securities" has the meaning set forth in the preamble hereto.
----------
"Shelf Registration" means a registration effected pursuant to Section
------------------
3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
-------------------------
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
----------------------------
of the Company pursuant to the provisions of Section 3 hereof which covers some
of or all the Securities or New Securities, as applicable, on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the Commission, all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" means the trustee with respect to the Securities and the New
-------
Securities under the Indenture.
"underwriter" means any underwriter of securities in connection with
-----------
an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by Exchanging
------------------------------------------------------------------
Dealers; Private Exchange.
- -------------------------
(a) The Company shall prepare and, not later than 90 days after the date
of the original issuance of the Securities, shall file with the Commission the
Exchange Offer Registration
3
<PAGE>
Statement with respect to the Registered Exchange Offer. The Company shall use
its best efforts to cause the Exchange Offer Registration Statement to become
effective under the Securities Act within 150 days after the date of the
original issuance of the Securities.
(b) Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for New Securities (assuming that such Securities do not
constitute a portion of an unsold allotment acquired by such Holder directly
from the Company and such Holder is not an affiliate of the Company within the
meaning of the Securities Act, acquires the New Securities in the ordinary
course of such Holder's business and has no arrangements with any person to
participate in the distribution of the New Securities) to trade such New
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of a substantial proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30 days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
and
(iv) comply in all material respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver to each
Holder of Securities, New Securities equal
4
<PAGE>
in principal amount to the Securities of such Holder so accepted for
exchange.
(e) The Purchasers and the Company acknowledge that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
and in the absence of an applicable exemption therefrom, each Exchanging Dealer
is required to deliver a Prospectus in connection with a sale of any New
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Securities acquired for its own account as a
result of market-making activities or other trading activities. Accordingly,
the Company shall:
(i) include the information set forth in Annex A hereto on the cover
of the Exchange Offer Registration Statement, in Annex B hereto in the
forepart of the Exchange Offer Registration Statement in a section setting
forth details of the Exchange Offer, in Annex C hereto in the underwriting
or plan of distribution section of the Prospectus forming a part of the
Exchange Offer Registration Statement, and in Annex D hereto in the Letter
of Transmittal delivered pursuant to the Registered Exchange Offer (it
being understood that a Holder's participation in the Exchange Offer is
conditioned on the Holder, by executing and returning the Letter of
Transmittal, representing in writing to the Company as set forth in Rider B
of Annex D hereto); and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Securities Act during the
Exchange Offer Registration Period for delivery by Exchanging Dealers in
connection with sales of New Securities received pursuant to the Registered
Exchange Offer, as contemplated by Section 4(h) below.
(f) In the event that any Purchaser determines that it is not eligible to
participate in the Registered Exchange Offer with respect to the exchange of
Securities constituting any portion of an unsold allotment, at the request of
such Purchaser, the Company shall issue and deliver to such Purchaser or the
party purchasing New Securities registered under a Shelf Registration Statement
as contemplated by Section 3 hereof from such Purchaser, in exchange for such
Securities, a like principal amount of New Securities. The Company shall seek
to cause the CUSIP Service Bureau to issue the same CUSIP number for such New
Securities as for New Securities issued pursuant to the Registered Exchange
Offer.
3. Shelf Registration. If, (i) because of any change in law or applicable
------------------
interpretations thereof by the Commission's staff, the Company determines upon
advice of its outside counsel that it is not permitted to effect the Registered
Exchange Offer as contemplated by Section 2 hereof, or (ii) for any other reason
the Exchange Offer Registration Statement is not declared
5
<PAGE>
effective within 150 days after the Closing Date or the Registered Exchange
Offer is not consummated within 180 days after the Closing Date, or (iii) any
Purchaser so requests with respect to Securities (or any New Securities received
pursuant to Section 2(f)) not eligible to be exchanged for New Securities in a
Registered Exchange Offer or, in the case of any Purchaser that participates in
any Registered Exchange Offer, such Purchaser does not receive freely tradable
New Securities, or (iv) any Holder (other than a Purchaser) is not eligible to
participate in the Registered Exchange Offer or (v) in the case of any such
Holder that participates in the Registered Exchange Offer, such Holder does not
receive freely tradable New Securities in exchange for tendered securities,
other than by reason of such Holder being an affiliate of the Company within the
meaning of the Securities Act (it being understood that, for purposes of this
Section 3, (x) the requirement that a Purchaser deliver a Prospectus containing
the information required by Items 507 and/or 508 of Regulation S-K under the
Securities Act in connection with sales of New Securities acquired in exchange
for such Securities shall result in such New Securities being not "freely
tradeable" but (y) the requirement that an Exchanging Dealer deliver a
Prospectus in connection with sales of New Securities acquired in the Registered
Exchange Offer in exchange for Securities acquired as a result of market-making
activities or other trading activities shall not result in such New Securities
being not "freely tradeable"), the following provisions shall apply:
(a) The Company shall as promptly as practicable (but in no event
more than the later of (i) 90 days after the Closing Date or (ii) 45 days after
so required or requested pursuant to this Section 3), file with the Commission
and thereafter shall use its best efforts to cause to be declared effective
under the Securities Act a Shelf Registration Statement relating to the offer
and sale of the Securities or the New Securities, as applicable, by the Holders
from time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement (such Securities or
New Securities, as applicable, to be sold by such Holders under such Shelf
Registration Statement being referred to herein as "Registration Securities");
provided, however, that, with respect to New Securities received by a Purchaser
- -------- -------
in exchange for Securities constituting any portion of an unsold allotment, the
Company may, if permitted by current interpretations by the Commission's staff,
file a post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of its obligations under this paragraph (a) with
respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to herein as, and governed by the provisions herein
applicable to, a Shelf Registration Statement.
6
<PAGE>
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by the Commission or
such shorter period that will terminate when all the Securities or New
Securities, as applicable, covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Company shall be deemed not
to have used its best efforts to keep the Shelf Registration Statement effective
during the Shelf Registration Period if it voluntarily takes any action that
would result in Holders of securities covered thereby not being able to offer
and sell such securities during that period, unless (i) such action is required
by applicable law or (ii) such action is taken by the Company in good faith and
for valid business reasons (not including avoidance of the Company's obligation
hereunder), including the acquisition or divestiture of assets, so long as the
Company promptly thereafter complies with the requirements of Section 4(k)
hereof, if applicable.
4. Registration Procedures. In connection with any Shelf Registration
------------------------
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) (i) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Exchange Offer Registration
Statement, each amendment thereof and each amendment or supplement, if any,
to the Prospectus included therein and shall use its best efforts to
reflect in each such document, when so filed with the Commission, such
comments as you reasonably may propose.
(ii) The Company shall furnish to you, prior to the filing thereof
with the Commission, a copy of any Shelf Registration Statement, each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein and shall use its best efforts to reflect in
each such document, when so filed with the Commission, such comments as any
Holder whose securities are to be included in such Shelf Registration
Statement reasonably may propose.
(b) The Company shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Securities Act and the rules and regulations thereunder, (ii) any
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any Prospectus forming part
7
<PAGE>
of any Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) (1) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and, in the
case of an Exchange Offer Registration Statement, any Exchanging Dealer which
has provided in writing to the Company a telephone or facsimile number and
address for notices, and, if requested by you or any such Holder or Exchanging
Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the making of any
changes in the Registration Statement or the Prospectus so that, as of
such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading
(which advice shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made).
8
<PAGE>
Each such Holder or Exchanging Dealer agrees by its acquisition of such
securities to be sold by such Holder or Exchanging Dealer, that, upon being
so advised by the Company of any event described in clause (iii) of this
paragraph (c)(2), such Holder or Exchanging Dealer will forthwith
discontinue disposition of such securities under such Registration
Statement or Prospectus, until such Holder's or Exchanging Dealer's receipt
of the copies of the supplemented or amended Prospectus contemplated by
paragraph 4(k) hereof, or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed.
(d) The Company shall use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of any Registration Statement at
the earliest possible time.
(e) The Company shall furnish to each Holder of securities included
within the coverage of any Shelf Registration Statement, without charge, at
least one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if
the Holder so requests in writing, any documents incorporated by reference
therein and all exhibits thereto (including those incorporated by reference
therein).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of securities included within the coverage of any Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may
reasonably request; and the Company consents to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders of
securities in connection with the offering and sale of the securities
covered by the Prospectus or any amendment or supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if the Exchanging Dealer so
requests in writing, any documents incorporated by reference therein and
all exhibits thereto (including those incorporated by reference therein).
(h) The Company shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies
of the Prospectus included in such Exchange Offer Registration Statement
and any amendment or supplement thereto as such Exchanging Dealer may
reasonably request for delivery by such
9
<PAGE>
Exchanging Dealer in connection with a sale of New Securities received by
it pursuant to the Registered Exchange Offer; and the Company consents to
the use of the Prospectus or any amendment or supplement thereto by any
such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other offering of
securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests
in writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the securities
covered by such Registration Statement; provided, however, that the Company
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will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names
as Holders may request prior to sales of securities pursuant to such
Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the Trustee with printed certificates
for such Securities or New Securities, in a form, if requested by the
applicable Holder or Holder's Counsel, eligible for deposit with The
Depository Trust Company or any successor thereto under the Indenture.
10
<PAGE>
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission to the extent and so
long as they are applicable to the Registered Exchange Offer or the Shelf
Registration and will make generally available to its security holders a
consolidated earnings statement (which need not be audited) covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act.
(n) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, on or prior to the effective date
of any Shelf Registration Statement or Exchange Offer Registration
Statement.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company in
writing such information regarding the Holder and the distribution of such
securities as the Company may from time to time reasonably require for
inclusion in such Registration Statement. The Company may exclude from any
such Registration Statement the securities of any such Holder who fails to
furnish such information within a reasonable time after receiving such
request. Each Holder as to which any Shelf Registration is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.
(p) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters, if any, and
Majority Holders reasonably agree should be included therein and shall make
all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(q) (i) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 hereof (or such other provisions and
procedures acceptable to the Majority Holders and the Managing
Underwriters, if any), with respect to all parties to
11
<PAGE>
be indemnified pursuant to Section 6 hereof from Holders of Securities to the
Company.
(ii) Without limiting in any way paragraph (q)(i), no Holder may
participate in any underwritten registration hereunder unless such Holder
(x) agrees to sell such Holder's securities to be covered by such
registration on the basis provided in any underwriting arrangements
approved by the Majority Holders and the Managing Underwriters and (y)
completes and executes in a timely manner all customary questionnaires,
powers of attorney, underwriting agreements and other documents reasonably
required by the Company or the Managing Underwriters in connection with
such underwriting arrangements.
(r) In the case of any Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by the Holders of
securities to be registered thereunder, any underwriter participating in
any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such underwriter
all relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries reasonably requested by such
person; (ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by the Holders or any
such underwriter, attorney, accountant or agent in connection with any such
Registration Statement as is customary for due diligence examinations in
connection with primary underwritten offerings; provided, however, that any
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information that is nonpublic at the time of delivery of such information
shall be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection
with a court proceeding or required by law, or such information becomes
available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such representations
and warranties to the Holders of securities registered thereunder and the
underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in primary underwritten offerings; (iv) obtain
opinions of counsel to the Company (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may
be reasonably requested by such Holders and underwriters; (v) obtain "cold
comfort" letters (or, in the case of any person that does not satisfy the
conditions for receipt of a "cold comfort" letter specified in Statement on
Auditing Standards No. 72, an "agreed-upon procedures" letter under
Statement on Auditing Standards No. 35) and updates thereof from the
independent certified public
12
<PAGE>
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included or incorporated by
reference in the Registration Statement), addressed to each selling Holder
of securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
and (vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 4(k) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 4(r) shall be performed
(A) on the effective date of such Registration Statement and each post-
effective amendment thereto and (B) at each closing under any underwriting
or similar agreement as and to the extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement, the
Company shall (i) make reasonably available for inspection by each
Purchaser, and any attorney, accountant or other agent retained by such
Purchaser, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries reasonably
requested by such person; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by such
Purchaser or any such attorney, accountant or agent in connection with any
such Registration Statement as is customary for due diligence examinations
in connection with primary underwritten offerings; provided, however, that
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any information that is nonpublic at the time of delivery of such
information shall be kept confidential by such Purchaser or any such
attorney, accountant or agent, unless such disclosure is made in connection
with a court proceeding or required by law, or such information becomes
available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such representations
and warranties to such Purchaser, in form, substance and scope as are
customarily made by issuers to underwriters in primary underwritten
offerings; (iv) obtain opinions of counsel to the Company (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to such Purchaser and its counsel), addressed to such
Purchaser, covering such matters as are customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such Purchaser or its counsel; (v) obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if
13
<PAGE>
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included or incorporated by reference in the Registration Statement),
addressed to such Purchaser, in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
primary underwritten offerings, or if requested by such Purchaser or its
counsel in lieu of a "cold comfort" letter, an agreed-upon procedures
letter under Statement on Auditing Standards No. 35, covering matters
requested by such Purchaser or its counsel; and (vi) deliver such documents
and certificates as may be reasonably requested by such Purchaser or its
counsel, including those to evidence compliance with Section 4(k) and with
conditions customarily contained in underwriting agreements. The foregoing
actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(s)
shall be performed (A) at the close of the Registered Exchange Offer and
(B) on the effective date of any post-effective amendment to the Exchange
Offer Registration Statement.
5. Registration Expenses. The Company shall bear all expenses incurred in
----------------------
connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel (in
addition to one local counsel in each relevant jurisdiction) designated by the
Majority Holders to act as counsel for the Holders in connection therewith
("Holders' Counsel"). Notwithstanding the foregoing, the Holders of the
securities being registered shall pay all agency or brokerage fees and
commissions and underwriting discounts and commissions attributable to the sale
of such securities and the fees and disbursements of any counsel or other
advisors or experts retained by such holders (severally or jointly), other than
the counsel and experts specifically referred to above in this Section 5,
transfer taxes on resale of any of the securities by such Holders and any
advertising expenses incurred by or on behalf of such Holders in connection with
any offers they may make.
6. Indemnification and Contribution. (a) In connection with any Registration
---------------------------------
Statement, the Company agrees to indemnify and hold harmless each Holder of
securities covered thereby (including each Purchaser and, with respect to any
Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging
Dealer), the directors, officers, employees and agents of each such Holder and
each other person, if any, who controls any such Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Securities Act, the Exchange Act or
other Federal or state statutory law or
14
<PAGE>
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement as originally filed or in any amendment thereof, or
in any preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
-----------------
Company will not be liable in any case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any such Holder specifically for inclusion therein;
provided further, however, that the indemnity agreement contained in this
- ---------------- -------
Section 6(a) shall not inure to the benefit of any indemnified party to the
extent that it is determined by a final, non-appealable judgment that (i) a
preliminary Prospectus contained an untrue statement of a material fact or
omitted to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the sale to the
person asserting any such losses, claims, damages or liabilities was an initial
resale of securities by any Holder, (iii) any such loss, claim, damage or
liability of such indemnified party results from the fact that there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such securities to such person, a copy of any revised preliminary
Prospectus, the related Prospectus or the related Prospectus as amended or
supplemented in any case where such delivery is required by the Securities Act,
and the Company had previously furnished copies thereof to such Holder and (iv)
the revised preliminary Prospectus, the related Prospectus or the related
Prospectus as amended or supplemented corrected such untrue statement or
omission. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses (as
defined below) of, as provided in Section 6(d), any underwriters of Securities
registered under a Shelf Registration Statement, their officers, directors,
employees and agents and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Purchasers
and the selling Holders provided in this Section 6(a) and shall, if requested by
any Holder, enter into an underwriting agreement reflecting such agreement, as
provided in Section 4(q) hereof.
15
<PAGE>
(b) Each Holder of securities covered by a Registration Statement
(including each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer) severally and not
jointly agrees to indemnify and hold harmless the Company, each of its directors
and officers and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to each such Holder,
but only with reference to written information relating to such Holder furnished
to the Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
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reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and local
counsel) if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the
16
<PAGE>
institution of such action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding. It is understood,
however, that the Company shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in addition
to any local counsel) at any time for all such Holders and controlling persons.
An indemnifying party shall not be liable under this Section 6 to any
indemnified party regarding any settlement or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
is consented to by such indemnifying party, which consent shall not be
unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
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no case shall any Purchaser or any subsequent Holder of any Security or New
Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a
New Security, applicable to the Security which was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the securities purchased by such underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the
17
<PAGE>
indemnifying party and the indemnified party shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of such indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the sum of (x)
the total net proceeds from the Initial Placement (before deducting expenses) as
set forth on the cover page of the Final Memorandum and (y) the total amount of
additional interest which the Company was not required to pay as a result of
registering the securities covered by the Registration Statement which resulted
in such Losses. Benefits received by the Purchasers shall be deemed to be equal
to the total purchase discounts and commissions as set forth on the cover page
of the Final Memorandum, and benefits received by any other Holders shall be
deemed to be equal to the value of receiving Securities or New Securities, as
applicable, registered under the Securities Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Registration Statement which resulted in such Losses. Relative fault shall
be determined by reference to whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand, or
by the indemnified party, on the other hand. The parties agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Purchaser,
any other Holder, the Company or any underwriter or any of the officers,
directors or controlling persons referred to in this Section 6, and will survive
the sale by a Holder of securities covered by a Registration Statement.
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7. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not, as of the date
---------------------------
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that limits the rights granted to the
Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
-----------------------
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding aggregate
principal amount of Securities (or, after the consummation of any Exchange Offer
in accordance with Section 2 hereof, of New Securities); provided that, with
--------
respect to any matter that directly or indirectly affects the rights of any
Purchaser hereunder, the Company shall obtain the written consent of each such
Purchaser against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by the
Majority Holders, determined on the basis of securities being sold rather than
registered under such Registration Statement.
(c) Notices. All notices and other communications provided for or
--------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
facsimile, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this
Section 7(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the registrar under the
Indenture, with a copy in like manner to Salomon Smith Barney Inc. by
facsimile (212-783-2823) and confirmed by mail to it at Seven World
Trade Center, New York, New York 10048, Attention: General Counsel;
(2) if to you, initially at the address set forth in the Purchase
Agreement; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
19
<PAGE>
The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company or subsequent Holders of Securities and/or New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and/or New Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
-------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
---------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
THE CONFLICT OF LAW PROVISIONS THEREOF).
(h) Severability. In the event that any one of more of the
-------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
------------------------------------
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its Affiliates (other than subsequent Holders
of Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
(j) Termination. This Agreement shall automatically terminate,
------------
without any further action on the part of the Company or the Purchasers, upon
the termination or cancelation of the Purchase Agreement prior to the Closing
Date.
20
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
LEVEL 3 COMMUNICATIONS, INC.
By:
/s/ THOMAS C. STORTZ
---------------------------------
Name: Thomas C. Stortz
Title: Senior Vice President and
General Counsel
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written
SALOMON SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
CHASE SECURITIES INC.
J.P. MORGAN & CO.
By: SALOMON SMITH BARNEY INC.
By:
/s/ WILLIAM RAINCSUK, JR.
---------------------------------
Name: William Raincsuk, Jr.
Title: Vice President
21
<PAGE>
ANNEX A
Each broker-dealer that receives New Securities for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the date hereof
(the "Expiration Date") and ending on the close of business on the day that is
180 days following the Expiration Date, it will make this Prospectus available
to any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Securities. See "Plan of Distribution."
1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such New Securities. The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business on the
day that is 180 days following the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 199 , all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus. */
-
The Company will not receive any proceeds from any sale of New Securities
by broker-dealers. New Securities received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any broker-
dealer that resells New Securities that were received by it for its own account
pursuant to the Registered Exchange Offer and any broker or dealer that
participates in a distribution of such New Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
- --------------------
*/ In addition, the legend required by Item 502(e) of Regulation S-K will
-
appear on the back cover page of the Exchange Offer Prospectus.
<PAGE>
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (other than the expenses of counsel for the
holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
[If applicable, add information required by Regulation S-K Items 507 and/or
508.]
2
<PAGE>
ANNEX D
Rider A
-------
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
-----------------------------------------------------------------
Address:
--------------------------------------------------------------
--------------------------------------------------------------
Rider B
-------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New
Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
EXHIBIT 12
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
LEVEL 3 COMMUNICATIONS, INC.
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Fiscal Year Ended
---------------- -----------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ----- ----- ---- ---- -----
($ in millions, except for ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (Loss) from Continuing
Operations Before Taxes....... $ (100) $ 66 $ 70 $ 116 $ (4) $(33) $ 241
Interest on Debt, Net of
Capitalized Interest........ 86 11 15 33 52 77 11
Interest Expense Portion of
Rental Expense.............. 5 -- -- 1 -- 1 --
------- ------- ----- ----- ---- ---- -----
Earnings Available for Fixed
Charges....................... $ (9) $ 77 $ 85 $ 150 $ 48 $ 45 $ 252
======= ======= ===== ===== ==== ==== =====
Interest on Debt............... $ 92 $ 11 $ 15 $ 38 $ 72 $ 86 $ 12
MFS Preferred Dividends...... -- -- -- -- 8 -- --
Interest Expense Portion of
Rental Expense.............. 5 -- -- 1 -- 1 --
------- ------- ----- ----- ---- ---- -----
Total Fixed Charges............ $ 97 $ 11 $ 15 $ 39 $ 80 $ 87 $ 12
======= ======= ===== ===== ==== ==== =====
Ratio of Earnings to Fixed
Charges....................... -- 7.29 5.73 3.87 -- -- 20.94
======= ======= ===== ===== ==== ==== =====
Deficiency..................... $ (106) $ -- $ -- $ -- $(32) $(42) $ --
======= ======= ===== ===== ==== ==== =====
</TABLE>
<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-4 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-K/A 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
/s/ PricewaterhouseCoopers LLP
-------------------------------------
Omaha, Nebraska
February 3, 1999
<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-4 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-K/A 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
/s/ PricewaterhouseCoopers LLP
-------------------------------------
Philadelphia, Pennsylvania
February 3, 1999
<PAGE>
EXHIBIT 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON ,
1999 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5:00 P.M., EASTERN STANDARD TIME, ON THE EXPIRATION DATE.
LEVEL 3 COMMUNICATIONS, INC.
3555 Farnam Street
Omaha, Nebraska 68131
LETTER OF TRANSMITTAL
For 10 1/2% Senior Discount Notes Due 2008
EXCHANGE AGENT:
IBJ WHITEHALL BANK & TRUST COMPANY
(FORMERLY KNOWN AS IBJ SCHRODER BANK & TRUST COMPANY)
By Facsimile:
(212) 858-2611
Confirm by telephone:
(212) 858-2103
By Registered or Certified Mail:
IBJ Whitehall Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attention: Reorganization Operations Department
By Overnight Courier or By Hand:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Securities Processing Window Subcellar One (SC-1)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING
THE INSTRUCTIONS TO THIS LETTER, CAREFULLY
BEFORE CHECKING ANY BOX BELOW
Capitalized terms used in this Letter and not defined herein shall have the
respective meanings ascribed to them in the Prospectus.
List in Box 1 below the Original Notes of which you are the holder. If the
space provided in Box 1 is inadequate, list the certificate numbers and
principal amount of Original Notes on a separate SIGNED schedule and affix
that schedule to this Letter.
<PAGE>
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED PRINCIPAL AMOUNT
HOLDER(S) PRINCIPAL AMOUNT AT MATURITY
(PLEASE AT MATURITY OF ORIGINAL
FILL IN IF CERTIFICATE OF ORIGINAL NOTES
BLANK) NUMBER(S)(1) NOTES TENDERED(2)
- -----------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
TOTALS:
- -----------------------------------------------------------
</TABLE>
(1) Need not be completed if Original Notes are being tendered by book-entry
transfer.
(2) Unless otherwise indicated, the entire principal amount at maturity of
Original Notes represented by a certificate or Book-Entry Confirmation
delivered to the Exchange Agent will be deemed to have been tendered.
The undersigned acknowledges receipt of the Prospectus dated , 1999
(the "Prospectus") of Level 3 Communications, Inc., a Delaware corporation
(the "Company"), and this Letter of Transmittal for 10 1/2% Senior Discount
Notes Due 2008 which may be amended from time to time (this "Letter"), which
together constitute the Company's offer (the "Exchange Offer") to exchange,
for each $1,000 in principal amount at maturity of its outstanding 10 1/2%
Senior Discount Notes Due 2008 issued and sold in a transaction exempt from
registration under the Securities Act of 1933, as amended (the "Original
Notes"), $1,000 in principal amount at maturity of 10 1/2% Senior Discount
Notes Due 2008 (the "New Notes").
The undersigned has completed, executed and delivered this Letter to
indicate the action he or she desires to take with respect to the Exchange
Offer.
All holders of Original Notes who wish to tender their Original Notes must,
prior to the Expiration Date: (1) complete, sign, date and mail or otherwise
deliver this Letter to the Exchange Agent, in person or to the address set
forth above; and (2) tender his or her Original Notes or, if a tender of
Original Notes is to be made by book-entry transfer to the account maintained
by the Exchange Agent at The Depository Trust Company (the "Book-Entry
Transfer Facility"), confirm such book-entry transfer (a "Book-Entry
Confirmation"), in each case in accordance with the procedures for tendering
described in the Instructions to this Letter. Holders of Original Notes whose
certificates are not immediately available, or who are unable to deliver their
certificates or Book-Entry Confirmation and all other documents required by
this Letter to be delivered to the Exchange Agent on or prior to the
Expiration Date, must tender their Original Notes according to the guaranteed
delivery procedures set forth under the caption "The Exchange Offer -- How to
Tender" in the Prospectus. (See Instruction 1).
The Instructions included with this Letter must be followed in their
entirety. Questions and requests for assistance or for additional copies of
the Prospectus or this Letter may be directed to the Exchange Agent, at the
address listed above, or the Company, 1450 Infinite Drive, Louisville,
Colorado 80027, Attention: Vice President, Investor Relations (telephone (303)
926-3000).
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned tenders to the Company the principal amount of Original Notes
indicated above. Subject to, and effective upon, the acceptance for exchange
of the Original Notes tendered with this Letter, the undersigned exchanges,
assigns and transfers to, or upon the order of, the Company all right, title
and interest in and to the Original Notes tendered.
The undersigned constitutes and appoints the Exchange Agent as his or her
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered
2
<PAGE>
Original Notes, with full power of substitution, to: (a) deliver certificates
for such Original Notes; (b) deliver Original Notes and all accompanying
evidence of transfer and authenticity to or upon the order of the Company upon
receipt by the Exchange Agent, as the undersigned's agent, of the New Notes to
which the undersigned is entitled upon the acceptance by the Company of the
Original Notes tendered under the Exchange Offer; and (c) receive all benefits
and otherwise exercise all rights of beneficial ownership of the Original
Notes, all in accordance with the terms of the Exchange Offer. The power of
attorney granted in this paragraph shall be deemed irrevocable and coupled
with an interest.
The undersigned hereby represents and warrants that he or she has full power
and authority to tender, exchange, assign and transfer the Original Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the assignment and transfer of the Original
Notes tendered.
The undersigned agrees that acceptance of any tendered Original Notes by the
Company and the issuance of New Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Agreement (as defined in the Prospectus) and that, upon the issuance of the
New Notes, the Company will have no further obligations or liabilities
thereunder (except in certain limited circumstances). By tendering Original
Notes, the undersigned certifies (a) that it is not an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act, that it is
not a broker-dealer that owns Original Notes acquired directly from the
Company or an affiliate of the Company, that it is acquiring the New Notes in
the ordinary course of the undersigned's business and that the undersigned is
not engaged in, and does not intend to engage in, a distribution of New Notes
or (b) that it is an "affiliate" (as so defined) of the Company or of the
initial purchasers in the offering of the Original Notes, and that it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it.
The undersigned acknowledges that, if it is a broker-dealer that will
receive New Notes for its own account in exchange for Original Notes that were
acquired as a result of market-making activities or other trading activities,
it will deliver a prospectus in connection with any resale of such New Notes.
By so acknowledging and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The undersigned understands that the Company may accept the undersigned's
tender by delivering written notice of acceptance to the Exchange Agent, at
which time the undersigned's right to withdraw such tender will terminate.
All authority conferred or agreed to be conferred by this Letter shall
survive the death or incapacity of the undersigned, and every obligation of
the undersigned under this Letter shall be binding upon the undersigned's
heirs, personal representatives, successors and assigns. Tenders may be
withdrawn only in accordance with the procedures set forth in the Instructions
contained in this Letter.
Unless otherwise indicated under "Special Delivery Instructions" below, the
Exchange Agent will deliver New Notes (and, if applicable, a certificate for
any Original Notes not tendered but represented by a certificate also
encompassing Original Notes which are tendered) to the undersigned at the
address set forth in Box 1.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict
between the terms of the Prospectus and this Letter, the Prospectus shall
prevail.
3
<PAGE>
[_]CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ________________________________________________
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
[_]CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): _______________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Window Ticket Number (if available): __________________________________________
Name of Institution which Guaranteed Delivery: ________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________________________________
Address: ______________________________________________________________________
_______________________________________________________________________________
4
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
BOX 2
PLEASE SIGN HERE WHETHER OR NOT ORIGINAL NOTES ARE BEING
PHYSICALLY TENDERED HEREBY
X _____________________________ ______________
X _____________________________ ______________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: ________________________________
This box must be signed by registered holder(s) of Original Notes as their
name(s) appear(s) on certificate(s) for Original Notes, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Letter. If signature is by a trustee, executor,
administrator, guardian, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below. (See Instruction 3)
Name(s) _____________________________________________________________________
_____________________________________________________________________________
(Please Print)
Capacity ____________________________________________________________________
Address _____________________________________________________________________
_____________________________________________________________________________
(Include Zip Code)
Signature(s) Guaranteed _____________________________________________________
by an Eligible Institution: (Authorized Signature)
(If required by _____________________________________________________________
Instruction 3) (Title)
_____________________________________________________________
(Name of Firm)
5
<PAGE>
BOX 3
_______________________________________________________________________________
TO BE COMPLETED BY ALL TENDERING HOLDERS
- --------------------------------------------------------------------------------
PAYOR'S NAME: IBJ Whitehall Bank & Trust Company
- --------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND DATING
BELOW.
-------------------------------
Social Security
Number
or Employer
Identification Number
- --------------------------------------------------------------------------------
SUBSTITUTE Part 2--Check the box if you are NOT subject to back-up
Form W-9 withholding because (1) you have not been notified by the
Department of the Internal Revenue Service that you are subject to back-up
Treasury Internal withholding as a result of failure to report all interest [ ]
Revenue Service or dividends, or (2) the Internal Revenue Service has
notified you that you are no longer subject to back-up
Payor's Request withholding, or (3) you are exempt from back-up withholding.
for
Taxpayer
Identification
Number (TIN) ------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, Part 3
I CERTIFY THAT THE INFORMATION PROVIDED ON Check if
THIS FORM IS TRUE, CORRECT AND COMPLETE. Awaiting TIN
[_]
SIGNATURE ______________ DATE __________
_______________________________________________________________________________
BOX 4 BOX 5
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if To be completed ONLY if
certificates for Original Notes in certificates for Original Notes in
a principal amount not exchanged, a principal amount not exchanged,
or New Notes, are to be issued in or New Notes, are to be sent to
the name of someone other than the someone other than the person
person whose signature appears in whose signature appears in Box 2
Box 2, or if Original Notes or to an address other than that
delivered by book-entry transfer shown in Box 1.
which are not accepted for
exchange are to be returned by
credit to an account maintained at
the Book-Entry Transfer Facility
other than the account indicated
above.
Deliver:
(check appropriate boxes)
[_] Original Notes not
tendered
Issue and deliver: [_] New Notes, to:
(check appropriate boxes) Name ______________________________
(Please Print)
[_] Original Notes not
tendered Address ___________________________
___________________________________
[_] New Notes, to:
Name ______________________________
(Please Print)
Address ___________________________
Please complete the Substitute
Form W-9 at Box 3
Tax I.D. or Social Security
Number: ___________________________
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter and Certificates. Certificates for Original Notes
or a Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed copy of this Letter and any other documents
required by this Letter, must be received by the Exchange Agent at one of its
addresses set forth herein on or before the Expiration Date. The method of
delivery of this Letter, certificates for Original Notes or a Book-Entry
Confirmation, as the case may be, and any other required documents is at the
election and risk of the tendering holder, but except as otherwise provided
below, the delivery will be deemed made when actually received by the Exchange
Agent. If delivery is by mail, the use of registered mail with return receipt
requested, properly insured, is suggested.
Holders whose Original Notes are not immediately available or who cannot
deliver their Original Notes or a Book-Entry Confirmation, as the case may be,
and all other required documents to the Exchange Agent on or before the
Expiration Date may tender their Original Notes pursuant to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedure:
(i) tender must be made by or through an Eligible Institution (as defined in
the Prospectus under the caption "The Exchange Offer"); (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by telegram, telex, facsimile transmission, mail or hand delivery)
(x) setting forth the name and address of the holder, the description of the
Original Notes and the principal amount of Original Notes tendered, (y)
stating that the tender is being made thereby and (z) guaranteeing that,
within three New York Stock Exchange trading days after the date of execution
of such Notice of Guaranteed Delivery, this Letter together with the
certificates representing the Original Notes or a Book-Entry Confirmation, as
the case may be, and any other documents required by this Letter will be
deposited by the Eligible Institution with the Exchange Agent; and (iii) the
certificates for all tendered Original Notes or a Book-Entry Confirmation, as
the case may be, as well as all other documents required by this Letter, must
be received by the Exchange Agent within three New York Stock Exchange trading
days after the date of execution of such Notice of Guaranteed Delivery, all as
provided in the Prospectus under the caption "The Exchange Offer--How to
Tender."
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders that are not
in proper form or the acceptance of which, in the opinion of the Company's
counsel, would be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to particular Original Notes. All
tendering holders, by execution of this Letter, waive any right to receive
notice of acceptance of their Original Notes.
Neither the Company, the Exchange Agent nor any other person shall be
obligated to give notice of defects or irregularities in any tender, nor shall
any of them incur any liability for failure to give any such notice.
2. Partial Tenders; Withdrawals. If less than the entire principal amount of
any Original Note evidenced by a submitted certificate or by a Book-Entry
Confirmation is tendered, the tendering holder must fill in the principal
amount at maturity tendered in the fourth column of Box 1 above. All of the
Original Notes represented by a certificate or by a Book-Entry Confirmation
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. A certificate for Original Notes not tendered will be
sent to the holder, unless otherwise provided in Box 5, as soon as practicable
after the Expiration Date, in the event that less than the entire principal
amount at maturity of Original Notes represented by a submitted certificate is
tendered (or, in the case of Original Notes tendered by book-entry transfer,
such non-exchanged Original Notes will be credited to an account maintained by
the holder with the Book-Entry Transfer Facility).
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to the Expiration Date. To be effective with respect to the
tender of Original Notes, a notice of withdrawal must: (i) be received by the
Exchange Agent before the Company notifies the Exchange Agent that it has
accepted the tender of Original Notes pursuant to the Exchange Offer; (ii)
specify the name of the person who tendered the Original Notes;
7
<PAGE>
(iii) contain a description of the Original Notes to be withdrawn, the
certificate numbers shown on the particular Exchange Agent before the Company
notifies the Exchange Agent that it has accepted the tender of Original Notes
pursuant to the Exchange Offer; (ii) specify the name of the person who
tendered the Original Notes; (iii) contain a description of the Original Notes
to be withdrawn, the certificate numbers shown on the particular certificates
evidencing such Original Notes and the principal amount at maturity of
Original Notes represented by such certificates; and (iv) be signed by the
holder in the same manner as the original signature on this Letter (including
any required signature guarantee).
3. Signatures on this Letter; Assignments; Guarantee of Signatures. If this
Letter is signed by the holder(s) of Original Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the
certificate(s) for such Original Notes, without alteration, enlargement or any
change whatsoever.
If any of the Original Notes tendered hereby are owned by two or more joint
owners, all owners must sign this Letter. If any tendered Original Notes are
held in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Letter as there are
names in which certificates are held.
If this Letter is signed by the holder of record and (i) the entire
principal amount of the holder's Original Notes are tendered; and/or (ii)
untendered Original Notes, if any, are to be issued to the holder of record,
then the holder of record need not endorse any certificates for tendered
Original Notes, nor provide a separate bond power. If any other case, the
holder of record must transmit a separate bond power with this Letter.
If this Letter or any certificate or assignment is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence satisfactory to
the Company of their authority to so act must be submitted, unless waived by
the Company.
Signatures on this Letter must be guaranteed by an Eligible Institution,
unless Original Notes are tendered: (i) by a holder who has not completed the
Box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter; or (ii) for the account of an Eligible
Institution. In the event that the signatures in this Letter or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by an eligible guarantor institution which is a member of The
Securities Transfer Agents Medallion Program (STAMP), The New York Stock
Exchanges Medallion Signature Program (MSP) or The Stock Exchanges Medallion
Program (SEMP) (collectively, "Eligible Institutions"). If Original Notes are
registered in the name of a person other than the signer of this Letter, the
Original Notes surrendered for exchange must be endorsed by, or be accompanied
by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company, in its sole discretion, duly
executed by the registered holder with the signature thereon guaranteed by an
Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering holders should
indicate, in Box 4 or 5, as applicable, the name and address to which the New
Notes or certificates for Original Notes not exchanged are to be issued or
sent, if different from the name and address of the person signing this
Letter. In the case of issuance in a different name, the tax identification
number of the person named must also be indicated. Holders tendering Original
Notes by book-entry transfer may request that Original Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer Facility as
such holder may designate.
5. Tax Identification Number. Federal income tax law requires that a holder
whose tendered Original Notes are accepted for exchange must provide the
Exchange Agent (as payor) with his or her correct taxpayer identification
number ("TIN"), which, in the case of a holder who is an individual, is his or
her social security number. If the Exchange Agent is not provided with the
correct TIN, the holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, delivery to the holder of the New Notes
pursuant to the Exchange Offer may be subject to back-up withholding. (If
withholding results in overpayment of taxes, a refund or credit may be
obtained.) Exempt holders (including, among others, all corporations and
certain foreign individuals) are not subject to these back-up withholding and
reporting requirements. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
8
<PAGE>
Under federal income tax laws, payments that may be made by the Company on
account of New Notes issued pursuant to the Exchange Offer may be subject to
back-up withholding at a rate of 31%. In order to avoid being subject to back-
up withholding, each tendering holder must provide his or her correct TIN by
completing the "Substitute Form W-9" referred to above, certifying that the
TIN provided is correct (or that the holder is awaiting a TIN) and that: (i)
the holder has not been notified by the Internal Revenue Service that he or
she is subject to back-up withholding as a result of failure to report all
interest or dividends; or (ii) the Internal Revenue Service has notified the
holder that he or she is no longer subject to back-up withholding; or (iii)
certify in accordance with the Guidelines that such holder is exempt from
back-up withholding. If the Original Notes are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
information on which TIN to report.
6. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the transfer of Original Notes to it or its order pursuant to
the Exchange Offer. If, however, the New Notes or certificates for Original
Notes not exchanged are to be delivered to, or are to be issued in the name
of, any person other than the record holder, or if tendered certificates are
recorded in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed by any reason other than the transfer of
Original Notes to the Company or its order pursuant to the Exchange Offer,
then the amount of such transfer taxes (whether imposed on the record holder
or any other person) will be payable by the tendering holder. If satisfactory
evidence of payment of taxes or exemption from taxes is not submitted with
this Letter, the amount of transfer taxes will be billed directly to the
tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter.
7. Waiver of Conditions. The Company reserves the absolute right to amend or
waive any of the specified conditions in the Exchange Offer in the case of any
Original Notes tendered.
8. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder whose
certificates for Original Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above, for further
instructions.
9. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus or this Letter, may be directed to the Exchange Agent.
IMPORTANT: This Letter (together with certificates representing tendered
Original Notes or a Book-Entry Confirmation and all other required documents)
must be received by the Exchange Agent on or before the Expiration Date (as
defined in the Prospectus).
9
<PAGE>
EXHIBIT 99.2
LEVEL 3 COMMUNICATIONS, INC.
Exchange Offer
to holders of its
10 1/2% Senior Discount Notes Due 2008
NOTICE OF GUARANTEED DELIVERY
As set forth in the Prospectus dated , 1999 (the "Prospectus") of Level
3 Communications, Inc. (the "Company") under "The Exchange Offer--How to
Tender" and in the Letter of Transmittal (the "Letter of Transmittal")
relating to the offer (the "Exchange Offer") by the Company to exchange up to
$833,815,000 in principal amount at maturity of its 10 1/2% Senior Discount
Notes Due 2008 (the "New Notes") for $833,815,000 in principal amount at
maturity of its 10 1/2% Senior Discount Notes Due 2008, issued and sold in a
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Original Notes"), this form or one substantially equivalent
hereto must be used to accept the Exchange Offer of the Company if: (i)
certificates for the Original Notes are not immediately available; or (ii)
time will not permit all required documents to reach the Exchange Agent (as
defined below) on or prior to the Expiration Date (as defined in the
Prospectus) of the Exchange Offer. Such form may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or letter to the
Exchange Agent.
TO: IBJ Whitehall Bank & Trust Company formerly known as IBJ Schroder Bank &
Trust Company (the "Exchange Agent")
By Facsimile:
(212) 858-2611
Confirm by telephone:
(212) 858-2103
By Registered or Certified Mail:
IBJ Whitehall Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attention: Reorganization Operations Department
By Overnight Courier or By Hand:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Securities Processing Window Subcellar One (SC-1)
Delivery of this instrument to an address other than
as set forth above or transmittal of this instrument to
a facsimile or telex number other than as set forth
above does not constitute a valid delivery.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and conditions
set forth in the Prospectus and the Letter of Transmittal (which together
constitute the "Exchange Offer"), receipt of which are hereby acknowledged,
the principal amount at maturity of Original Notes set forth below pursuant to
the guaranteed delivery procedure described in the Prospectus and the Letter
of Transmittal.
Sign Here
Principal Amount of Original Signature(s) ________________________
Notes Tendered __________________ _____________________________________
Tendered ________________________
Please Print the Following
Certificate Nos. Information
Name(s) _____________________________
(if available) __________________
_____________________________________
Total Principal Amount Address _____________________________
Represented by Original Notes
_____________________________________
Certificate(s) __________________
Area Code and Tel. No(s). ___________
Account Number __________________
_____________________________________
Dated: ____________________, 1999
2
<PAGE>
GUARANTEE
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17A(d)-15 under the Securities Exchange Act
of 1934, as amended, hereby guarantees that delivery to the Exchange Agent of
certificates tendered hereby, in proper form for transfer, or delivery of such
certificates pursuant to the procedure for book-entry transfer, in either case
with delivery of a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents, is being made within
three trading days after the date of execution of a Notice of Guaranteed
Delivery of the above-named person.
Name of Firm _________________________________
Authorized Signature _________________________
Number and Street or P.O. Box ________________
______________________________________________
City ____________ State ____ Zip Code ________
Area Code and Tel. No. _______________________
Dated: , 1999
3
<PAGE>
EXHIBIT 99.3
LEVEL 3 COMMUNICATIONS, INC.
Offer to Exchange
Up to $833,815,000 in principal amount at maturity of
10 1/2% Senior Discount Notes Due 2008
for
$833,815,000 in principal amount at maturity of
10 1/2% Senior Discount Notes Due 2008 issued and
sold in a transaction exempt from registration
under the Securities Act of 1933, as amended
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Level 3 Communications, Inc. (the "Company")
to exchange up to $833,815,000 in principal amount at maturity of its 10 1/2%
Senior Discount Notes Due 2008 (the "New Notes") for $833,815,000 in principal
amount at maturity of its 10 1/2% Senior Discount Notes Due 2008, issued and
sold in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Original Notes").
The material is being forwarded to you as the beneficial owner of Original
Notes carried by us for your account or benefit but not registered in your
name. A tender of any Original Notes may be made only by us as the registered
holder and pursuant to your instructions. Therefore, the Company urges
beneficial owners of Original Notes registered in the name of a broker,
dealer, commercial bank, trust company or other nominee to contact such
registered holder promptly if they wish to tender Original Notes in the
Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all Original Notes, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal. We urge you to read carefully the
Prospectus and Letter of Transmittal before instructing us to tender your
Original Notes.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Original Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
Eastern Standard Time, on , , 1999, unless extended (the "Expiration
Date"). Original Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
If you wish to have us tender any or all of your Original Notes held by us
for your account or benefit, please so instruct us by completing, executing
and returning to us the instruction form that appears below. The accompanying
Letter of Transmittal is furnished to you for informational purposes only and
may not be used by you to tender Original Notes held by us and registered in
our name for your account or benefit.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Level 3
Communications, Inc.
This will instruct you to tender the principal amount of Original Notes
indicated below held by you for the account or benefit of the undersigned,
pursuant to the terms of and conditions set forth in the Prospectus and the
Letter of Transmittal.
Box 1 [_] Please tender my Original Notes held by you for my account or
benefit. I have identified on a signed schedule attached hereto the
principal amount of Original Notes to be tendered if I wish to tender
less than all of my Original Notes.
Box 2 [_] Please do not tender any Original Notes held by you for my account
or benefit.
Date: , 1999
_____________________________________
_____________________________________
Signature(s)
_____________________________________
_____________________________________
Please print name(s) here
______
Unless a specific contrary instruction is given in a signed Schedule attached
hereto, your signature(s) hereon shall constitute an instruction to us to
tender all of your Original Notes.
2
<PAGE>
EXHIBIT 99.4
LEVEL 3 COMMUNICATIONS, INC.
Offer to Exchange
Up to $833,815,000 in principal amount at maturity of
10 1/2% Senior Discount Notes Due 2008
for
$833,815,000 in principal amount at maturity of
10 1/2% Senior Discount Notes Due 2008 issued and
sold in a transaction exempt from registration
under the Securities Act of 1933, as amended
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Level 3 Communications, Inc. (the "Company")
to exchange up to $833,815,000 in principal amount at maturity of its 10 1/2%
Senior Discount Notes Due 2008 (the "New Notes") for $833,815,000 in principal
amount at maturity of its 10 1/2% Senior Discount Notes Due 2008, issued and
sold in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Original Notes").
We are asking you to contact your clients for whom you hold Original Notes
registered in your name or in the name of your nominee. In addition, we ask
you to contact your clients who, to your knowledge, hold Original Notes
registered in their own name. The Company will not pay any fees or commissions
to any broker, dealer or other person in connection with the solicitation of
tenders pursuant to the Exchange Offer. You will, however, be reimbursed by
the Company for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. The Company will pay
all transfer taxes, if any, applicable to the tender of Original Notes to it
or its order, except as otherwise provided in the Prospectus and the Letter of
Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender of
Original Notes and for the information of your clients;
3. A form of letter that may be sent to your clients for whose accounts you
hold Original Notes registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard
to the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., Eastern Standard Time, on , , 1999, unless extended (the
"Expiration Date"). Original Notes tendered pursuant to the Exchange Offer may
be withdrawn, subject to the procedures described in the Prospectus, at any
time prior to the Expiration Date.
To tender Original Notes, certificates for Original Notes or a Book-Entry
Confirmation, a duly executed and properly completed Letter of Transmittal or
a facsimile thereof, and any other required documents, must be received by the
Exchange Agent as provided in the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from IBJ
Whitehall Bank & Trust Company (formerly known as IBJ Schroder Bank & Trust
Company), the Exchange Agent, by calling (212) 858-2103.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH
RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
