<PAGE>
As filed with the Securities and Exchange Commission on August 4, 1999
Registration No. 333-82851
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
McLeodUSA Incorporated
(Exact name of registrant as specified in its charter)
Delaware McLeodUSA Technology Park 42-1407240
(State or other 6400 C Street SW, P.O. Box 3177 (I.R.S. Employer
jurisdiction of Cedar Rapids, IA 52406-3177 Identification Number)
incorporation or (319) 364-0000
organization)
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
Clark E. McLeod
Chairman and Chief Executive Officer
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
(319) 364-0000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
Copies to:
Joseph G. Connolly, Jr., Esq. James J. Junewicz, Esq.
Hogan & Hartson L.L.P. Mayer, Brown & Platt
555 Thirteenth Street, N.W. 190 South LaSalle Street
Washington, D.C. 20004 Chicago, Illinois 60603
(202) 637-5600 (312) 782-0600
----------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
maximum maximum
Amount to be offering aggregate Amount of
Title of each class of registered price per offering price registration
securities to be registered (1)(2)(3) unit(1)(2)(3)(4) (1)(3)(5) fee(6)
<S> <C> <C> <C> <C>
Class A common stock...
Preferred stock........
Debt securities........
Depositary shares......
Warrants...............
Subscription rights....
Stock purchase
contracts and stock
purchase units.........
Total: $1,750,000,000 $486,500(7)
- ---------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or currency units or composite currencies, including the European Currency
Unit.
(2) Such indeterminate number of amount of Class A common stock, preferred
stock, debt securities, depositary shares, warrants, subscription rights
and stock purchase contracts and stock purchase units, as may from time to
time be issued at indeterminate prices, but with an aggregate initial
offering price not to exceed $1,750,000,000, plus such indeterminate number
of shares of Class A common stock and preferred stock as may be issued in
exchange for, or upon conversion of, debt securities or other preferred
stock registered hereunder. Debt securities may be issued with original
issue discount such that the aggregate initial public offering price,
together with the other securities issued hereunder, will not exceed
$1,750,000,000.
(3) Omitted pursuant to General Instruction II.D of Form S-3.
(4) The proposed maximum initial offering price per unit will be determined,
from time to time, by the Registrant.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all primary securities issued from time to time pursuant to this
Registration Statement exceed $1,750,000,000.
(6) Calculated pursuant to Rule 457 of the rules and regulations under the
Securities Act of 1933.
(7) Previously paid.
----------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus supplement 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 supplement is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any state or jurisdiction +
+where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 4, 1999
P R O S P E C T U S S U P P L E M E N T
(To Prospectus dated , 1999)
[LOGO OF McLEODUSA APPEARS HERE]
800,000 Shares
McLeodUSA Incorporated
% Series A Cumulative Convertible Preferred Stock
--------
We are selling 800,000 shares of our % Series A cumulative convertible
preferred stock, liquidation preference $500 per share which is convertible at
the option of the holder into shares of our Class A common stock at a
conversion price of $ per share of Class A common stock for each share of
Series A preferred stock, equivalent to a conversion rate of shares of Class
A common stock for each share of Series A preferred stock, subject to
adjustments in certain circumstances. Our Class A common stock is quoted on the
Nasdaq National Market under the symbol "MCLD", and the last reported price of
the Class A common stock on , 1999 was $ per share. Other terms described
in this prospectus supplement include:
. The quarterly dividend will be $ per share, payable at our option in
cash or shares of our Class A common stock, beginning , 1999.
. Beginning on , 2001 and prior to , 2002, if the price of our Class
A common stock equals or exceeds 150% of the conversion price for a
specific period, we may redeem, for cash, shares of our Class A common
stock or both, the Series A preferred stock at a redemption price of %
of the liquidation preference, plus (1) unpaid dividends and (2) a make
whole payment for future dividends.
. Beginning on , 2002, we may redeem, for cash, the Series A preferred
stock at prices declining to the liquidation preference, plus unpaid
dividends.
. On or after , 2002, we may convert the Series A preferred stock into
our Class A common stock if the trading price of our Class A common stock
equals or exceeds 135% of the conversion price for a specific period.
. We will seek to have the Series A preferred stock listed on the Nasdaq
National Market.
--------
Investing in the Series A preferred stock involves various risks. See "Risk
Factors" beginning on page S-10.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
--------
<TABLE>
<CAPTION>
Per Share Total
--------- -----------
<S> <C> <C>
Public Offering Price.................................... $ $
Underwriting Discount.................................... $ $
Proceeds to the Company (before expenses)................ $ $
</TABLE>
The underwriters are offering the Series A preferred stock subject to various
conditions. The underwriters expect to deliver the Series A preferred stock to
purchasers on or about , 1999. The underwriters may purchase up to 120,000
additional shares of Series A preferred stock to cover over-allotments.
--------
Salomon Smith Barney
Goldman, Sachs & Co.
Morgan Stanley Dean Witter
August , 1999
<PAGE>
You should rely only on the information provided or incorporated by reference
in this prospectus supplement and accompanying prospectus. Neither we nor the
underwriters have authorized anyone to provide you with different or
inconsistent information. You should assume that the information in this
prospectus supplement and accompanying prospectus is accurate only as of the
date on the front cover of such documents. Our business, financial information,
results of operations and prospects may have changed since those dates.
If it is against the law in any state to make an offer to sell these
securities (or to solicit an offer from someone to buy these securities), then
this offer does not apply to any person in that state, and no offer or
solicitation is made by this prospectus supplement or accompanying prospectus
to any such person.
----------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... S-1
Risk Factors............................................................... S-10
Cautionary Note Regarding Forward-Looking Statements....................... S-17
Use of Proceeds............................................................ S-18
Dividend Policy............................................................ S-18
Market Price of Class A Common Stock ...................................... S-18
Capitalization............................................................. S-19
Selected Consolidated Financial and Operating Data......................... S-20
Pro Forma Financial Data................................................... S-22
Description of the Series A Preferred Stock................................ S-25
Federal Tax Considerations................................................. S-37
Underwriting............................................................... S-43
Legal Matters.............................................................. S-45
Experts.................................................................... S-45
Where You Can Find More Information........................................ S-45
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 1
Cautionary Note Regarding Forward-Looking Statements....................... 2
About McLeodUSA............................................................ 3
Coverage Ratios............................................................ 4
Use of Proceeds............................................................ 4
Description of Common Stock................................................ 5
Description of Preferred Stock............................................. 10
Description of Depositary Shares........................................... 13
Description of Debt Securities............................................. 16
Description of Warrants.................................................... 27
Description of Stock Purchase Contracts and Stock Purchase Units........... 29
Description of Subscription Rights......................................... 30
Plan of Distribution....................................................... 31
Legal Matters.............................................................. 32
Experts.................................................................... 32
</TABLE>
<PAGE>
SUMMARY
The following summary highlights selected information about us. It does not
contain all of the information that is important to you. You should carefully
read this entire prospectus supplement and accompanying prospectus and the
other documents to which those documents refer you. In addition, you should
carefully consider the factors set forth under the caption "Risk Factors."
Unless otherwise indicated, dollar amounts over $1 million have been rounded
to one decimal place and dollar amounts less than $1 million have been rounded
to the nearest thousand.
Our Company
We provide communications services to business and residential customers in
the Midwestern and Rocky Mountain regions of the United States. We offer
local, long distance, Internet access, data, voice mail and paging services,
from a single company on a single bill. We believe we are the first company in
many of our markets to offer one-stop shopping for communications services
tailored to customers' specific needs.
Our approach makes it easier for both our business and our residential
customers to satisfy their communications needs. It also allows businesses to
receive customized services, such as competitive long distance pricing and
enhanced calling features, that might not otherwise be directly available on a
cost-effective basis. As of March 31, 1999, we served over 494,700 local lines
in 408 cities and towns and have a combined total of 488 switches and central
office locations.
In addition to our core business of providing competitive local, long distance
and related communications services, we also derive revenue from:
. sale of advertising space in telephone directories
. traditional local telephone company services in east central Illinois and
southeast South Dakota
. special access, private line and data services
. communications network maintenance services
. telephone equipment sales, leasing, service and installation
. video services
. telemarketing services
. computer networking services
. other communications services, including cellular, operator, payphone,
mobile radio, paging services and Web site development and hosting
We plan to derive revenues from high-speed digital access and data services
using Digital Subscriber Line and other technologies.
In most of our markets, we compete with the existing local phone company by
leasing its lines and switches. In other markets, primarily in east central
Illinois and southeast South Dakota, we operate our own lines and switches. We
provide long distance services by using our own communications network
facilities and leasing capacity from long distance and local communications
providers. We are constructing fiber optic communications networks in Iowa,
Illinois, Wisconsin, Indiana, Missouri, Michigan, Minnesota, South Dakota,
North Dakota, Colorado and Wyoming to carry additional communications traffic
on our own network.
Our Strategy
We want to be the leading and most admired provider of communications services
in our markets. To achieve this goal, we are:
. aggressively capturing customer share and generating revenue using leased
communications network capacity
. concurrently building our own communications network
. migrating customers to our communications network to provide enhanced
services and to reduce our operating costs
The principal elements of our business strategy are to:
Provide integrated communications services. We believe we can rapidly
penetrate our target markets and build customer loyalty by providing an
integrated product offering to business and residential customers.
S-1
<PAGE>
Build customer share through branding. We believe we will create and strengthen
brand awareness in our target markets by branding our communications services
with the trade name McLeodUSA in combination with the distinctive black-and-
yellow motif of our telephone directories.
Provide outstanding customer service. Our customer service representatives are
available 24 hours a day, seven days a week, to answer customer calls. Our
customer-focused software and systems allow our representatives immediate
access to our customer and network data, enabling a rapid and effective
response to customer requests.
Emphasize small and medium sized businesses. We primarily target small and
medium sized businesses because we believe we can rapidly capture customer
share by providing face-to-face business sales and strong service support to
these customers.
Expand our fiber optic communications network. We are building a state-of-the-
art fiber optic communications network to deliver multiple services and reduce
operating costs.
Expand our intra-city fiber optic communications network. Within selected
cities, we plan to extend our network directly to our customers' locations.
This will allow us to provide expanded services and reduce the expense of
leasing communications facilities from the existing local telephone company.
Explore acquisitions and strategic alliances. We plan to pursue acquisitions,
joint ventures and strategic alliances that expand or complement our business.
Leverage proven management team. Our executive management team consists of
veteran telecommunications managers who successfully implemented similar
customer-focused telecommunications strategies in the past.
----------------
As of June 30, 1999, based on our business plan, capital requirements and
growth projections as of that date, we estimated that we would require
approximately $1.4 billion through 2001 to fund our planned capital
expenditures and operating expenses. Our estimated aggregate capital
requirements include the projected cost of:
. building our fiber optic communications network, including intra-city fiber
optic networks
. expanding operations in existing and new markets
. developing wireless services
. funding general corporate expenses
. integrating acquisitions
. constructing, acquiring, developing or improving telecommunication assets
We expect to use the following to address our capital needs:
. approximately $ million in net proceeds from the sale of the Series A
preferred stock
. approximately $523.0 million of cash and investments on hand at June 30,
1999
. projected operating cash flow
. additional issuances of debt or equity securities
Our estimate of future capital requirements is a forward-looking statement
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The actual amount and timing of our future
capital requirements is subject to risks and uncertainties and may differ
materially from our estimates. Accordingly, we may need additional capital to
continue to expand our markets, operations, facilities, network and services.
See "Risk Factors--Failure to Raise Necessary Capital Could Restrict Our
Ability to Develop Our Network and Services and Engage in Strategic
Acquisitions."
----------------
Our principal executive offices are located at McLeodUSA Technology Park, 6400
C Street SW, P.O. Box 3177, Cedar Rapids, Iowa 52406-3177, and our phone number
is (319) 364-0000.
S-2
<PAGE>
The Offering
<TABLE>
<S> <C>
Series A Preferred Stock
Offered......................... 800,000 Shares
Over-Allotment Option............ We have granted the underwriters an option to purchase up to
120,000 additional shares of Series A preferred stock to cover
over-allotments. If the over-allotment option is exercised in full by
the underwriters, the total offering price, underwriters' discounts,
and proceeds to us (before expenses) will be $
million, $ million and $ million, respectively.
Dividends........................ Holders of Series A preferred stock will be entitled to receive
cumulative dividends at an annual rate of % of the liquidation
preference payable quarterly on each , , , and ,
commencing on , 1999. Dividends will accrue from the date
of the original issuance of the Series A preferred stock. Any
dividend on the Series A preferred stock shall be, at our option,
payable (1) in cash or (2) through the issuance of a number of
shares of our Class A common stock equal to the dividend amount
divided by the Discounted Current Market Value.
For the foreseeable future, we intend to pay these dividends solely in
shares of Class A common stock. If, in the future, we were to consider
paying cash dividends on the Series A preferred stock we would have to
comply with the restrictions contained in the indentures governing our
outstanding indebtedness. See "Risk Factors--We Are Restricted from
Paying Cash Dividends" and "Description of the Series A Preferred
Stock--Dividends."
Conversion into Class A Common Series A preferred stock is convertible at the option of its holder,
Stock........................... unless previously redeemed, at any time after the issue date, into
shares of our Class A common stock at a conversion rate of
shares of Class A common stock for each share of Series A preferred
stock (representing a conversion price of $ per share of
Class A common stock), subject to adjustment in certain events.
In addition, if on or after , 2002, the closing price of our
Class A common stock has equaled or exceeded 135% of the
Conversion Price for at least 20 out of 30 consecutive days on which
the Nasdaq National Market is open for the transaction of business,
we will have the option to convert all the Series A preferred
stock into Class A common stock at the then current conversion rate.
See "Description of the Series A Preferred Stock-- Conversion Rights."
Liquidation Preference........... $500 per share. See "Description of the Series A Preferred Stock
--Liquidation Preference."
Redemption....................... We may redeem, for cash, shares of our Class A common stock
or both, the Series A preferred stock at a redemption price
of % of the liquidation preference, plus accumulated and
unpaid dividends to the redemption date, on or after ,
2001, but prior to , 2002, if the closing price of our
Class A common stock equals or exceeds 150% of the conversion
price, currently equal to $ per share, for a specified trading
period, which we refer to as the provisional redemption. In addition
</TABLE>
S-3
<PAGE>
<TABLE>
<C> <S>
to the payments in the previous sentence,
holders will receive a
payment equal to the present value of the
dividends that would
thereafter have been payable on the Series
A preferred stock from
the redemption date to , 2002.
Except in the circumstances described
above, we may not redeem the Series A
preferred stock prior to , 2002.
Thereafter, each share of Series A
preferred stock may be redeemed, at our
option, initially at a redemption price of
% of the liquidation preference and
thereafter at prices declining to 100% on
and after , plus in each case, all
accumulated and unpaid dividends. In
addition, we may also redeem the Series A
Preferred Stock under certain other limited
circumstances as provided in our
certificate of incorporation. See
"Description of the Series A Preferred
Stock--Redemption."
Voting Rights.................... Except as required by law, the holders of
the Series A preferred stock will not be
entitled to any voting rights unless
payments of dividends on the Series A
preferred stock are in arrears and unpaid
for an aggregate of six or more quarterly
dividend payments. In such an event, the
holders of the Series A preferred stock
(together with holders of other series of
preferred stock having similar rights) will
be entitled to elect the lesser of two
directors to the board of directors or that
number of directors constituting at least
25% of the board of directors, until such
time as all dividend arrearages have been
paid. See "Description of the Series A
Preferred Stock--Voting Rights."
Change of Control................ Upon the occurrence of a Change of Control
or a Common Stock Change of Control, we
will adjust the Conversion Price. The terms
"Change of Control," "Common Stock Change
of Control" and "Conversion Price" are
defined in the "Description of the Series A
Preferred Stock--Conversion Rights."
Ranking.......................... The Series A preferred stock will be, with
respect to dividends and upon liquidation,
dissolution or winding-up:
. junior to all our existing and future
debt obligations
. junior to each class of capital stock or
series of preferred stock, the terms of
which expressly provide that it ranks
senior to the Series A preferred stock
. on a parity with each class of capital
stock or series of preferred stock, the
terms of which expressly provide that it
ranks on a parity with the Series A
preferred stock
. senior to all classes of our common stock
and each other class of capital stock or
series of preferred stock, the terms of
which do not expressly provide that it
ranks senior to or on a parity with the
Series A preferred stock
See "Description of the Series A Preferred
Stock--Ranking."
Proposed Nasdaq National
Market symbol................... MCLDA
</TABLE>
S-4
<PAGE>
<TABLE>
<C> <S>
Use of Proceeds.................. The net proceeds from the offering will be
used to fund:
. development and construction costs of our
fiber optic network, and construction,
acquisition, development and improvement
of our telecommunications assets
. market expansion activities
. development, construction and operations
necessary to include wireless services as
part of our communications services and
. additional working capital and general
corporate purposes
</TABLE>
Risk Factors
You should consider carefully all of the information contained and
incorporated by reference in this prospectus supplement and accompanying
prospectus, including the information set forth under the caption "Risk
Factors," before making an investment in the Series A preferred stock.
S-5
<PAGE>
Recent Developments
Acquisition of Ovation Communications, Inc.
On March 31, 1999, we acquired Ovation Communications, Inc. for an aggregate
of 11,193,234 shares of our Class A common stock, after giving effect to the
two-for-one stock split described below, and $121.3 million in cash. We paid
approximately $105.6 million of the outstanding debt of Ovation at the time of
the transaction.
Ovation is a diversified communications services company serving business
customers primarily in larger metropolitan areas in Minnesota, Illinois and
Wisconsin (such as Minneapolis/St. Paul, Chicago and Milwaukee) and in small to
mid-sized cities in Michigan. Ovation provides the following services:
. local and network access
. local and long distance telephone
. voice mail, teleconferencing and calling card
. Internet access
Announcement of Data Strategy
On April 14, 1999, we announced plans to offer high-speed digital access and
data services as part of our integrated communications product package using
DSL (Digital Subscriber Line) and other technologies. These services are
expected to include:
. basic dial tone transmitted digitally
. high-speed data communications for Internet and intranet applications
. commercial network connections for local area, metropolitan area and wide
area networks
Follow-on Offering of Secondary Shares
On May 18, 1999, we completed the sale of 18,000,000 shares of Class A common
stock in a secondary offering for the benefit of several selling stockholders
at a sale price of $27 13/16 per share, after giving effect to the two-for-one
stock split described below. We received no proceeds from the sale of these
shares.
Agreements to Acquire Access Communications Holdings, Inc. and S.J. Investments
Holdings, Inc.
On June 1, 1999, we entered into an Agreement and Plan of Merger with Access
Communications Holdings, Inc., a Utah corporation and certain of the
stockholders of Access, pursuant to which we will acquire Access.
As a result of the Access merger, the outstanding shares of common stock of
Access will be converted in the aggregate into the right to receive
approximately $23.3 million and 1,939,864 shares of our Class A common stock,
after giving effect to the two-for-one stock split described below. We also
will assume approximately $48.3 million in Access debt.
In a related transaction, on June 1, 1999, we entered into an Agreement and
Plan of Merger with an affiliated company of Access, S.J. Investments Holdings,
Inc., a Utah corporation, and the stockholders of SJIH, pursuant to which we
will acquire SJIH.
As a result of the SJIH merger, the outstanding shares of common stock of
SJIH will be converted in the aggregate into the right to receive $25 million
and 1,939,864 shares of our Class A common stock, after giving effect to the
two-for-one stock split described below. We also will assume approximately
$48.3 million in SJIH debt. Consummation of the Access merger and the SJIH
merger are subject to the satisfaction of certain conditions.
Although two legally separate corporations, Access and SJIH conduct business
as Access Long Distance. Access Long Distance serves business and residential
customers in the states of Arizona, California, Colorado, Florida, Idaho,
Nevada, New Mexico, Oregon, Utah and Washington. As of March 31, 1999, Access
Long Distance served approximately 17,500 commercial customers and
approximately 11,600 residential customers, generating 1998 revenues of $87
million. Access
S-6
<PAGE>
Long Distance is a switch-based provider of commercial and residential
telecommunications services, including long distance, toll-free and prepaid
calling cards. In addition, Access Long Distance also sells enhanced toll-free
services.
Market Area Expansion
As a result of the Access Long Distance agreements, we will add four new
states to our current 16-state Midwest and Rocky Mountain market area: Arizona,
New Mexico, Oregon and Washington, and provide coverage of the entire U S WEST
geography. The additional states increase our addressable voice and data market
by approximately 23%.
Two-For-One Stock Split
On June 30, 1999, we declared a two-for-one stock split to be effected in the
form of a stock dividend on our Class A common stock. The record date for the
stock split was July 12, 1999 and the distribution of the additional shares
took place on July 26, 1999.
S-7
<PAGE>
Summary Consolidated Financial and Operating Data
The information in the following table is based on historical financial
information included in our prior SEC filings, including our annual report on
Form 10-K for the fiscal year ended December 31, 1998. The following summary
financial information should be read in connection with this historical
financial information, including the notes which accompany such financial
information. This historical financial information is considered a part of this
document. See "Where You Can Find More Information." Our audited historical
financial statements as of December 31, 1998 and 1997, and for each of the
three years ended December 31, 1998 were audited by Arthur Andersen LLP,
independent public accountants.
The information in the table on the following page reflects consolidated
financial information for the following companies we have acquired:
<TABLE>
<CAPTION>
Acquired Company Date Acquired
---------------- -------------
<S> <C>
MWR Telecom, Inc. April 28, 1995
Ruffalo, Cody & Associates, Inc. July 15, 1996
Telecom*USA Publishing Group Inc. September 20, 1996
Consolidated Communications, Inc. September 24, 1997
Ovation Communications, Inc. March 31, 1999
</TABLE>
The operations statement data and other financial data in the table include
the operations of these companies beginning on the dates they were acquired.
The balance sheet data in the table include the financial position of these
companies at the end of the periods presented, beginning with the period in
which they were acquired. These acquisitions affect the comparability of the
financial data for the periods presented.
On June 30, 1999, we announced that our board of directors had declared a
two-for-one stock split to be effected in the form of a stock dividend. The
record date for the stock split was July 12, 1999. Stockholders of record at
the market close on that date will receive one additional share of our Class A
common stock for each share held. Distribution of the additional shares took
place on July 26, 1999. All information in the following table has been
adjusted to reflect the two-for-one stock split.
The pro forma information presented in the operations statement data and
other financial data in the table reflects the operations of Ovation as if the
Ovation acquisition had occurred on January 1, 1998 and the pro forma
information in the balance sheet data in the table includes Ovation's financial
position as of December 31, 1998.
The pro forma information presented in the operations statement data and
other financial data in the table includes the effects of the issuance of $300
million principal amount of our 8 3/8% senior notes in March 1998, $300 million
principal amount of our 9 1/2% senior notes in October 1998 and $500 million
principal amount of the 8 1/8% senior notes in February 1999 as if they had
occurred at the beginning of 1998 and the pro forma information presented in
the balance sheet data in the table includes the effects of the issuance of the
8 1/8% senior notes as if it had occurred at the end of 1998.
The ratio of earnings to fixed charges and preferred stock dividends is
calculated as follows: earnings consist of net loss before income taxes plus
fixed charges (excluding capitalized interest). Fixed charges consist of
interest on all debt (including capitalized interest), amortization of debt
discount and deferred loan costs and the portion of rental expense that is
representative of the interest component of rental expense (deemed to be one-
third of rental expense which management believes is a reasonable approximation
of the interest component). Preferred stock dividends means the amount of pre-
tax earnings that is required to pay the dividends on outstanding preferred
stock. We had no shares of preferred stock outstanding during any of the
periods presented. For each of the years ended December 31, 1994, 1995, 1996,
1997 and 1998, earnings were insufficient to cover fixed charges by $11.4
million, $11.4 million, $22.6 million, $84.4 million and $135.5 million,
respectively. For the three months ended March 31, 1998 and 1999, earnings were
insufficient to cover fixed charges by $32 million and $51.7 million,
respectively. On a pro forma basis, earnings would not have been sufficient to
cover fixed charges by $188.6 million and $61.7 million for the year ended
December 31, 1998 and the three months ended March 31, 1999, respectively.
(table begins on the next page)
S-8
<PAGE>
Summary Consolidated Financial and Operating Data
(In thousands, except per share and operating data)
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
------------------------------------------ -----------------------------------
Pro Forma Pro Forma
1996 1997 1998 1998 1998 1999 1999
-------- -------- --------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operations Statement
Data:
Revenue................ $ 81,323 $267,886 $ 604,146 $ 625,181 $134,331 $181,109 $200,805
-------- -------- --------- --------- -------- -------- --------
Operating expenses:
Cost of service....... 52,624 151,190 323,208 329,527 75,045 92,459 99,797
Selling, general and
administrative....... 46,044 148,158 260,931 274,420 58,768 79,811 90,691
Depreciation and
amortization......... 8,485 33,275 89,107 109,720 19,431 35,110 41,680
Other................. 2,380 4,632 5,575 5,575 1,900 -- --
-------- -------- --------- --------- -------- -------- --------
Total operating
expenses............. 109,533 337,255 678,821 719,242 155,144 207,380 232,168
-------- -------- --------- --------- -------- -------- --------
Operating loss......... (28,210) (69,369) (74,675) (94,061) (20,813) (26,271) (31,363)
Interest income
(expense), net........ 5,369 (11,967) (52,234) (85,898) (10,141) (21,204) (26,074)
Other non-operating
income................ 495 1,426 1,997 1,997 687 (1) (1)
Income taxes........... -- -- -- -- -- -- --
-------- -------- --------- --------- -------- -------- --------
Net loss............... $(22,346) $(79,910) $(124,912) $(177,962) $(30,267) $(47,476) $(57,438)
======== ======== ========= ========= ======== ======== ========
Loss per common share.. $ (.28) $ (.73) $ (.99) $ (1.30) $ (.24) $ (.36) $ (.40)
======== ======== ========= ========= ======== ======== ========
Weighted average common
shares outstanding.... 81,012 109,948 125,614 136,808 124,454 132,242 143,436
======== ======== ========= ========= ======== ======== ========
Ratio of earnings to
fixed charges and
preferred stock
dividends............. -- -- -- -- -- -- --
======== ======== ========= ========= ======== ======== ========
<CAPTION>
March 31,
December 31, 1999
------------------------------ -----------
1996 1997 1998 Actual
-------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
(unaudited)
Balance Sheet Data:
Current assets..................... $224,401 $ 517,869 $ 793,192 $ 974,218
Working capital.................... $185,968 $ 378,617 $ 613,236 $ 740,191
Property and equipment, net........ $ 92,123 $ 373,804 $ 629,746 $ 828,591
Total assets....................... $452,994 $1,345,652 $1,925,197 $ 2,836,380
Long-term debt less current
maturities........................ $ 2,573 $ 613,384 $1,245,170 $ 1,776,475
Stockholders' equity............... $403,429 $ 559,379 $ 462,806 $ 785,415
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
---------------------------------------- -----------------------------------
Pro Forma Pro Forma
1996 1997 1998 1998 1998 1999 1999
-------- -------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) (unaudited) (unaudited) (unaudited)
Other Financial Data:
Capital expenditures,
including business
acquisitions.......... $173,782 $601,137 $339,660 $ 739,497 $ 48,930 $ 538,897 $ 560,894
EBITDA(1).............. $(17,345) $(31,462) $ 20,007 $ 21,234 $ 518 $ 8,839 $ 10,317
</TABLE>
<TABLE>
<CAPTION>
December 31, March 31,
---------------------- ---------
1996 1997 1998 1999
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Operating Data: (unaudited)
Local lines.................................... 65,400 282,600 397,600 494,700
Cities and towns served........................ 120 227 269 408
Central offices/switches....................... -- 366 415 488
Route miles.................................... 2,352 4,908 7,120 7,654
Employees...................................... 2,077 4,941 5,300 6,109
</TABLE>
- --------
(1) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. We have included EBITDA data because
it is a measure commonly used in the industry. EBITDA is not a measure of
financial performance under generally accepted accounting principles and
should not be considered an alternative to net income as a measure of
performance or to cash flows as a measure of liquidity.
S-9
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and the other
information in this prospectus supplement before investing in our securities.
You should also consider the additional information set forth in our SEC
reports on Forms 10-K, 10-Q and 8-K and in the other documents considered a
part of this prospectus supplement and accompanying prospectus. See "Where You
Can Find More Information."
Fluctuations in the Market Price of Our Class A Common Stock May Make it More
Difficult for Us to Raise Capital.
The market price of our Class A common stock is extremely volatile and has
fluctuated over a wide range. These fluctuations may impair our ability to
raise capital by offering equity securities. The market price may continue to
fluctuate significantly in response to various factors, including:
. market conditions in the industry
. announcements or actions by competitors
. low trading volume
. sales of large amounts of our Class A common stock in the public market
or the perception that such sales could occur
. quarterly variations in operating results or growth rates
. changes in estimates by securities analysts
. regulatory and judicial actions
. general economic conditions
We May Not Be Able to Successfully Integrate Acquired Companies into Our
Operations, Which Could Slow Our Growth.
The integration of acquired companies into our operations involves a number
of risks, including:
. difficulty integrating new operations and personnel
. diversion of management attention
. potential disruption of ongoing business
. inability to retain key personnel or customers
. inability to successfully incorporate new assets and rights into our
service offerings
. inability to maintain uniform standards, controls, procedures and
policies
. impairment of relationships with employees, customers or vendors
Failure to overcome these risks or any other problems encountered in
connection with acquisition transactions could slow our growth or lower the
quality of our services, which could reduce customer demand and adversely
affect our business.
Continued Rapid Growth of Our Network, Services and Subscribers Could Be Slowed
if We Cannot Manage this Growth.
We have rapidly expanded and developed our network, services and subscriber
base. For example, we recently announced plans to offer high-speed digital
access and data services. Our expansion and development have placed and will
continue to place significant demands on our management, operational and
financial systems and procedures and controls. We may not be able to manage our
anticipated growth effectively, which would adversely affect our business,
results of operations and financial condition.
Further expansion and development will depend on a number of factors,
including:
. cooperation of the existing local telephone companies
. regulatory, judicial and governmental developments
. changes in the competitive climate in which we operate
. development of customer billing, order processing and network management
systems
. availability of financing
. technological developments
. availability of rights-of-way, building access and antenna sites
. existence of strategic alliances or relationships
. emergence of future opportunities
S-10
<PAGE>
We will need to continue to improve our operational and financial systems and
our procedures and controls as we grow. We must also develop, train and manage
our employees.
We Expect to Incur Significant Losses Over the Next Several Years.
If we do not become profitable in the future, the value of our Class A common
stock may fall and we could have difficulty obtaining funds to continue our
operations. We have incurred net losses every year since we began operations.
Since January 1, 1994, our net losses have been as follows:
Net Losses
<TABLE>
<CAPTION>
Period Amount
- ------ --------------
<S> <C>
1994............................................................. $ 11.4 million
1995............................................................. $ 11.3 million
1996............................................................. $ 22.3 million
1997............................................................. $ 79.9 million
1998............................................................. $124.9 million
</TABLE>
We expect to incur net losses during the next several years while we develop
our businesses, expand our fiber optic communications network and develop
wireless services.
Failure to Raise Necessary Capital Could Restrict Our Ability to Develop Our
Network and Services and Engage in Strategic Acquisitions.
We need significant capital to continue to expand our operations, facilities,
network and services. We cannot assure you that our capital resources will
permit us to fund our planned network deployment and operations or achieve
operating profitability. Our failure to generate or raise sufficient funds may
require us to delay or abandon some of our expansion plans or expenditures,
which could adversely affect our business and competitive position.
As of June 30, 1999, based on our business plan, capital requirements and
growth projections as of that date, we estimated that we would require
approximately $1.4 billion through 2001 to fund our capital expenditures and
operating expenses. Our estimated aggregate capital requirements include the
projected costs of:
. building our fiber optic communications network, including intra-city
fiber optic networks
. expanding operations in existing and new markets
. developing wireless services
. funding general corporate expenses
. integrating acquisitions
. constructing, acquiring, developing or improving telecommunications
assets
Our estimate of future capital requirements is a forward-looking statement
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The actual amount and timing of our future
capital requirements may differ substantially from our estimate due to factors
such as:
. strategic acquisition costs and effects of acquisitions on our business
plan, capital requirements and growth projections
. unforeseen delays
. cost overruns
. engineering design changes
. changes in demand for our services
. regulatory, technological or competitive developments
. new opportunities
We also expect to evaluate potential acquisitions, joint ventures and
strategic alliances on an ongoing basis. We may require additional financing if
we pursue any of these opportunities.
We may meet any additional capital needs by issuing additional debt or equity
securities or borrowing funds from one or more lenders. We cannot assure you
that we will have timely access to additional financing sources on acceptable
terms. If we do not have such access, we may not be able to expand our markets,
operations, facilities, network and services through acquisitions as we intend.
S-11
<PAGE>
Our High Level of Debt Could Limit Our Flexibility in Responding to Business
Developments and Put Us at a Competitive Disadvantage.
We have substantial debt, which could adversely affect us in a number of
ways, including:
. limiting our ability to obtain necessary financing in the future
. limiting our flexibility to plan for, or react to, changes in our
business
. requiring us to use a substantial portion of our cash flow from
operations to pay our debt obligations rather than for other purposes,
such as working capital or capital expenditures
. making us more highly leveraged than some of our competitors, which may
place us at a competitive disadvantage
. making us more vulnerable to a downturn in our business
As of March 31, 1999, we had $1.8 billion of long-term debt and $785.4
million of stockholders' equity. As a result, we expect our fixed charges to
exceed our earnings for the foreseeable future.
Covenants in Debt Instruments Restrict Our Capacity to Borrow and Invest, Which
Could Impair Our Ability to Expand or Finance Our Operations.
The indentures governing the terms of our long-term debt impose operating and
financial restrictions that limit our discretion on some business matters,
which could make it more difficult for us to expand, finance our operations or
engage in other business activities that may be in our interest. These
restrictions limit or prohibit our ability to:
. incur additional debt
. pay dividends or make other distributions
. make investments or other restricted payments
. enter into sale and leaseback transactions
. pledge or mortgage assets or otherwise create liens
. enter into transactions with related persons
. sell assets
. consolidate, merge or sell all or substantially all of our assets
If we fail to comply with these restrictions, all of our long-term debt could
become immediately due and payable.
Our Ability to Pay Cash Dividends is Restricted.
We have never paid any cash dividends. We do not anticipate paying any cash
dividends for the foreseeable future. The indentures governing our debt
restrict our ability to pay cash dividends. You should not expect that cash
dividends will be paid on the shares of our Series A preferred stock or on the
shares of our Class A common stock that you may acquire upon the conversion of
the Series A preferred stock.
Our Dependence on Regional Bell Operating Companies to Provide Most of Our
Communications Services Could Make it Harder for Us to Offer Our Services at a
Profit.
We depend on the regional Bell operating companies to provide most of our
core local and some of our long distance services. Today, without using the
communications facilities of these companies, we could not provide bundled
local and long distance services to most of our customers. Because of this
dependence, our communications services are highly susceptible to changes in
the conditions for access to these facilities and we may therefore have
difficulty offering our services at profitable and competitive rates.
U S WEST Communications, Inc., Ameritech Corporation and Southwestern Bell
Telephone Company are our primary suppliers of local lines to our customers and
communications services that allow us to transfer and connect calls. Their
communications facilities allow us to provide (1) local service, (2) long
distance service and (3) private lines dedicated to our customers' use. If
these or other companies deny or limit our access to their communications
network elements or wholesale services, we may not be able to offer profitable
communications services.
S-12
<PAGE>
Our plans to provide local service using our own communications network
equipment also depend on the regional Bell operating companies. In order to
interconnect our network equipment and other communications facilities to
network elements controlled by the regional Bell operating companies, we must
first negotiate and enter into interconnection agreements with them.
Interconnection obligations imposed on the regional Bell operating companies by
the Telecommunications Act of 1996 have been, and continue to be, subject to a
variety of legal proceedings, which could affect our ability to obtain
interconnection agreements on acceptable terms. We cannot assure you that we
will succeed in obtaining interconnection agreements on terms that would permit
us to offer local services using our own communications network facilities at
profitable and competitive rates.
Actions by U S WEST May Make it More Difficult for Us to Offer Our
Communications Services.
U S WEST has introduced several measures that may make it more difficult for
us to offer our communications services. For example, in February 1996, U S
WEST filed tariffs and other notices with the public utility commissions in its
fourteen-state service region to limit future Centrex access to its switches.
Centrex access allows us to aggregate lines, have control over several
characteristics of those lines and provide a set of standard features on those
lines. We use U S WEST's Centrex services to provide most of our local
communications services in U S WEST's service territories.
In January 1997, U S WEST also proposed interconnection surcharges in several
of the states in its service region, which would increase our costs of
providing communications services in those states.
We have challenged or are challenging these actions by U S WEST before the
FCC or applicable state public utility commissions. We cannot assure you we
will succeed in our challenges to these or other actions by U S WEST that would
prevent or deter us from using U S WEST's Centrex service or communications
network elements. If U S WEST successfully withdraws or limits our access to
Centrex services in any jurisdiction, we may not be able to offer
communications services in that jurisdiction, which could adversely affect our
business.
We anticipate that U S WEST will also pursue legislation in states within our
target market area to reduce state regulatory oversight over its rates and
operations. If adopted, these initiatives could make it more difficult for us
to challenge U S WEST's actions in the future.
Competition in the Communications Services Industry Could Cause Us to Lose
Customers and Revenue and Could Make it More Difficult for Us to Enter New
Markets.
We face intense competition in all of our markets. This competition could
result in loss of customers and lower revenue for us. It could also make it
more difficult for us to enter new markets. Existing local telephone companies,
including U S WEST, Ameritech, Southwestern Bell and GTE, currently dominate
their local telecommunications markets. Three major competitors, AT&T, MCI
WorldCom and Sprint, dominate the long distance market. Hundreds of other
companies also compete in the long distance marketplace. AT&T, MCI WorldCom and
Sprint also offer local telecommunications services in many locations.
We also compete with other communications services companies which, like us,
compete with the existing local telephone companies in some markets.
Other competitors may include cable television companies, providers of
communications network facilities dedicated to particular customers, providers
of digital access and data services, microwave and satellite carriers, wireless
telecommunications providers, private networks owned by large end-users, and
telecommunications management companies.
These and other firms may enter the markets where we focus our sales efforts.
Many of our existing and potential competitors have financial and other
resources far greater than our own. In addition, the trend toward mergers and
strategic alliances in the communications industry may strengthen some of our
competitors, which could put us at a significant competitive disadvantage.
We May Not Succeed in Developing or Making a Profit from Wireless Services.
Our proposal to offer wireless services involves a high degree of risk and
will impose significant
S-13
<PAGE>
demands on our management and financial resources. Developing wireless services
may require us to, among other things, spend substantial time and money to
acquire, build and test a wireless infrastructure and enter into roaming
arrangements with wireless operators in other markets. We may not succeed in
developing wireless services. Even if we spend substantial amounts to develop
wireless services, we may not make a profit from wireless operations.
Our ability to successfully offer wireless services will also depend on a
number of factors beyond our control, including:
. changes in communications service rates charged by other companies
. changes in the supply and demand for wireless services due to competition
with other wireline and wireless operators in the same geographic area
. changes in the federal, state or local regulatory requirements affecting
the operation of wireless systems
. changes in wireless technologies that could render obsolete the
technology and equipment we choose for our wireless services
Competition in the Wireless Telecommunications Industry Could Make it Harder
for Us to Successfully Offer Wireless Services.
The wireless telecommunications industry is experiencing increasing
competition and significant technological change. This will make it harder for
us to gain a share of the wireless communications market. We expect up to eight
wireless competitors in each of our target wireless markets. We could face
additional competition from mobile satellite services.
Many of our potential wireless competitors have financial and other resources
far greater than our own and have more experience testing new or improved
products and services. In addition, several wireless competitors operate or
plan to operate, wireless telecommunications systems that encompass most of the
United States, which could give them a significant competitive advantage,
particularly if we only offer regional wireless services.
The Success of Our Communications Services Will Depend on Our Ability to Keep
Pace with Rapid Technological Changes in Our Industry.
Communications technology is changing rapidly. These changes influence the
demand for our services. We need to be able to anticipate these changes and to
develop new and enhanced products and services quickly enough for the changing
market. This will determine whether we can continue to increase our revenues
and number of subscribers and be competitive. Failure to adapt to these changes
may adversely affect our business.
The Loss of Key Personnel Could Weaken Our Technical and Operational Expertise,
Delay Our Introduction of New Services or Entry into New Markets and Lower the
Quality of Our Service.
We may not be able to attract, develop, motivate and retain experienced and
innovative personnel. There is intense competition for qualified personnel in
our business. The loss of the services of key personnel, or the inability to
attract additional qualified personnel, could cause us to make less successful
strategic decisions, which could hinder the introduction of new services or the
entry into new markets. We could also be less prepared for technological or
marketing problems, which could reduce our ability to serve our customers and
lower the quality of our services. As a result, our financial condition could
worsen.
Our future success depends on the continued employment of our senior
management team, particularly Clark E. McLeod, our Chairman and Chief Executive
Officer, and Stephen C. Gray, our President and Chief Operating Officer. We do
not have term employment agreements with these employees.
Failure to Obtain and Maintain Necessary Permits and Rights-of-Way Could Delay
Installation of Our Networks and Interfere with Our Operations.
To obtain access to rights-of-way needed to install our fiber optic cable, we
must reach agreements with state highway authorities, local governments,
transit authorities, local telephone companies, other utilities, railroads,
long distance carriers and other parties. The failure to obtain or maintain any
rights-of-way could delay our planned network expansion, interfere with our
operations and
S-14
<PAGE>
adversely affect our business. For example, if we lose access to a right-of-
way, we may need to spend significant sums to remove and relocate our
facilities.
Government Regulation May Increase Our Cost of Providing Services, Slow Our
Expansion into New Markets and Subject Our Services to Additional Competitive
Pressures.
Our facilities and services are subject to federal, state and local
regulation. The time and expense of complying with these regulations could slow
down our expansion into new markets, increase our costs of providing services
and subject them to additional competitive pressures. One of the primary
purposes of the Telecommunications Act of 1996 was to open the local telephone
services market to competition. While this has presented us with opportunities
to enter local telephone markets, it also has provided important benefits to
the existing local telephone companies, such as the ability, under specified
conditions, to provide out-of-region long distance service to customers in
their respective regions. In addition, we need to obtain and maintain licenses,
permits and other regulatory approvals in connection with some of our services.
Any of the following could adversely affect our business:
. failure to maintain proper federal and state tariffs
. failure to maintain proper state certifications
. failure to comply with federal, state or local laws and regulations
. failure to obtain and maintain required licenses and permits
. burdensome license or permit requirements to operate in public rights-of-
way
. burdensome or adverse regulatory requirements
Our Management and Principal Stockholders Can Control McLeodUSA and May Have
Different Interests Than Those of Other Stockholders.
As of July 1, 1999, Interstate Energy Corporation, M/C Investors L.L.C.,
Media/Communications Partners III Limited Partnership, Richard A. Lumpkin and
various trusts for the benefit of his family, Clark and Mary McLeod, and our
directors and executive officers beneficially owned approximately 40% of our
outstanding Class A common stock. These stockholders can collectively control
management policy and may be able to control corporate actions requiring a
stockholder vote, including election of the board of directors. Conflicts of
interest may arise between the interests of these stockholders and our other
stockholders. For example, the fact that these stockholders hold so much Class
A common stock could make it more difficult for a third party to acquire us.
You should expect these stockholders to resolve any conflicts in their favor.
Computer Systems May Malfunction and Interrupt Our Services if We and Our
Suppliers Do Not Attain Year 2000 Readiness.
We and our major suppliers of communications services and network elements
rely greatly on computer systems and other technological devices. These may not
be capable of recognizing January 1, 2000 or subsequent dates. This problem
could cause any or all of our systems or services to malfunction or fail.
We are reviewing our computer systems and programs and other technological
devices to determine which are not capable of recognizing the Year 2000 and to
verify system readiness for the millennium date. The review covers all of our
operations and is centrally managed. This review may not be sufficient,
however, to prevent interruptions to our systems and services.
Some of our critical operations and services depend on other companies. For
example, we depend on the existing local telephone companies, primarily the
regional Bell operating companies, to provide most of our local and some of our
long distance services. To the extent U S WEST, Ameritech or Southwestern Bell
fail to address Year 2000 issues which might interfere with their ability to
fulfill their obligations to us, it could interfere with our operations. If we,
our major vendors, our material service providers or our customers fail to
address Year 2000 issues in a timely manner, our business, results of
operations and financial condition could be adversely affected.
S-15
<PAGE>
Secondary Sales of Our Class A Common Stock in the Public Market Could
Adversely Affect Our Stock Price.
We cannot assure you that the market price of our Class A common stock will
not fluctuate or decline significantly in the future as a consequence of sales
by existing stockholders. Accordingly, there can be no assurance that the
market price of the Class A common stock will exceed the Conversion Price of
the Series A preferred stock.
As of July 1, 1999, after giving effect to the two-for-one stock split
announced June 30, 1999, there were outstanding:
. 150.4 million shares of our Class A common stock
. options to purchase 26.7 million shares of our Class A common stock
. 62.8 million shares of Class A common stock owned by Interstate Energy,
M/C Investors, Media/Communications Partners III, Richard A. Lumpkin and
various trusts for the benefit of his family, Clark and Mary McLeod, and
our directors and executive officers, all of which were eligible for sale
in the public market either in accordance with Rule 144 under the
Securities Act of 1933 or otherwise.
Payment of Dividends in Shares of Class A Common Stock May Not Result in Stated
Dividend Yield.
In the event dividends are paid in shares of Class A common stock, the number
of shares of Class A common stock to be issued on each dividend payment date
will be determined by dividing the total dividend to be paid on each share of
Series A preferred stock by the Discounted Current Market Value, as defined
under "Description of the Series A Preferred Stock-- Dividends." If the market
price of Class A common stock applicable in determining the Discounted Current
Market Value is higher than the market price for the Class A common stock on
the dividend payment date and you sell your Class A common stock at such lower
price, your actual dividend yield could be lower than the stated dividend yield
on the Series A preferred stock. In addition, you are likely to incur
commissions and
other transaction costs in connection with the sale of such Class A common
stock.
The Series A Preferred Stock is Subordinated to All Our Liabilities.
In the event of our bankruptcy, liquidation or winding-up, our assets will be
available to pay obligations on the Series A preferred stock only after all
indebtedness and other liabilities, including our existing senior notes, and
all subsequent series of preferred stock which rank senior to the Series A
preferred stock, have been paid. There may not be sufficient assets remaining
to pay amounts due on any or all of the Series A preferred stock then
outstanding. As of March 31, 1999, the Series A preferred stock would have been
junior in right of payment to our $1.8 billion of long-term debt, of which
$325.0 million is attributed to our subsidiaries.
Purchasers of Our Series A Preferred Stock Who Convert Their Shares to Class A
Common Stock Will Incur Immediate Dilution.
Persons purchasing Series A preferred stock who convert their shares into
Class A common stock will incur immediate net tangible book value dilution of
$ per share, assuming that they converted all of their shares of Series A
preferred stock on March 31, 1999. Our existing stockholders will receive an
immediate increase in net tangible book value of $ per share. The per share
amounts give effect to the two-for-one stock split announced June 30, 1999.
Our Series A Preferred Stock is a New Issue of Securities and Has Never Been
Publicly Traded.
Prior to this offering there has been no trading market for the Series A
preferred stock. We will seek to have the Series A preferred stock listed for
quotation on the Nasdaq National Market; however, no assurance can be given as
to the liquidity of, or trading market for, the Series A preferred stock. If an
active market for the Series A preferred stock fails to develop or be
sustained, the trading price of such Series A preferred stock could be
materially adversely affected.
S-16
<PAGE>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and accompanying prospectus and the information
incorporated by reference in them include "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. We intend the forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements in these
sections. All statements regarding our expected financial position and
operating results, our business strategy, our financing plans, our future
capital requirements, forecasted demographic and economic trends relating to
our industry, our ability to complete acquisitions, to realize anticipated cost
savings and other benefits from acquisitions and to recover acquisition-related
costs, and similar matters are forward-looking statements. These statements are
subject to known and unknown risks, uncertainties and other factors that could
cause our actual results to differ materially from the statements. The forward-
looking information is based on various factors and was derived using numerous
assumptions. In some cases, you can identify these statements by our use of
forward-looking words such as "may," "will," "should," "anticipate,"
"estimate," "expect," "plan," "believe," "predict," "potential" or "intend."
You should be aware that these statements only reflect our predictions. Actual
events or results may differ substantially. Important factors that could cause
our actual results to be materially different from our expectations include
those discussed in this prospectus supplement under the caption "Risk Factors."
We undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
S-17
<PAGE>
USE OF PROCEEDS
We will use the net proceeds from the sale of Series A preferred stock along
with funds available from prior offerings and from other financing sources: (1)
to fund development and construction costs of our fiber optic network,
including intra-city fiber optic networks, and construction, acquisition,
development and improvement of telecommunications assets; (2) to fund market
expansion activities in existing and new markets as well as acquisitions, joint
ventures and strategic alliances; (3) to fund development, construction and
operations necessary to include wireless services as part of our communications
services; and (4) for additional working capital and other general corporate
purposes, including funding operating deficits and net losses.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and do
not anticipate paying cash dividends in the foreseeable future. The indentures
that govern the terms of our debt restrict our ability to pay cash dividends.
Future dividends on our Class A common stock, if any, will be at the discretion
of our board of directors and will depend upon, among other things, our
operations, capital requirements and surplus, general financial condition,
contractual restrictions in financing agreements and such other factors as our
board of directors may deem relevant. Although we have the option under the
Certificate of Designations of the Series A preferred stock of paying dividends
in cash, because of the restrictions contained in our indentures, we do not
expect to pay dividends in cash in the foreseeable future. Rather, we expect to
pay such dividends in shares of our Class A common stock.
MARKET PRICE OF CLASS A COMMON STOCK
Our Class A common stock is quoted on the Nasdaq National Market under the
symbol "MCLD." The following table sets forth for the periods indicated the
high and low sales price per share of our Class A common stock as reported by
the Nasdaq National Market. All prices in the following table have been
adjusted to reflect the two-for-one stock split effective July 26, 1999.
<TABLE>
<CAPTION>
1997 High Low
---- ------- ------
<S> <C> <C>
First Quarter............................................. $14.375 $8.688
Second Quarter ........................................... 17.125 8.188
Third Quarter............................................. 20.000 14.313
Fourth Quarter............................................ 20.875 16.000
<CAPTION>
1998
----
<S> <C> <C>
First Quarter............................................. 23.188 15.250
Second Quarter ........................................... 24.156 19.000
Third Quarter............................................. 20.063 10.688
Fourth Quarter............................................ 19.250 7.625
<CAPTION>
1999
----
<S> <C> <C>
First Quarter............................................. 22.125 15.188
Second Quarter............................................ 30.938 21.188
Third Quarter (through August , 1999)....................
</TABLE>
On August , 1999, the last reported sale price of our Class A common stock
on the Nasdaq National Market was $ per share.
S-18
<PAGE>
CAPITALIZATION
The following table shows our capitalization as of March 31, 1999, (1) on a
historical basis as adjusted for the stock split announced June 30, 1999 and
(2) as adjusted to reflect the sale of 800,000 shares of our Series A preferred
stock and the application of the proceeds from this offering, net of our
estimated offering expenses and the underwriting discount. You should read this
table together with our consolidated financial statements and related notes and
the other financial data appearing elsewhere, or incorporated by reference,
into this prospectus supplement and the accompanying prospectus.
<TABLE>
<CAPTION>
March 31, 1999
--------------------------
As
Historical adjusted
---------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Cash and cash equivalents........................... $ 415,343 $ 802,343
Investments in available-for-sale securities........ 278,676 278,676
---------- ----------
Total cash, cash equivalents and investments in
available-for-sale securities.................. 694,019 1,081,019
========== ==========
Short-term debt..................................... 10,276 10,276
Long-term debt...................................... 1,776,475 1,776,475
---------- ----------
Stockholders' equity:
Class A common stock, $.01 par value, 250,000,000
shares authorized; 148,881,788 shares issued and
outstanding, actual.............................. 1,489 1,489
Class B common stock, convertible, $.01 par value,
22,000,000 shares authorized; none issued or
outstanding...................................... -- --
Series A preferred stock, convertible, $.01 par
value, 920,000 shares authorized; 800,000 shares
issued and outstanding, as adjusted.............. -- 8
Additional paid-in capital........................ 1,078,307 1,465,299
Accumulated deficit............................... (300,868) (300,868)
Accumulated other comprehensive income............ 6,487 6,487
---------- ----------
Total stockholders' equity...................... 785,415 1,172,415
---------- ----------
Total capitalization............................ $2,572,166 $2,959,166
========== ==========
</TABLE>
S-19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The information in the following table is based on historical financial
information included in our prior SEC filings, including our annual report on
Form 10-K for the fiscal year ended December 31, 1998. The following summary
financial information should be read in connection with this historical
financial information, including the notes which accompany such financial
information. This historical financial information is considered a part of this
document. See "Where You Can Find More Information." Our audited historical
financial statements as of December 31, 1998 and 1997, and for each of the
three years ended December 31, 1998 were audited by Arthur Andersen LLP,
independent public accountants.
The information in the table on the following page reflects consolidated
financial information for the following companies we have acquired:
<TABLE>
<CAPTION>
Acquired Company Date Acquired
---------------- -------------
<S> <C>
MWR Telecom, Inc. April 28, 1995
Ruffalo, Cody & Associates, Inc. July 15, 1996
Telecom^USA Publishing Group Inc. September 20, 1996
Consolidated Communications, Inc. September 24, 1997
Ovation Communications, Inc. March 31, 1999
</TABLE>
The operations statement data and other financial data in the table include
the operations of these companies beginning on the dates they were acquired.
The balance sheet data in the table include the financial position of these
companies at the end of the periods presented, beginning with the period in
which they were acquired. These acquisitions affect the comparability of the
financial data for the periods presented.
On June 30, 1999, we announced that our board of directors had declared a
two-for-one stock split to be effected in the form of a stock dividend. The
record date for the stock split was July 12, 1999. Stockholders of record at
the market close on that date will receive one additional share of our Class A
common stock for each share held. Distribution of the additional shares took
place on July 26, 1999. All information in the following table has been
adjusted to reflect the two-for-one stock split.
The pro forma information presented in the operations statement data and
other financial data in the table reflects the operations of Ovation as if the
Ovation acquisition had occurred on January 1, 1998 and the pro forma
information in the balance sheet data in the table includes Ovation's financial
position as of December 31, 1998.
The pro forma information presented in the operations statement data and
other financial data in the table includes the effects of the issuance of $300
million principal amount of our 8 3/8% senior notes in March 1998, $300 million
principal amount of our 9 1/2% senior notes in October 1998 and $500 million
principal amount of the 8 1/8% notes in February 1999 as if they had occurred
at the beginning of 1998 and the pro forma information presented in the balance
sheet data in the table includes the effects of the issuance of the 8 1/8%
notes as if it had occurred at the end of 1998.
The ratio of earnings to fixed charges and preferred stock dividends is
calculated as follows: earnings consist of net loss before income taxes plus
fixed charges (excluding capitalized interest). Fixed charges consist of
interest on all debt (including capitalized interest), amortization of debt
discount and deferred loan costs and the portion of rental expense that is
representative of the interest component of rental expense (deemed to be one-
third of rental expense which management believes is a reasonable approximation
of the interest component). Preferred stock dividends means the amount of pre-
tax earnings that is required to pay the dividends on outstanding preferred
stock. We had no preferred stock outstanding during any of the periods
presented. For each of the years ended December 31, 1994, 1995, 1996, 1997 and
1998, earnings were insufficient to cover fixed charges by $11.4 million, $11.4
million, $22.6 million, $84.4 million and $135.5 million, respectively. For the
three months ended March 31, 1998 and 1999, earnings were insufficient to cover
fixed charges by $32 million and $51.7 million, respectively. On a pro forma
basis, earnings would not have been sufficient to cover fixed charges by $188.6
and $61.7 million for the year ended December 31, 1998 and the three months
ended March 31, 1999, respectively.
(table begins on the next page)
S-20
<PAGE>
Selected Consolidated Financial and Operating Data
(In thousands, except per share and operating data)
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
------------------------------------------ -----------------------------------
Pro Forma Pro Forma
1996 1997 1998 1998 1998 1999 1999
-------- -------- --------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operations Statement
Data:
Revenue................ $ 81,323 $267,886 $ 604,146 $ 625,181 $134,331 $181,109 $200,805
-------- -------- --------- --------- -------- -------- --------
Operating expenses:
Cost of service....... 52,624 151,190 323,208 329,527 75,045 92,459 99,797
Selling, general and
administrative....... 46,044 148,158 260,931 274,420 58,768 79,811 90,691
Depreciation and
amortization......... 8,485 33,275 89,107 109,720 19,431 35,110 41,680
Other................. 2,380 4,632 5,575 5,575 1,900 -- --
-------- -------- --------- --------- -------- -------- --------
Total operating
expenses............. 109,533 337,255 678,821 719,242 155,144 207,380 232,168
-------- -------- --------- --------- -------- -------- --------
Operating loss......... (28,210) (69,369) (74,675) (94,061) (20,813) (26,271) (31,363)
Interest income
(expense), net........ 5,369 (11,967) (52,234) (85,898) (10,141) (21,204) (26,074)
Other non-operating
income................ 495 1,426 1,997 1,997 687 (1) (1)
Income taxes........... -- -- -- -- -- -- --
-------- -------- --------- --------- -------- -------- --------
Net loss............... $(22,346) $(79,910) $(124,912) $(177,962) $(30,267) $(47,476) $(57,438)
======== ======== ========= ========= ======== ======== ========
Loss per common share.. $ (.28) $ (.73) $ (.99) $ (1.30) $ (.24) $ (.36) $ (.40)
======== ======== ========= ========= ======== ======== ========
Weighted average common
shares outstanding.... 81,012 109,948 125,614 136,808 124,454 132,242 143,436
======== ======== ========= ========= ======== ======== ========
Ratio of earnings to
fixed charges and
preferred stock
dividends............. -- -- -- -- -- -- --
======== ======== ========= ========= ======== ======== ========
<CAPTION>
March 31,
December 31, 1999
------------------------------ -----------
1996 1997 1998 Actual
-------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
(unaudited)
Balance Sheet Data:
Current assets..................... $224,401 $ 517,869 $ 793,192 $ 974,218
Working capital.................... $185,968 $ 378,617 $ 613,236 $ 740,191
Property and equipment, net........ $ 92,123 $ 373,804 $ 629,746 $ 828,591
Total assets....................... $452,994 $1,345,652 $1,925,197 $ 2,836,380
Long-term debt less current
maturities........................ $ 2,573 $ 613,384 $1,245,170 $ 1,776,475
Stockholders' equity............... $403,429 $ 559,379 $ 462,806 $ 785,415
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
---------------------------------------- -----------------------------------
Pro Forma Pro Forma
1996 1997 1998 1998 1998 1999 1999
-------- -------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) (unaudited) (unaudited) (unaudited)
Other Financial Data:
Capital expenditures,
including business
acquisitions.......... $173,782 $601,137 $339,660 $ 739,497 $ 48,930 $ 538,897 $ 560,894
EBITDA(1).............. $(17,345) $(31,462) $ 20,007 $ 21,234 $ 518 $ 8,839 $ 10,317
</TABLE>
<TABLE>
<CAPTION>
December 31, March 31,
---------------------- ---------
1996 1997 1998 1999
------ ------- ------- ---------
<S> <C> <C> <C> <C>
Operating Data: (unaudited)
Local lines.................................... 65,400 282,600 397,600 494,700
Cities and towns served........................ 120 227 269 408
Central offices/switches....................... -- 366 415 488
Route miles.................................... 2,352 4,908 7,120 7,654
Employees...................................... 2,077 4,941 5,300 6,109
</TABLE>
- --------
(1) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. We have included EBITDA data
because it is a measure commonly used in the industry. EBITDA is not a
measure of financial performance under generally accepted accounting
principles and should not be considered an alternative to net income as a
measure of performance or to cash flows as a measure of liquidity.
S-21
<PAGE>
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial information has been prepared to
give effect to:
. the issuance of $300 million aggregate principal amount of our 8 3/8% senior
notes in March 1998
. the issuance of $300 million aggregate principal amount of our 9 1/2% senior
notes in October 1998
. the issuance of $500 million aggregate principal amount of our 8 1/8% senior
notes in February 1999
. our acquisition of Ovation Communications, Inc. in March 1999
The Unaudited Pro Forma Condensed Consolidated Statements of Operations
reflects the Ovation acquisition using the purchase method of accounting, and
assumes that the Ovation acquisition and the issuance of the 8 3/8% senior
notes, the 9 1/2% senior notes and the 8 1/8% senior notes were consummated at
the beginning of 1998. The unaudited pro forma financial information is derived
from and should be read in conjunction with our consolidated financial
statements, Ovation's consolidated financial statements and the related notes
thereto incorporated by reference in this prospectus. The pro forma adjustments
are based upon available information and assumptions that management believes
to be reasonable. Depreciation and amortization were adjusted to include
amortization of intangibles acquired in the Ovation acquisition. The acquired
intangibles will be amortized over periods ranging from 3 to 30 years. For
purposes of this pro forma presentation, the issuance of the 8 3/8% senior
notes, the 9 1/2% senior notes and the 8 1/8% senior notes are collectively
referred to as the "Notes Offerings."
The adjustments for the Ovation acquisition reflect the preliminary
allocation of the net purchase price of Ovation to the assets of Ovation,
including intangible assets, and record the payment of $121.3 million in cash
and the issuance of 11,193,234 shares of our Class A common stock (as adjusted
for the two-for-one stock split described below) valued at $16.88 per share (as
adjusted for the two-for-one stock split described below). The value of $16.88
per share represents the average closing price of our Class A common stock on
the Nasdaq National Market for the eleven trading days beginning five days
prior to the date the agreement was announced, January 7, 1999, and ending five
days after such announcement. The adjustments include the elimination of the
Ovation equity components, including common stock, treasury stock, other
capital and retained deficit.
On June 30, 1999, we announced that our board of directors had declared a
two-for-one stock split to be effected in the form of a stock dividend. The
record date for the stock split was July 12, 1999. Stockholders of record at
the market close on that date will receive one additional share of our Class A
common stock for each share held. Distribution of the additional shares took
place on July 26, 1999. All information in the Pro Forma Financial Data has
been adjusted to reflect the two-for-one stock split.
We have provided this unaudited pro forma financial data for informational
purposes only. This data does not necessarily indicate the operating results
that would have occurred had the Ovation acquisition been consummated at the
beginning of 1998, nor does it necessarily indicate future operating results or
financial position.
S-22
<PAGE>
McLeodUSA Incorporated and Subsidiaries
Unaudited Pro Forma Condensed
Consolidated Statements of Operations
(In thousands, except per share information)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
----------------------------------------------------------------
Adjustments Pro Forma Adjustments
for the for the for the
Notes Notes Ovation
McLeodUSA Offerings Offerings Ovation Acquisition Total
--------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations Statement Data:
Revenue............................... $ 604,146 $ -- $ 604,146 $21,035 $ -- $ 625,181
--------- -------- --------- ------- -------- ---------
Operating Expenses:
Cost of service...................... 323,208 -- 323,208 6,319 -- 329,527
Selling, general and administrative.. 260,931 -- 260,931 13,489 -- 274,420
Depreciation and amortization........ 89,107 -- 89,107 5,383 15,230 109,720
Other................................ 5,575 -- 5,575 -- -- 5,575
--------- -------- --------- ------- -------- ---------
Total operating expenses............ 678,821 -- 678,821 25,191 15,230 719,242
--------- -------- --------- ------- -------- ---------
Operating loss........................ (74,675) -- (74,675) (4,156) (15,230) (94,061)
Interest expense, net................. (52,234) (32,056) (84,290) (1,608) -- (85,898)
Other non-operating income............ 1,997 -- 1,997 -- -- 1,997
Income taxes.......................... -- -- -- -- -- --
--------- -------- --------- ------- -------- ---------
Net loss............................. $(124,912) $(32,056) $(156,968) $(5,764) $(15,230) $(177,962)
========= ======== ========= ======= ======== =========
Loss per common share................. $ (0.99) $ (1.25) $ (1.30)
========= ========= =========
Weighted average common shares
outstanding.......................... 125,614 125,614 136,808
========= ========= =========
Other Financial Data:
EBITDA(1)............................. $ 20,007 $ -- $ 20,007 $ 1,227 $ -- $ 21,234
</TABLE>
- --------
(1) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. We have included EBITDA data because
it is a measure commonly used in the industry. EBITDA is not a measure of
financial performance under generally accepted accounting principles and
should not be considered an alternative to net income as a measure of
performance or to cash flows as a measure of liquidity.
S-23
<PAGE>
McLeodUSA Incorporated and Subsidiaries
Unaudited Pro Forma Condensed
Consolidated Statements of Operations
(In thousands, except per share information)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999
---------------------------------------------------------------
Adjustments Pro Adjustments
for the Forma for for the
Notes the Notes Ovation
McLeodUSA Offerings Offerings Ovation Acquisition Total
--------- ----------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Operations Statement
Data
Revenue................ $181,109 $ -- $181,109 $19,696 $ -- $200,805
-------- ------- -------- ------- ------- --------
Operating expenses:
Cost of service....... 92,459 -- 92,459 7,338 -- 99,797
Selling, general and
administrative....... 79,811 -- 79,811 10,880 -- 90,691
Depreciation and
amortization......... 35,110 -- 35,110 2,829 3,741 41,680
Other................. -- -- -- -- -- --
-------- ------- -------- ------- ------- --------
Total operating
expenses............ 207,380 -- 207,380 21,047 3,741 232,168
-------- ------- -------- ------- ------- --------
Operating loss........ (26,271) -- (26,271) (1,351) (3,741) (31,363)
Interest expense,
net.................. (21,204) (2,487) (23,691) (2,383) -- (26,074)
Other non-operating
income............... (1) -- (1) -- -- (1)
Income taxes.......... -- -- -- -- -- --
-------- ------- -------- ------- ------- --------
Net loss.............. $(47,476) $(2,487) $(49,963) $(3,734) $(3,741) $(57,438)
======== ======= ======== ======= ======= ========
Loss per common
share................ $ (0.36) $ (0.38) $ (0.40)
======== ======== ========
Weighted average
common shares
outstanding.......... 132,242 132,242 143,436
======== ======== ========
Other Financial Data:
EBITDA(1).............. $ 8,839 $ -- $ 8,839 $ 1,478 $ -- $ 10,317
</TABLE>
- --------
(1) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. We have included EBITDA data
because it is a measure commonly used in the industry. EBITDA is not a
measure of financial performance under generally accepted accounting
principles and should not be considered an alternative to net income as a
measure of performance or to cash flows as a measure of liquidity.
S-24
<PAGE>
DESCRIPTION OF THE SERIES A PREFERRED STOCK
The following is a summary of certain provisions of the Certificate of
Designations and the Series A preferred stock. Copies of the Certificate of
Designations and the form of Series A preferred stock share certificate are
available upon request at our address set forth under "Where You Can Find More
Information." This summary is not intended to be complete and is subject to,
and is qualified in its entirety by reference to, the Certificate of
Designations. The definitions of certain capitalized terms used in the
following summary that are not defined herein are defined in the Certificate of
Designations. For purposes of this description of the Series A preferred stock,
the words "McLeodUSA," "we," "our" or "us" refer to McLeodUSA Incorporated and
do not include its subsidiaries.
General
At the consummation of this offering, we will issue 800,000 shares of our
% Series A Cumulative Convertible Preferred Stock, $0.01 par value per
share, designated as " % Series A Cumulative Convertible Preferred Stock."
When issued, the Series A preferred stock will be validly issued, fully paid
and nonassessable. The holders of the Series A preferred stock will have no
preemptive or preferential right to purchase or subscribe to stock,
obligations, warrants or any other of our securities of any class. We will seek
to have the Series A preferred stock approved for listing on the Nasdaq
National Market.
Ranking
The Series A preferred stock will, with respect to dividend rights and rights
on liquidation, dissolution or winding-up, rank:
. junior to all our existing and future debt obligations
. junior to "Senior Stock," which is each class of our capital stock or
series of preferred stock established after the Series A preferred stock
by our board of directors that has terms which expressly provide that
such class or series will rank senior to the Series A preferred stock
. on a parity with "Parity Stock," which is each class of capital stock or
series of preferred stock established after the Series A preferred stock
by our board of directors that has terms which expressly provide that
such class or series will rank on a parity with the Series A preferred
stock
. senior to "Junior Stock," which is all classes of our common stock,
including our Class A common stock and Class B common stock, and any
other class of our capital stock established after the Series A
preferred stock by our board of directors whose terms do not expressly
provide that such class or series ranks senior to, or on a parity with,
our Series A preferred stock
While any shares of Series A preferred stock are outstanding, we may not
authorize, create or increase the authorized amount of any class or series of
Senior Stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding-up without the consent of the holders of at
least 66 2/3% of the outstanding shares of Series A preferred stock. We may,
however, without the consent of any holder of Series A preferred stock, create
additional classes of capital stock, increase the authorized number of shares of
preferred stock or issue series of Parity Stock or Junior Stock. See "--Voting
Rights."
Dividends
Subject to the rights of any holders of Senior Stock and Parity Stock,
holders of shares of Series A preferred stock will be entitled to receive,
when, as and if declared by the board of directors out of funds of McLeodUSA
legally available for payment, cumulative dividends at the annual rate of %
per share on the liquidation preference thereof of $500 per share of Series A
preferred stock (equivalent to $ per share
S-25
<PAGE>
and of each year commencing , 1999, at such annual rate
and shall accrue from the most recent date as to which dividends shall have
been paid or, if no dividends have been paid, from the date of the original
issuance of the Series A preferred stock. Each such dividend will be payable to
holders of record as they appear on our stock records at the close of business
on the record date immediately preceding such quarterly dividend payment date,
which record dates will be established by the board of directors but, in any
event, will be not more than 60 days nor less than 15 days before the
respective quarterly dividend payment dates. Dividends will be cumulative from
such quarterly dividend payment date, whether or not in any dividend period or
periods there shall be funds of McLeodUSA legally available for the payment of
such dividends. Accumulations of dividends on shares of Series A preferred
stock will not bear interest. Dividends payable on the Series A preferred stock
for any period greater or less than a full quarterly dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Any dividend on the Series A preferred stock shall be, at the option of
McLeodUSA, payable (1) in cash or (2) through the issuance of shares of our
Class A common stock. If we pay dividends in shares of Class A common stock,
the number of shares of Class A common stock to be issued on each dividend
payment date will be determined by dividing the total dividend to be paid on
each share of Series A preferred stock by the applicable Discounted Current
Market Value (as defined below) of the Class A common stock. No fractional
shares of Class A common stock will be issued as a dividend on the Series A
preferred stock. The transfer agent is authorized and directed in the
Certificate of Designations to aggregate any fractional shares of Class A
common stock that are issued as dividends, sell them at the best available
price and distribute the proceeds to the holders of the Series A preferred
stock in proportion to their respective interests. We will pay the expenses of
the transfer agent with respect to such sale, including brokerage commissions.
If we are not entitled to pay cash for fractional shares, we will pay cash to
the holders of the Series A preferred stock for the fractional shares when we
become legally and contractually able to pay such cash. All shares of Class A
common stock distributed on the related dividend payment date in payment of
dividends on the Series A preferred stock will be freely transferable without
restriction under the Securities Act.
The "Discounted Current Market Value" of the Class A common stock with
respect to a dividend payment date means the product of (x) 97% and (y) the
"Market Average Value" as of the record date relating to such dividend payment
date. The "Market Average Value" will equal the average of the daily closing
prices of the Class A common stock for the five consecutive Trading Days ending
on (and including) the fourth Trading Day prior to such dividend payment date.
The closing price for each Trading Day will be the last sales price on the
Nasdaq National Market, or the principal securities exchange or other
securities market on which the Class A common stock is then being traded.
"Trading Day" means any day on which the Class A common stock is traded for any
period on the Nasdaq National Market (or on the principal securities exchange
or other securities market on which the Class A common stock is then being
traded).
No dividend will be declared or paid upon, or any sum set apart for the
payment of dividends upon, any outstanding share of the Series A preferred
stock with respect to any dividend period unless all dividends for all
preceding dividend periods have been declared and paid, or declared and a
sufficient sum set apart for the payment of such dividend, upon all outstanding
shares of Series A preferred stock.
We will not (1) declare, pay or set apart funds for the payment of any
dividend or other distribution with respect to any Junior Stock or (2) redeem,
purchase or otherwise acquire for consideration any Junior Stock through a
sinking fund or otherwise, unless (A) all accrued and unpaid dividends with
respect to the Series A preferred stock and any Parity Stock at the time such
dividends are payable have been paid or funds have been set apart for payment
of such dividends and (B) sufficient funds have been paid or set apart for the
payment of the dividend for the current dividend period with respect to the
Series A preferred stock and any Parity Stock.
No dividend will be declared or paid on any Parity Stock unless full
cumulative dividends have been paid on the Series A preferred stock for all
prior dividend periods; provided, however, if accrued dividends on the Series A
preferred stock for all prior dividend periods have not been paid in full, then
any dividend declared for any dividend period on the Series A preferred stock
and on any Parity Stock will be declared ratably in proportion to accrued and
unpaid dividends on the Series A preferred stock and such Parity Stock.
S-26
<PAGE>
Notwithstanding anything herein to the contrary, we may declare and pay
dividends on Parity Stock or Junior Stock which are payable solely in shares of
Parity Stock or Junior Stock (in the case of Parity Stock) or of Junior Stock
(in the case of Junior Stock) or by the increase in the liquidation value of
Parity Stock or Junior Stock, as applicable, or repurchase, redeem or otherwise
acquire Junior Stock in exchange for Junior Stock and Parity Stock in exchange
for Parity Stock or Junior Stock.
For the foreseeable future, we intend to pay all dividends on the Series A
preferred stock (except with respect to cash paid in lieu of fractional shares)
in shares of our Class A common stock. If, in the future, we were to consider
paying cash dividends on the Series A preferred stock we would have to comply
with the restrictions contained in the indentures governing our outstanding
indebtedness. See "Risk Factors--We Are Restricted from Paying Cash Dividends."
Redemption
Provisional Redemption
We may redeem Series A preferred stock, upon not less than 30 nor more than
60 days' prior notice mailed by first-class mail to each holder's registered
address, at a redemption price of % of the liquidation preference, plus
accumulated and unpaid dividends, if any, whether or not declared (including a
prorated dividend for any partial dividend period), to the redemption date (the
"Provisional Redemption Date"), on or after , 2001, but prior to
, 2002, if the closing price of our Class A common stock equals or
exceeds 150% of the Conversion Price for at least 20 Trading Days within any 30
Trading Day period. This type of redemption is a "Provisional Redemption."
If we undertake a Provisional Redemption, the holders of shares of Series A
preferred stock that are called for redemption also will receive a payment
(referred to as the "additional payment") in an amount equal to the present
value of the aggregate value of the dividends that would thereafter have been
payable on the Series A preferred stock (whether or not such dividends have
been declared) for the period from the Provisional Redemption Date to ,
2002 (which period is referred to as the "additional period"). The present
value will be calculated using the bond equivalent yield on U.S. Treasury notes
or bills having a term nearest in length to that of the additional period as of
the day immediately preceding the date on which a notice of Provisional
Redemption is mailed.
If we choose to pay all or a portion of the provisional redemption price
(including any additional payment) through the delivery of shares of Class A
common stock, the number of shares of Class A common stock that we will deliver
for each share of Series A preferred stock will be determined by dividing the
portion of the provisional redemption price (including any additional payment)
that is to be paid in shares of Class A common stock by the Provisional
Redemption Value (as defined below) of the Class A common stock. No fractional
shares of Class A common stock will be delivered in connection with a
Provisional Redemption. The transfer agent is authorized and directed in the
Certificate of Designations to aggregate any fractional shares of Class A
common stock that would otherwise be issued in connection with the Provisional
Redemption, sell them at the best available price and distribute the proceeds
to the holders of the Series A preferred stock in proportion to their
respective interests. We will pay the expenses of the transfer agent with
respect to such sale, including brokerage commissions. If we are not entitled
to pay cash for fractional shares, we will pay cash to the holders of the
Series A preferred stock for the fractional shares when we become legally and
contractually able to pay such cash.
The "Provisional Redemption Value" of the Class A common stock with respect
to a Provisional Redemption Date means the product of (y) 97% and (z) the
average of the daily closing prices of the Class A common stock for the five
consecutive Trading Days ending on (and including) the fourth Trading Day
preceding the Provisional Redemption Date. The closing price for each Trading
Day will be the last sales price on the Nasdaq National Market or the principal
securities exchange or other securities market on which the Class A common
stock is then being traded.
S-27
<PAGE>
We may effect any Provisional Redemption, in whole or in part, at our option,
by payment of the redemption price, including any additional payment, in cash,
through delivery of shares of Class A common stock or a combination thereof,
subject to applicable law, by delivering notice to the holders of the Series A
preferred stock not less than 30 nor more than 60 days prior to the Provisional
Redemption Date.
Optional Redemption
Except under the foregoing circumstances for a Provisional Redemption, and
except under certain circumstances set forth in our certificate of
incorporation (as described below), we may not redeem the Series A preferred
stock prior to , 2002. Thereafter, each share of the Series A
preferred stock may be redeemed, at our option, 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 mailed by first-class mail to each holder's registered address, at the
following redemption prices, plus accumulated and unpaid dividends, if any, to
the date fixed for redemption (the "Optional Redemption Date") (including a
prorated dividend for any partial dividend period), payable in cash. This type
of redemption is an "Optional Redemption."
If redeemed during the 12-month period commencing on (or, if such
date is not a date on which the Nasdaq National Market is open for business,
then on the next day the Nasdaq National Market is open for business) of the
years set forth below, the Optional Redemption prices shall be:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
2002..................................................... $
2003.....................................................
2004.....................................................
2005 and thereafter...................................... $500.00
</TABLE>
In the case of any partial Provisional Redemption or Optional Redemption,
selection of the Series A preferred stock for redemption will be made by us in
compliance with the requirements of the principal national securities exchange,
if any, on which the Series A preferred stock is listed, or if the Series A
preferred stock is not listed on a national securities exchange, on a pro rata
basis, by lot or such other method as we, in our sole discretion, deem fair and
appropriate; provided, however, that we may redeem all the shares held by
holders of fewer than five shares (or all of the shares held by the holders who
would hold fewer than five shares as a result of such redemption) as we may
determine.
If any Provisional Redemption Date or Optional Redemption Date falls after a
dividend payment record date and prior to the related dividend payment date,
the holders of the Series A preferred stock at the close of business on such
record date will be entitled to receive the dividend payable on such shares on
the corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accrued
dividends on any shares of Series A preferred stock called for redemption.
Our ability to redeem the Series A preferred stock at our option is limited
by the terms of our outstanding indebtedness. We may not be able to redeem the
Series A preferred stock unless we simultaneously redeem or repay such
indebtedness.
Notwithstanding any of the foregoing provisions relating to a Provisional
Redemption or an Optional Redemption, our certificate of incorporation provides
that we may redeem shares of any class of our capital stock (thus including the
Series A preferred stock) to the extent necessary to prevent the loss or secure
the reinstatement of any license, operating authority or franchise from any
governmental agency. Any redemption of shares of Series A preferred stock under
such circumstances will be at the price, and on the other terms and conditions,
specified in our certificate of incorporation. These provisions are described
in the accompanying prospectus under "Description of Common Stock--Certain
Charter and Statutory Provisions-Certain Statutory Provisions."
S-28
<PAGE>
Liquidation Preference
Upon the voluntary or involuntary liquidation, dissolution or winding-up of
McLeodUSA, and subject to the rights of the creditors of McLeodUSA and holders
of Senior Stock and Parity Stock, each holder of Series A preferred stock will
be entitled to be paid, out of the assets of McLeodUSA available for
distribution to stockholders, an amount equal to the liquidation preference of
$500 per share of Series A preferred stock held by such holder, plus
accumulated and unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding-up (including an amount equal to a prorated dividend for
the period from the last divided payment date to the date fixed for
liquidation, dissolution or winding-up) before any distribution is made on any
Junior Stock, including our Class A common stock. If, upon any voluntary or
involuntary liquidation, dissolution or winding-up of McLeodUSA, the amounts
payable with respect to the Series A preferred stock and all other Parity Stock
are not paid in full, the holders of the Series A preferred stock and the
Parity Stock will share equally and ratably in any distribution of the assets
of McLeodUSA in proportion to the respective amounts to which they are
entitled. After payment of the full amount of the liquidation preference of the
Series A preferred stock, and, if applicable, an amount equal to a prorated
dividend, the holders of shares of Series A preferred stock will not be
entitled to any further participation in any distribution of the assets of
McLeodUSA. However, neither the sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of McLeodUSA nor the consolidation
or merger of McLeodUSA with, or into, one or more entities will be deemed to be
a liquidation, dissolution or winding-up of McLeodUSA.
The Certificate of Designations will not contain any provision requiring
funds to be set aside to protect the liquidation preference of the Series A
preferred stock even though it is substantially in excess of the par value
thereof.
Voting Rights
The holders of Series A preferred stock, except as otherwise required under
Delaware law or as provided in the Certificate of Designations, shall not be
entitled to vote on any matter required or permitted to be voted upon by our
stockholders. In exercising any such vote, each outstanding share of Series A
preferred stock will have one vote (excluding shares of Series A preferred
stock held by McLeodUSA or any entity controlled by McLeodUSA, which shares
will have no votes).
The Certificate of Designations will provide that if dividends on the Series
A preferred stock are in arrears and unpaid for six or more dividend periods
(whether or not consecutive) then the holders of the outstanding shares of
Series A preferred stock, voting separately and as a class together with the
holders of any Parity Stock upon which like rights have been conferred and are
exercisable, will be entitled to elect to serve on the board of directors the
lesser of (x) two additional members to the board of directors or (y) that
number of directors constituting at least 25% of the members of the board of
directors, and the number of members of the board of directors will be
immediately and automatically increased by such number. Such voting rights of
the Series A preferred stock will continue until such time as all dividends in
arrears on the Series A preferred stock are paid in full, at which time the
term of any directors elected pursuant to the provisions of this paragraph
(subject to the right of holders of any other preferred stock to elect such
directors) shall terminate and the number of directors constituting the board
of directors will be immediately and automatically decreased by such number
(until the occurrence of any such subsequent event).
The Certificate of Designations will also provide that, except as expressly
set forth above under "--Ranking," (1) the creation, authorization or issuance
of any shares of Junior Stock or Parity Stock, including the designation of a
series thereof within the existing class of Series A preferred stock, or (2)
the increase or decrease in the amount of authorized capital stock of any
class, including any preferred stock, shall not require the consent of the
holders of Series A preferred stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of shares of Series A
preferred stock.
S-29
<PAGE>
Conversion Rights
Shares of Series A preferred stock will be convertible, in whole or in part,
at any time after the issue date, at the option of the holders thereof, into
shares of Class A common stock initially at the conversion price of $ per
share, subject to adjustment as described below ("Conversion Price"). The
right to convert shares of Series A preferred stock called for redemption will
terminate at the close of business on the relevant redemption date.
We will have the option to convert all of the shares of Series A preferred
stock into shares of Class A common stock at the Conversion Price if, on or
after , 2002, the closing price of our Class A common stock has
equaled or exceeded 135% of the Conversion Price for at least 20 out of 30
consecutive days on which the Nasdaq National Market (or the principal
securities exchange or other securities market on which the Class A common
stock is then being traded) is open for the transaction of business.
Conversion of shares of Series A preferred stock, or a specified portion
thereof, may be effected by delivering certificates evidencing such shares,
together with written notice of conversion and a proper assignment of such
certificates to McLeodUSA or in blank, to the office or agency to be
maintained by McLeodUSA for that purpose. Initially, Norwest Shareowner
Services will maintain such office.
Each conversion will be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of
Series A preferred stock shall have been surrendered and notice (and if
applicable, payment of an amount equal to the dividends payable on such
shares) received by McLeodUSA. McLeodUSA will issue a certificate evidencing
the Class A common stock distributed upon conversion, plus payment in lieu of
any fractional share of Class A common stock, as soon as reasonably practical
after the conversion date.
All shares of Class A common stock distributed upon conversion will be
freely transferable without restriction under the Securities Act.
Holders of shares of Series A preferred stock at the close of business on a
dividend payment record date will be entitled to receive the dividend payable
on such shares on the corresponding dividend payment date notwithstanding the
conversion of such shares following the dividend payment record date and prior
to such dividend payment date. However, shares of Series A preferred stock
surrendered for conversion during the period between the close of business on
any dividend payment record date and the opening of business on the
corresponding dividend payment date (except shares converted after the
issuance of a notice of redemption with respect to a redemption date during
such period, which will be entitled to such dividend) must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
dividend payment date. A holder of shares of Series A preferred stock on a
dividend payment record date who (or whose transferee) tenders any such shares
for conversion into shares of Class A common stock on such dividend payment
date will receive the dividend payable on such shares of Series A preferred
stock on such date, and the converting holder need not include payment of the
amount of such dividend upon surrender of shares of Series A preferred stock
for conversion. Except as provided above, we will make no payment or allowance
for unpaid dividends, whether or not in arrears, on converted shares or the
dividends on the shares of Class A common stock issued upon such conversion.
Fractional shares of Class A common stock will not be issued upon conversion
but, in lieu thereof, we will pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the last sales price of
the Class A common stock on the last Trading Day immediately preceding such
conversion date.
The Conversion Price is subject to adjustment upon certain events, including:
(1) any redemption payment or payment of a dividend or other distribution
payable in shares of Class A common stock to all holders of any class
of capital stock of McLeodUSA, other than the issuance of shares of
Class A common stock in connection with the payment (1) in redemption
for, of dividends
S-30
<PAGE>
on or upon the conversion of the Series A preferred stock or (2) to all
holders of the Series A preferred stock based upon the number of shares
of Class A common stock into which the Series A preferred stock is then
convertible;
(2) any issuance to all holders of shares of Class A common stock of
rights, options or warrants entitling them to subscribe for or purchase
shares of Class A common stock or securities convertible into or
exchangeable for shares of Class A common stock at an exercise price
that is less than the closing price of a share of Class A common stock
on the Nasdaq National Market (or the principal national securities
exchange or other securities market on which the Class A common stock
is then being traded) on the last Trading Day immediately preceding the
date of issuance of such rights, options or warrants; provided,
however, that no adjustment will be made with respect to such a
distribution if the holder of shares of the Series A preferred stock
would be entitled to receive such rights, options or warrants upon
conversion at any time of shares of the Series A preferred stock into
Class A common stock and provided, further, that if such rights,
options or warrants are only exercisable upon the occurrence of certain
triggering events, then the Conversion Price will not be adjusted until
such triggering events occur;
(3) any subdivision, combination or reclassification of Class A common
stock;
(4) any distribution consisting exclusively of cash excluding any cash
distributed in a transaction for which clause x, y or z below is
applicable, which specifies that no antidilution adjustment shall be
made, to all holders of shares of Class A common stock (which
distribution is not also being made to the holders of Series A
preferred stock based on the number of shares of Class A common stock
into which the Series A preferred stock is then convertible) in an
aggregate amount that, together with (1) all other such cash
distributions made within the then preceding 12 months in respect of
which no adjustment has been made and (2) any cash and the fair market
value of other consideration paid or payable in respect of any tender
offer by McLeodUSA or any of its subsidiaries for shares of Class A
common stock concluded within the then preceding 12 months in respect
of which no adjustment has been made, exceeds 15% of McLeodUSA's pre-
distribution market capitalization (defined as the product of the
closing price of the Class A common stock on the last Trading Day
before the record date for such distribution times the number of shares
of Class A common stock then outstanding on the record date of such
distribution);
(5) the completion of a tender or exchange offer which McLeodUSA or any of
its subsidiaries makes for shares of Class A common stock that involves
an aggregate consideration that, together with (1) any cash and other
consideration payable in a tender or exchange offer by McLeodUSA or any
of its subsidiaries for shares of Class A common stock expiring within
the then preceding 12 months in respect of which no adjustment has been
made and (2) the aggregate amount of any such cash distributions
referred to in clause 4 above to all holders of shares of Class A
common stock within the then preceding 12 months in respect of which no
adjustments have been made, exceeds 15% of McLeodUSA's market
capitalization on the Trading Day immediately after the expiration of
such tender offer; or
(6) a distribution to all holders of Class A common stock (which
distribution is not also being made to the holders of Series A
preferred stock based on the number of shares of Class A common stock
into which the Series A preferred stock is then convertible) consisting
of evidences of indebtedness, shares of capital stock other than Class
A common stock or assets, including securities, but excluding those
dividends and those issuances of rights, options, warrants and other
distributions for which an adjustment to the Conversion Price as
referred to above is applicable (other than in connection with a merger
effected solely to reflect a change in the jurisdiction of
incorporation of McLeodUSA).
No adjustment of the Conversion Price will be required to be made:
(A) until cumulative adjustments amount to one percent of such price,
or
(B) with respect to rights, options or warrants issued pursuant to
certain employee benefit plans of McLeodUSA.
S-31
<PAGE>
McLeodUSA also may from time to time decrease the Conversion Price by any
amount for any period of at least 20 days, so long as the decrease is
irrevocable during such period, in which case McLeodUSA shall give at least 15
days' notice of such decrease. In addition to the foregoing adjustments,
McLeodUSA will be permitted to make such reductions in the Conversion Price as
it determines to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities or distribution
of securities convertible into or exchangeable for stock made by McLeodUSA to
its stockholders will not be taxable to the recipients. In the event McLeodUSA
elects to make such a reduction in the Conversion Price, McLeodUSA will comply
with the requirements of Rule 14e-1 under the Securities Exchange Act, and any
other securities laws and regulations thereunder, if and to the extent that
such laws and regulations are applicable in connection with the reduction of
the Conversion Price. See "Federal Tax Considerations."
In the event that, after the issuance of the Series A preferred stock,
McLeodUSA distributes rights, options or warrants (other than those referred
to in clause 2 above) to all holders of Class A common stock, so long as any
such rights, options or warrants have not expired or been redeemed by
McLeodUSA, the holder of any shares of Series A preferred stock surrendered
for conversion will be entitled to receive upon such conversion, in addition
to the shares of Class A common stock then issuable upon such conversion,
which we call the conversion shares, a number of rights, options or warrants
to be determined as follows: (1) if such conversion occurs on or prior to the
date for the distribution to the holders of rights, options or warrants of
separate certificates evidencing such rights, options or warrants, called the
distribution date, the same number of rights, options or warrants to which a
holder of a number of shares of Class A common stock equal to the number of
conversion shares is entitled at the time of such conversion in accordance
with the terms and provisions applicable to the rights, options or warrants,
and (2) if such conversion occurs after such distribution date, the same
number of rights, options or warrants to which a holder of the number of
shares of Class A common stock into which such Series A preferred stock was
convertible immediately prior to such distribution date would have been
entitled on such distribution date in accordance with the terms and provisions
of and applicable to the rights, options or warrants.
Except as stated above, the Conversion Price will not be adjusted for the
issuance of common stock, or any securities convertible into or exchangeable
for common stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
In case of:
(x) any merger or consolidation of McLeodUSA, other than a merger or
consolidation in which (a) McLeodUSA is the continuing corporation and (b)
the Class A common stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of
another corporation;
(y) any sale, transfer or other disposition to another person of all or
substantially all of the assets of McLeodUSA (other than the sale,
transfer, assignment or distribution of shares of capital stock or assets
to a subsidiary of McLeodUSA) computed on a consolidated basis; or
(z) any statutory exchange of securities with another person, other than
in connection with a merger or acquisition,
there will be no adjustment of the Conversion Price. Each share of the then
outstanding Series A preferred stock will, without the consent of the holder
of any Series A preferred stock, become convertible only into the kind and
amount of securities, cash or other property receivable upon such merger,
consolidation, sale, transfer or statutory exchange by a holder of the number
of shares of Class A common stock into which such Series A preferred stock was
convertible immediately prior to such merger, consolidation, sale, transfer or
statutory exchange, assuming such holder of Class A common stock failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such merger, consolidation,
sale, transfer or statutory exchange. In the case of a cash merger of
McLeodUSA into another company or any other
S-32
<PAGE>
cash transaction of the type mentioned above, the effect of these provisions
would be that thereafter each share of Series A preferred stock would be
convertible at the Conversion Price in effect at such time into the same
amount of cash per share into which each share of Series A preferred stock
would have been convertible had such share been converted into Class A common
stock immediately prior to the effective date of such cash merger or
transaction. Depending upon the terms of such cash merger or transaction, the
aggregate amount of cash into which such shares of Series A preferred stock
would be converted could be more or less than the liquidation preference with
respect to such Series A preferred stock.
Change of Control
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Change in Control (as defined) occurs, then the Conversion
Price in effect will be adjusted immediately after such Change in Control as
described below. In addition, in the event of a Common Stock Change in Control
(as defined), each share of the Series A preferred stock shall be convertible
solely into common stock of the kind received by holders of Class A common
stock as the result of such Common Stock Change in Control.
A "Change in Control" shall be deemed to have occurred at such time as:
. the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all the assets of McLeodUSA and
its subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Securities Exchange Act)
. the adoption of a plan relating to the liquidation, dissolution or
winding-up of McLeodUSA
. the consummation of any transaction (including any merger or
consolidation) the result of which is that any "person" (as defined
above) other than any Permitted Holder (as defined below) becomes the
beneficial owner (as such term is defined in Rules 13d-3 and 13d-5
promulgated under the Securities Exchange Act, except that a person will
be deemed to have beneficial ownership of all shares that such person
has the right to acquire whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than
50% of the voting stock of McLeodUSA, or
. the first day on which a majority of the members of the board of
directors of McLeodUSA are not Continuing Directors (as defined in the
Certificate of Designations)
"Permitted Holders" include: IES Industries Inc. and its successors and
assigns; Clark E. McLeod, Mary E. McLeod and Richard A. Lumpkin, and
foundations and trusts controlled by any of them; and affiliates (other than
the Company and its subsidiaries) of each of the foregoing.
The term "Common Stock Change in Control" means any Change in Control in
which more than 50% of the value (as determined in good faith by McLeodUSA's
board of directors) or the consideration received by holders of Class A common
stock consists of common stock of another company that for each of the 10
consecutive Trading Days referred to in the definition of "Applicable Price"
below has been admitted for listing or admitted for listing subject to notice
of issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Change in Control shall not be a Common
Stock Change in Control unless either (1) McLeodUSA continues to exist after
the occurrence of such Change in Control and the outstanding shares of Series
A preferred stock continue to exist as outstanding shares of Series A
preferred stock, or (2) not later than the occurrence of such Change in
Control, the outstanding shares of Series A preferred stock are converted into
or exchanged for shares of convertible preferred stock of a corporation
succeeding to McLeodUSA's business, which convertible preferred stock has
powers, preferences and relative, participating, optional or other rights, and
qualifications, limitations and restrictions, substantially similar to those
of the Series A preferred stock.
The term "Non-Stock Change in Control" means any Change in Control other
than a Common Stock Change in Control.
S-33
<PAGE>
The term "Applicable Price" means (i) in the event of a Non-Stock Change in
Control in which the holders of the Class A common stock receive only cash, the
amount of cash received by the holder of one share of Class A common stock and
(ii) in the event of any other Non-Stock Change in Control or any Common Stock
Change in Control, the average of the closing prices for the Class A common
stock during the 10 Trading Days prior to and including the record date for the
determination of the holders of Class A common stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock Change
in Control or Common Stock Change in Control or, if there is no such record
date, the date upon which the holders of the Class A common stock shall have
the right to receive such cash, securities, property or other assets, in each
case as adjusted in good faith by the board of directors to appropriately
reflect any of the events referred to in clauses 1 through 6 under "--
Conversion Rights."
For purposes of calculating any adjustment to be made in the event of a
Change of Control, immediately after such Change in Control:
(1) in the case of a Non-Stock Change in Control, the Conversion Price
will thereupon become the lower of (A) the Conversion Price in effect
immediately prior to such Non-Stock Change in Control, but after giving
effect to any other prior adjustments, and (B) the result obtained by
multiplying the greater of the Applicable Price and the then applicable
Reference Market Price (as defined) by a fraction of which the numerator
will be $500 and the denominator will be the then current Optional
Redemption price per share or, prior to , 2002, an amount per
share of Series A preferred stock determined by McLeodUSA in its sole
discretion, after consultation with an investment banking firm, to be the
equivalent of the hypothetical Optional Redemption price that would have
been applicable if the Series A preferred stock had been redeemable during
such period; provided, however, that if, as a result of the operation of
this clause (1), the cumulative number of shares of Class A common stock
issued or issuable upon conversion of the Series A preferred stock, after
giving effect to the adjustment described in this clause (1) and all prior
conversions of Series A preferred stock, would exceed a number (the
"Threshold Number") equal to 20% of the outstanding shares of Class A
common stock as of the issue date of the Series A preferred stock, then
until and unless McLeodUSA obtains the approval of its common stockholders
for the issuance of any shares of Class A common stock in excess of the
Threshold Number, the Conversion Price shall be adjusted pursuant to this
clause (1) to that price that would entitle the holders of Series A
preferred stock to receive in the aggregate, upon conversion of all the
Series A preferred stock (including all prior conversions of Series A
preferred stock), no more than the Threshold Number of shares of Class A
common stock; and
(2) in the case of a Common Stock Change in Control, the Conversion Price
in effect immediately prior to such Common Stock Change in Control, but
after giving effect to any other prior adjustments, will thereupon be
adjusted by multiplying such Conversion Price by a fraction, of which the
numerator will be the Purchaser Stock Price (as defined) and the
denominator will be the Applicable Price; provided, however, that in the
event of a Common Stock Change in Control in which (A) 100% of the value of
the consideration received by a holder of Class A common stock is common
stock of the successor, acquiror or other third party (and cash, if any, is
paid with respect to any fractional interests in such common stock
resulting from such Common Stock Change in Control) and (B) all the Class A
common stock will have been exchanged for, converted into, or acquired for,
common stock (and cash with respect to fractional interests) of the
successor, acquiror or other third party, the Conversion Price in effect
immediately prior to such Common Stock Change in Control will thereupon be
adjusted by multiplying such Conversion Price by a fraction, of which the
numerator will be one (1) and the denominator will be the number of shares
of common stock of the successor, acquiror, or other third party received
by a holder of one share of Class A common stock as a result of such Common
Stock Change in Control.
The foregoing Conversion Price adjustments in the event of a Non-Stock Change
in Control will apply in situations whereby a Change in Control not involving a
change in beneficial ownership of the Class A common stock has occurred or
whereby all or substantially all of the Class A common stock is acquired in a
transaction in which 50% or less of the value received by holders of such Class
A common stock consists of common
S-34
<PAGE>
stock that has been admitted for listing on a national securities exchange or
quoted on the Nasdaq National Market. If the market price of the Class A common
stock immediately prior to a Non-Stock Change in Control is lower than the
applicable Conversion Price then in effect, the Conversion Price will be
adjusted as described in clause 1 above and the holders of the Series A
preferred stock will be entitled to receive the amount and kind of
consideration that would have been received if the Series A preferred stock had
been converted into Class A common stock prior to the Non-Stock Change in
Control after giving effect to such adjustment.
The foregoing Conversion Price adjustments in the event of a Common Stock
Change in Control will apply in situations whereby more than 50% of the value
received by holders of Class A common stock consists of common stock of another
company that has been admitted for listing on a national securities exchange or
quoted on the Nasdaq National Market, in which case the Series A preferred
stock will become convertible into shares of common stock of the other company.
If consideration for the Class A common stock consists partly of common stock
of another company and partly of other securities, cash or property, each share
of Series A preferred stock will be convertible solely into a number of shares
of such common stock determined so that the initial value of such shares
(measured as described in the definition of Purchaser Stock Price) equals the
value of the shares of Class A common stock into which such share of Series A
preferred stock was convertible immediately before the transaction (measured as
described in the definition of Applicable Price). If consideration for Class A
common stock is solely common stock of another company, each share of Series A
preferred stock will be convertible into the same number of shares of such
common stock of another company receivable by a holder of the number of shares
of Class A common stock into which such share of Series A preferred stock was
convertible immediately before such transaction.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Change in Control, the product of (1) the number of shares of common stock
received as consideration in such Common Stock Change in Control for each share
of Class A common stock, and (2) the average of the per share closing prices
for the common stock received as consideration in such Common Stock Change in
Control for the 10 consecutive Trading Days prior to and including the record
date for the determination of the holders of Class A common stock entitled to
receive such common stock, or, if there is no such record date, the date upon
which the holders of the Class A common stock shall have the right to receive
such common stock, in each case, as adjusted in good faith by the board of
directors of McLeodUSA to appropriately reflect any of the events referred to
in clauses 1 through 6 under "--Conversion Rights"; provided, however, that if
no such closing prices exist, then the Purchaser Stock Price shall be set at a
price determined in good faith by the board of directors of McLeodUSA.
The term "Reference Market Price" shall initially mean $ (which is an
amount equal to 66 2/3% of the reported last sale price for the Class A common
stock on the Nasdaq National Market on , 1999), and in the event of
any adjustment to the Conversion Price other than as a result of a Change in
Control, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the Conversion Price after giving effect to any
such adjustment shall always be the same as the ratio of $ to the
initial Conversion Price set forth on the cover page of this prospectus
supplement.
Depending upon whether a Change in Control is a Non-Stock Change in Control
or Common Stock Change in Control, a holder of Series A preferred stock may
receive significantly different consideration upon conversion. In the event of
a Non-Stock Change in Control, the holder has the right to convert each share
of the Series A preferred stock into the kind and amount of the shares of stock
and other securities or property or assets receivable by a holder of the number
of shares of Class A common stock issuable upon conversion of such share of the
Series A preferred stock immediately prior to such Non-Stock Change in Control,
but after giving effect to the adjustment described above. However, in the
event of a Common Stock Change in Control in which less than 100% of the value
of the consideration received by a holder of Class A common stock is common
stock of the acquiror or other third party, a holder of a share of Series A
preferred stock who converts a share following the Common Stock Change in
Control will receive consideration in the form of such common stock only,
whereas a holder who has converted his share prior to the Common Stock Change
in Control will
S-35
<PAGE>
receive consideration in the form of common stock as well as any other
securities or assets (which may include cash) receivable thereupon by a holder
of the number of shares of Class A common stock issuable upon conversion of
such share of Series A preferred stock immediately prior to such Common Stock
Change in Control.
In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Class A common
stock is converted into the right to receive other securities, cash or other
property, each share of Series A preferred stock then outstanding would,
without the consent of any holders of Series A preferred stock, become
convertible only into the kind and amount of securities, cash and other
property receivable upon the transaction by a holder immediately prior to such
transaction if such holder had converted its share of Series A preferred stock.
If at any such time McLeodUSA makes a distribution of property to its
stockholders that would be taxable to such stockholders as a dividend for
federal income tax purposes (for example, distributions of evidences of
indebtedness or assets of McLeodUSA, but generally not stock dividends or
rights to subscribe for capital stock) and, pursuant to the antidilution
provisions described above, the Conversion Price of the Series A preferred
stock is reduced, such reduction may be deemed to be the receipt of taxable
income by holders of the Series A preferred stock.
Consolidation, Merger and Sale of Assets
The Certificate of Designations will provide that McLeodUSA, without the
consent of any holder of outstanding Series A preferred stock, may consolidate
with or merge into any other Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person or may permit any Person
to consolidate with or merge into, or transfer or lease its properties
substantially as an entirety to, McLeodUSA
provided, however that (a) the successor, transferee or lessee (if not
McLeodUSA) is organized under the laws of the United States, any state thereof
or the District of Columbia, (b) the shares of Series A preferred stock shall
become shares of such successor, transferee or lessee, having in respect of
such successor, transferee or lessee the same powers, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon, the Series A preferred stock had
immediately prior to such transaction; and (c) certain other conditions are
met.
Under any consolidation by McLeodUSA with, or merger by McLeodUSA into, any
other Person or any conveyance, transfer or lease of the properties and assets
of McLeodUSA substantially as an entirety as described in the preceding
paragraph, the successor resulting from such consolidation or into which
McLeodUSA is merged or the transferee or lessee to which such conveyance,
transfer or lease is made, will succeed to, and be substituted for, and may
exercise every right and power of, McLeodUSA under the shares of Series A
preferred stock, and thereafter, except in the case of a lease, the predecessor
(if still in existence) will be released from its obligations and covenants
with respect to the Series A preferred stock.
SEC Reports and Reports to Holders
Whether or not we are required to file reports with the SEC, if any shares of
Series A preferred stock are outstanding, we will file with the SEC all such
reports and other information as we would be required to file with the SEC by
Sections 13(a) or 15(d) under the Securities Exchange Act. See "Where You Can
Find More Information." We will supply each holder of Series A preferred stock,
upon request, without cost to such holder, copies of such reports or other
information.
Transfer Agent, Registrar and Dividend Disbursing Agent
The transfer agent, registrar, dividend disbursing agent and redemption agent
for the shares of Series A preferred stock will be Norwest Bank Minnesota, N.A.
S-36
<PAGE>
FEDERAL TAX CONSIDERATIONS
The following is a summary of certain material U.S. federal tax
considerations relevant to the purchase, ownership and disposition of our
Series A preferred stock and Class A common stock. This summary is based on
the current provisions of the Internal Revenue Code of 1986, as amended,
Treasury regulations and judicial and administrative authority, all of which
are subject to change, possibly on a retroactive basis. This summary applies
only to investors who hold our Series A preferred stock or Class A common
stock as capital assets, within the meaning of section 1221 of the Internal
Revenue Code, and does not discuss the tax consequences to special classes of
investors, such as brokers or dealers in securities or currencies, financial
institutions, tax-exempt entities, life insurance companies, persons holding
our convertible preferred stock or common stock as a part of a hedging, short
sale or conversion transaction or a straddle, investors whose functional
currency is not the United States dollar, persons who hold our convertible
preferred stock or common stock through partnerships or other pass-through
entities, or, except as specifically noted, foreign holders and certain U.S.
expatriates. State, local and foreign tax consequences of ownership of our
Series A preferred stock and Class A common stock are not summarized.
We have not requested, and do not intend to request, any rulings from the
Internal Revenue Service concerning the federal tax consequences of an
investment in our Series A preferred stock or Class A common stock. You are
advised to consult with your own tax advisor regarding the consequences of
acquiring, holding or disposing of our Series A preferred stock or Class A
common stock in light of current tax laws, your particular investment
circumstances, and the application of state, local and foreign tax laws.
When we refer in the summary to a "United States Holder," we mean a
beneficial owner of Series A preferred stock or Class A common stock that is:
. a citizen or resident of the United States for United States federal
income tax purposes
. a corporation created or organized in the United States or under the
laws of the United States or of any political subdivision thereof
. an estate whose income is includible in gross income for United States
federal income tax purposes regardless of its source, or
. a trust if a court within the United States is able to exercise primary
supervision of the administration of the trust and one or more United
States persons has the authority to control all substantial decisions of
the trust
When we refer in the summary to a "Non-United States Holder," we mean a
beneficial owner of convertible preferred stock or common stock that is not a
United States Holder.
United States Holders
Distributions
We have the right to pay distributions on the Series A preferred stock and
the Class A common stock in cash or in shares of our Class A common stock. If
we distribute our Class A common stock, the amount of the distribution for
federal income tax purposes will be the fair market value (which may differ
from the Discounted Current Market Value) of the Class A common stock on the
date the distribution is paid, and the distribution will be subject to federal
income tax to the same extent as a cash distribution.
A distribution on the Series A preferred stock or Class A common stock will
be treated as a dividend to the extent of our current or accumulated earnings
and profits attributable to the distribution as determined under U.S. federal
income tax principles. The amount of our earnings and profits at any time will
depend upon our future actions and financial performance. If the amount of the
distribution exceeds our current and accumulated earnings and profits
attributable to the distribution, the distribution will be treated as a
nontaxable return of capital and will be applied against and reduce your
adjusted tax basis in the stock, but not below zero. The
S-37
<PAGE>
reduction in tax basis will increase the amount of any gain, or reduce the
amount of any loss, which you would otherwise realize on the sale or other
taxable disposition of the stock. If the distribution exceeds both our current
and accumulated earnings and profits attributable to the distribution and your
adjusted tax basis in your stock, the excess will be treated as capital gain
and will be either long-term or short-term capital gain depending on your
holding period for the stock.
Corporate investors in our Series A preferred stock or Class A common stock
generally should be eligible for the 70% dividends-received deduction with
respect to the portion of any distribution on the stock taxable as a dividend.
However, corporate investors should consider certain provisions that may limit
the availability of a dividend received deduction, including the 46-day holding
period required by section 246(c) of the Internal Revenue Code, the rules of
section 246A which reduce the dividends-received deduction of dividends on
certain debt-financed stock, and the rules in section 1059 of the Internal
Revenue Code that reduce the basis of stock in respect of certain extraordinary
dividends, as well as the effect of the dividends-received deduction on the
determination of alternative minimum tax liability.
Optional redemption for Class A common stock or cash
If we redeem our Series A preferred stock for Class A common stock, the
exchange should constitute a recapitalization within the meaning of Section
368(a)(1)(E) of the Internal Revenue Code. You will not recognize gain or loss
on the exchange unless some of the Class A common stock is received in
discharge of dividend arrearages, in which case the redemption will be treated
as a distribution on the Series A preferred stock to the extent of the
dividends in arrears. The amount constituting a distribution will be taxed as a
dividend to the extent of our current or accumulated earnings and profits
attributable to the distribution at the time, in accordance with the treatment
described above for distributions. Your tax basis in our Class A common stock
received pursuant to the redemption generally will equal your tax basis in the
Series A preferred stock surrendered in exchange, and your holding period for
the Class A common stock generally will include the period you held your Series
A preferred stock. However, the tax basis of Class A common stock received in
discharge of dividend arrearages will be its fair market value on the date
received and the holding period of that stock will commence on the day after
its receipt.
If we redeem our Series A preferred stock for cash, the redemption will be
taxable to you. The redemption generally will be treated as a sale or exchange
if you do not own, actually or constructively within the meaning of section 318
of the Internal Revenue Code, any stock of McLeodUSA other than the redeemed
Series A preferred stock. If you do own, actually or constructively, other
stock of McLeodUSA, a cash redemption of your Series A preferred stock may be
taxable in accordance with the treatment described above for distributions.
Such treatment as a distribution will not apply if the redemption (1) is
"substantially disproportionate" with respect to you under section 302(b)(2) of
the Internal Revenue Code, or (2) is "not essentially equivalent to a dividend"
under section 302(b)(1) of the Internal Revenue Code. A distribution to you
will be "not essentially equivalent to a dividend" if results in a meaningful
reduction in your stock interest in us, which should be the case if your
proportionate ownership interest, taking into account any actual ownership of
Class A common stock and any stock constructively owned, is reduced, your
relative stock interest in McLeodUSA is minimal, and you exercise no control
over our business affairs.
If a cash redemption of your Series A preferred stock is treated as a sale or
exchange, it will result in capital gains or losses equal to the difference
between the amount of cash received and the adjusted tax basis in the Series A
preferred stock redeemed, except to the extent that the redemption price
includes unpaid dividends which we declare prior to the redemption. The capital
gain or loss will be long term if you have held the Series A preferred stock
for more than one year. Any cash you receive in discharge of dividend
arrearages on the Series A preferred stock will be treated as a distribution on
the Series A preferred stock to the extent of the dividends in arrears, taxable
in accordance with the treatment described above for distributions.
If the cash you receive on redemption of your Series A preferred is taxed as
a dividend, your tax basis (reduced for amounts, if any, treated as return of
capital) in the redeemed Series A preferred stock will be
S-38
<PAGE>
transferred to any remaining other McLeodUSA stock you own, subject, in the
case of a corporate taxpayer, to reduction of possible gain recognition under
section 1059 of the Internal Revenue Code in an amount equal to the nontaxed
portion of such dividend. If you do not actually own any other McLeodUSA stock,
having a remaining stock interest only constructively, you may lose the benefit
of your tax basis in the Series A preferred stock but the tax basis may be
shifted to the stock of the related person whose stock you constructively own.
Under certain circumstances, section 305(c) of the Internal Revenue Code
requires that any excess of the redemption price of preferred stock over its
issue price be treated as constructively distributed on a periodic basis prior
to actual receipt. However, these rules do not apply if you and McLeodUSA are
not "related" within the meaning of Treasury regulations under section 305(c),
there are no plans, arrangements or agreements that effectively require or are
intended to compel us to redeem the Series A preferred stock, and our exercise
of the right to redeem would not reduce the yield of the Series A preferred
stock, as determined under the regulations. We intend to take the position that
the existence of our optional redemption rights does not result in a
constructive distribution under section 305(c). The preferred stock will also
be issued with a liquidation premium, since the liquidation preference will
exceed the proceeds received by us after excluding amounts deposited in the
deposit account. Although the regulations under section 305(c) do not
specifically address the treatment of liquidation premiums, we believe that a
similar rationale should apply to such premiums.
Conversion
You generally will not recognize gain or loss on conversion of shares of
Series A preferred stock into our Class A common stock, except with respect to
any cash paid in lieu of fractional shares of Class A common stock. However,
you may recognize gain or dividend income to the extent there are dividends in
arrears on such stock at the time of conversion into Class A common stock. Your
tax basis in the common stock received upon conversion of Series A preferred
stock generally will be equal to your tax basis in the Series A preferred stock
and the holding period of the Series A common stock generally will include your
holding period for the Series A preferred stock. However, the tax basis of any
Class A common stock received on conversion which is treated as a dividend will
be equal to its fair market value on the date of the distribution and the
holding period of that Class A common stock will commence on the day after its
receipt.
You may be deemed to have received a constructive distribution of stock
taxable as a dividend if the conversion ratio of the Series A preferred stock
is adjusted to reflect a cash or property distribution on our Class A common
stock or to prevent dilution in the case of certain issuances of rights or
warrants to purchase Class A common stock at below market prices. Although an
adjustment to the conversion price made pursuant to a bona fide reasonable
adjustment formula which has the effect of preventing the dilution your
interest in McLeodUSA generally will not be considered to result in a
constructive distribution of stock, certain of the possible adjustments may
trigger this rule. If a nonqualifying adjustment is made, or if we fail to make
an adjustment in certain cases, you might be deemed to have received a taxable
stock dividend. If so, the amount of the dividend to be included in income
would be the fair market value of the additional Class A common stock to which
you would be entitled by reason of the increase in your proportionate equity
interest in McLeodUSA.
Sale or other taxable disposition
If you sell or dispose of your Series A preferred stock or Class A common
stock in a taxable transaction other than a redemption or conversion by us, you
will recognize capital gain or loss equal to the difference between the amount
of cash and the fair market value of property received and your tax basis in
the Series A preferred stock or Class A common stock. The gain or loss will be
long-term capital gain or loss if your holding period for the stock exceeds one
year. For corporate taxpayers, long-term capital gains are taxed at the same
rate as ordinary income. For individual taxpayers, net capital gains--the
excess of the taxpayer's net long-term capital gains over this net short-term
capital losses--are subject to a maximum tax rate of 20% if the stock is held
for more than one year.
S-39
<PAGE>
Non-United States Holders
Distributions
Distributions received by you as a Non-United States Holder in respect of
the Series A preferred stock, whether in cash or shares of Class A common
stock, and distributions in respect of Class A common stock, to the extent
considered dividends for U.S. federal income tax purposes, generally will be
subject to withholding of United States federal income tax at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty, unless
the dividend is effectively connected with your conduct of a trade or business
within the United States or, where a tax treaty applies, is attributable to a
United States permanent establishment you maintain. For distributions of Class
A common stock, any amounts we withhold will reduce the value of the Class A
common stock distributed to you. If the dividend is effectively connected with
your conduct of a trade or business within the United States or, where a tax
treaty applies, is attributable to your United States permanent establishment,
the dividend will be subject to federal income tax on a net income basis at
applicable graduated individual or corporate rates and will be exempt from the
30% withholding tax.
In addition to the graduated rate described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a
United States trade or business or, where a tax treaty applies, is
attributable to your United States permanent establishment, may, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate
or at a lower rate specified by an applicable income tax treaty.
For purposes of obtaining a reduced rate of withholding under an income tax
treaty, you will be required to provide certain information concerning your
country of residence and entitlement to tax treaty benefits.
If you claim exemption from withholding with respect to dividends effectively
connected with your conduct of a business within the United States, you must
provide appropriate certification, currently, Internal Revenue Service Form
4224, to McLeodUSA or its paying agent. If you are eligible for a reduced rate
of U.S. federal withholding tax you may obtain a refund of any excess withheld
amounts by timely filing an appropriate claim for refund.
If a distribution exceeds our current and accumulated earnings and profits
attributable to the distribution, it will be treated first as a return of your
tax basis in the stock to the extent of your basis and then as gain from the
sale of a capital asset which would be taxable as described below. Any
withholding tax on distributions in excess of our current and accumulated
earnings and profits is refundable to you upon the timely filing of an
appropriate claim for refund with the Internal Revenue Service.
Under currently applicable Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of
such country, unless the payor has knowledge to the contrary, for purposes of
the withholding discussed above, and, under the current interpretation of
these Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under Treasury regulations currently scheduled to be
effective with respect to dividends paid after December 31, 2000, a Non-United
States Holder of McLeodUSA stock who wishes to claim the benefit of an
applicable treaty rate, and to avoid backup withholding as discussed below,
will be required to satisfy applicable certification and other requirements.
However, under either set of regulations, some payments to foreign partnership
and fiscally transparent entities may not be eligible for a reduced rate of
withholding tax under an applicable income tax treaty.
Disposition of Series A preferred stock or Class A common stock
Generally, you will not be subject to United States federal income tax on
any gain recognized upon the sale or other disposition of Series A preferred
stock or Class A common stock. However, you will be subject to federal income
tax on the gain if:
(1) the gain is effectively connected with your United States trade or,
if a tax treaty applies, attributable to your United States permanent
establishment;
(2) you are an individual who is a former citizen of the United States
who lost such citizenship within the preceding ten-year period, or former
long-term resident of the United States who relinquished United States
residency on or after February 6, 1995, and the loss of citizenship or
permanent residency had as one of its principal purposes the avoidance of
United States tax; or
S-40
<PAGE>
(3) you are a non-resident alien individual, are present in the United
States for 183 days or more days in the taxable year of disposition and
either (a) have a "tax home" in the United States for United States federal
income tax purposes or (b) the gain is attributable to an office or other
fixed place of business you maintain in the United States.
You will also be subject to federal income tax on the gain from the sale of
our Series A preferred stock or Class A common stock if we are or have been a
"United States real property holding corporation"--which we refer to in this
prospectus supplement as USRPHC--within the meaning of section 897(c)(2) of
the Internal Revenue Code at any time you held the stock, or within the five-
year period preceding the sale of the stock if you hold the stock for more
than five years. We believe we are not now a USRPHC, that we have not been an
USRPHC at any time since we were formed, and that it is unlikely we will
become a USRPHC. If we were a USRPHC or were to become a USRPHC, you would be
subject to U.S. income tax on any gain from your sale of Series A preferred
stock or from your sale of Class A common stock if you beneficially own, or
owned at any time during a specified 5-year period, more than 5 percent of the
total fair market value of the class of stock you sold.
Redemption and conversion of Series A preferred stock
As a Non-United States Holder, you generally will not recognize any gain or
loss for United States federal income tax purposes upon conversion of Series A
preferred stock into Class A common stock, except with respect to any cash
paid in lieu of fractional shares of Class A common stock, which would be
subject to the rules described under "Disposition of Series A preferred stock
or Class A common stock." However, you may recognize gain or dividend income
to the extent there are dividends in arrears on the Series A preferred stock
at the time of conversion into Class A common stock.
A redemption of Series A preferred stock for cash will be an event which
will constitute either a dividend to the extent of our current and accumulated
earnings and profits or a sale or exchange. See "United States Holders--
Optional redemption for Class A common stock or cash." To the extent the
redemption is treated as a dividend, the tax consequences are described in
"Non-United States Holders--Distributions," and to the extent the redemption
is treated as a sale or exchange, the tax consequences are described in "Non-
United States Holders--Disposition of Series A preferred stock or Class A
common stock."
Federal estate taxes
If you are an individual Non-United States Holder, Series A preferred stock
or Class A common stock you hold or are treated as owning at the time of your
death will be included in your United States gross estate for United States
federal estate tax purposes and may be subject to United States federal estate
tax, unless an applicable estate tax treaty provides otherwise.
Information Reporting And Backup Withholding
We generally will be required to report to certain holders of our Series A
preferred stock or Class A common stock and to the Internal Revenue Service
the amount of any dividends paid to the holder in each calendar year and the
amounts of tax withheld, if any, with respect to such payments. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which a Non-United States
Holder resides under the provisions of an applicable income tax treaty.
Each holder of Series A preferred stock or Class A common stock--other than
an exempt holder such as a corporation, tax-exempt organization, qualified
pension or profit-sharing trust, individual retirement account, or a
nonresident alien individual who provides certification as to his or her
status as a nonresident--will be required to provide, under penalties of
perjury, a certification setting forth the holder's name, address, correct
federal taxpayer identification number and a statement that the holder is not
subject to backup withholding. If a nonexempt holder fails to provide the
required certification, we will be required to withhold 31% of the amount
otherwise payable to the holder, and remit the withheld amount to the Internal
Revenue Service as a credit
S-41
<PAGE>
against the holder's federal income tax liability. However, no backup
withholding will be required with respect to any payment subject to the 30%
United States withholding tax discussed above. You should consult your own tax
advisor regarding your qualification for exemption from backup withholding and
the procedure for obtaining any applicable exemption.
The Internal Revenue Service has finalized Treasury regulations regarding the
backup withholding and information rules which are effective for payments made
after December 31, 2000 subject to certain transition rules. In general, these
regulations unify certification procedures and forms and clarify and modify
reliance standards. Among other provisions, these regulations also include the
new provisions discussed below regarding sales of stock outside the United
States by or for a broker. A Non-United States Holder should consult its own
tax advisor regarding the application of the new regulations.
Payment of the proceeds of a sale of Series A preferred stock or Class A
common stock by or through a United States office of a broker is subject to
both backup withholding and information reporting unless the beneficial owner
certifies under penalties of perjury that it is a Non-United States Holder or
otherwise establishes an exemption. In general, backup withholding and
information reporting will not apply to a payment of the proceeds of a sale of
Series A preferred stock or Class A common stock by or through a foreign office
of a broker. If, however, such broker is, for United States federal income tax
purposes a United States person, a "controlled foreign corporation" for U.S.
federal tax purposes, or a foreign person that derives 50% or more of its gross
income for a certain period from the conduct of a trade or business in the
United States, or, for taxable years beginning after December 31, 2000, a
foreign partnership in which one or more United States persons, in the
aggregate, own more than 50% of the income or capital interests in the
partnership or if the partnership is engaged in a trade or business in the
United States, such payments will be subject to information reporting, but not
backup withholding, unless (1) such broker has documentary evidence in its
records that the beneficial owner is a Non-United States Holder and certain
other conditions are met, or (2) the beneficial owner otherwise establishes an
exemption.
For payments after December 31, 2000, certification will be required in the
case of the disposition of shares of Series A preferred stock or Class A common
stock held in an offshore account if the disposition is made through a foreign
broker described in the immediately preceeding paragraph.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against the holder's United States federal income tax
liability provided the required information is furnished to the Internal
Revenue Service.
The foregoing discussion is for general information and is not tax advice.
Accordingly, each prospective holder of Series A preferred stock or Class A
common stock should consult its tax advisor as to the particular tax
consequences to it of the Series A preferred stock and Class A common stock,
including the applicability and effect of any state, local or foreign income
tax laws, and any recent or prospective changes in applicable tax laws.
S-42
<PAGE>
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each underwriter has severally agreed to purchase from
us and we have agreed to sell to the underwriters, the number of shares of
Series A preferred stock shown opposite its name below. The obligations of the
several underwriters to purchase these shares are subject to terms and
conditions contained in the underwriting agreement.
<TABLE>
<CAPTION>
Number
of
Underwriters Shares
------------ -------
<S> <C>
Salomon Smith Barney Inc. ........................................
Goldman, Sachs & Co. .............................................
Morgan Stanley & Co. Incorporated.................................
-------
Total .......................................................... 800,000
=======
</TABLE>
In the underwriting agreement, the underwriters have severally agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Series A preferred stock offered hereby (other than those subject to
the over-allotment option described below), if any such shares are purchased.
In the event of a default by any underwriter, the underwriting agreement
provides that, in certain circumstances, the purchase commitments of the non-
defaulting underwriters may be increased or the underwriting agreement may be
terminated.
The underwriters, for whom Salomon Smith Barney Inc., Goldman, Sachs & Co.
and Morgan Stanley & Co. Incorporated are acting as representatives, propose
initially to offer the shares of Series A preferred stock to the public at the
public offering price set forth on the cover page of this prospectus
supplement, and to some dealers at such price less a concession not in excess
of $ per share. The underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to other dealers. After the public
offering, the public offering price and such concessions may be changed.
We have granted the underwriters an option, exercisable within 30 days of the
date of this prospectus supplement, to purchase up to 120,000 additional shares
of Series A preferred stock to cover over-allotments, if any, at the public
offering price set forth on the cover page of this prospectus supplement. To
the extent that the underwriters exercise such option, in whole or in part,
each underwriter will have a firm commitment, subject to several conditions, to
purchase the same proportion of the option shares as the number of shares
purchased by such underwriter in the above table bears to the total number of
Series A preferred stock purchased by all of the underwriters in the table
above.
The following table shows the per share and total public offering price, the
underwriting discount to be paid to the underwriters, and the proceeds before
expenses to us. The totals are presented assuming either no exercise or full
exercise by the underwriters of the over-allotment option.
<TABLE>
<CAPTION>
Total
-----------------
Per No Full
Share Exercise Exercise
----- -------- --------
<S> <C> <C> <C>
Public offering price ........................... $ $ $
Underwriting discount ........................... $ $ $
Proceeds to company ............................. $ $ $
</TABLE>
In connection with the offering, Salomon Smith Barney Inc., on behalf of the
underwriters, may purchase and sell the shares of Series A preferred stock
and/or shares of our Class A common stock in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of our shares
of Series A preferred stock in excess of the number of shares of Series A
preferred stock to be purchased by the underwriters in the offering, which
creates a syndicate short position. Syndicate covering transactions involve
purchases of our shares of Series A preferred stock in the open market after
the distribution has been completed in order to cover syndicate short
positions. Stabilizing transactions consist of bids or purchases of our shares
of Series A preferred stock and/or shares of our Class A common stock made for
the purpose of preventing or retarding a decline in the market price of our
shares of Series A preferred stock and/or shares of our Class A common stock
while the offering is in progress.
S-43
<PAGE>
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
underwriters, in covering syndicate short positions or making stabilizing
purchases, repurchase shares originally sold by that syndicate member.
Any of these activities may cause the price of our shares of Series A
preferred stock and/or our Class A common stock to be higher than the price
that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected on the Nasdaq National Market
or in the over-the-counter market, or otherwise and, if commenced, may be
discontinued at any time.
In addition, in connection with this offering, the underwriters (and selling
group members) may engage in passive market making transactions in our Class A
common stock on the Nasdaq National Market prior to the pricing and completion
of the offering. Passive market making consists of displaying bids on the
Nasdaq National Market no higher than the bid prices of independent market
makers and making purchases at no higher than those independent bids and
effected in response to order flow. Net purchases by a passive market maker on
each day are limited to a specified percentage of the passive market maker's
average daily trading volume in our Class A common stock during a specified
period and must be discontinued when such limit is reached. Passive market
making may cause the price of our Class A common stock to be higher than the
price that otherwise would exist in the open market in the absence of such
transactions. If passive market making is commenced, it may be discontinued at
any time.
We estimate that the total expenses of this offering will be $ .
Salomon Smith Barney Inc. and Morgan Stanley & Co. Incorporated have
performed investment banking and advisory services for us from time to time for
which they have received customary fees and expenses. They may, from time to
time, engage in transactions with and perform services for us in the ordinary
course of their business.
The underwriting agreement provides that we will indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act, or
contribute to payments the underwriters may be required to make in respect of
such liabilities.
We, our directors and officers, and several other stockholders have each
agreed with the underwriters that they will not offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce an offering
of any shares of our Class A common stock or any securities convertible into,
or exchangeable for, shares of Class A common stock for a period of 90 days
from the date of this prospectus supplement, without the prior written consent
of Salomon Smith Barney Inc., except:
. in the case of McLeodUSA, any such transactions in connection with
acquisitions, employee benefit or option plans, or upon conversion of
outstanding securities
. in the case of our directors, officers and stockholders, dispositions of
shares of our Class A common stock as bona fide gifts or pledges where
the recipients of such gifts or the pledgees, as the case may be, agree
in writing with the underwriters to be bound by these same restrictions
In addition, Clark E. McLeod, Mary E. McLeod, Interstate Energy, M/C, and
Richard A. Lumpkin and Gail G. Lumpkin and several other parties related to the
Lumpkins have agreed not to sell or otherwise dispose of any of our equity
securities without the consent of the board of directors of McLeodUSA. See
"Description of Capital Stock--Stockholders' Agreement."
S-44
<PAGE>
LEGAL MATTERS
The validity of our Series A preferred stock offered hereby is being passed
upon for us by Hogan & Hartson L.L.P., Washington, D.C., our special counsel.
Certain legal matters relating to this offering are being passed upon for the
underwriters by Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements and schedule of McLeodUSA and
subsidiaries as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of Ovation Communications, Inc. as of
December 31, 1998 and 1997 and for the period from March 27, 1997 (inception)
to December 31, 1997 and the year ended December 31, 1998 incorporated by
reference in this registration statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon, and are
incorporated by reference herein in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement of which this prospectus supplement
forms a part. The registration statement, including the attached exhibits and
schedules, contain additional relevant information about our Class A common
stock. The rules and regulations of the SEC allow us to omit some of the
information included in the registration statement from this prospectus
supplement.
In addition, we have filed reports, proxy statements and other information
with the SEC under the Securities Exchange Act. You may read and copy any of
this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-
2511
You may obtain information on the operation of the SEC's Public Reference
Room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. The SEC file
number for our documents filed under the Securities Exchange Act is 0-20763.
The SEC also maintains an Internet web site that contains reports, proxy
statements and other information regarding issuers, like McLeodUSA, that file
electronically with the SEC. The address of that site is http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
prospectus supplement and accompanying prospectus. This means we can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is
considered to be a part of this prospectus supplement, except for any such
information that is superseded by information included directly in this
document.
S-45
<PAGE>
This prospectus supplement incorporates by reference the documents listed
below that we have previously filed or will file with the SEC. They contain
important information about us and our financial condition.
. Our Annual Report on Form 10-K for our fiscal year ended December 31,
1998, filed on March 24, 1999, as amended by Form 10-K/A filed on April
22, 1999
. Our Current Reports on Form 8-K filed on April 15, 1999, April 16, 1999,
June 17, 1999, July 2, 1999 and August 4, 1999
. All documents filed with the SEC by us under Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act after the date of this
prospectus supplement and before the offering is terminated, are
considered to be a part of this prospectus, effective the date such
documents are filed
. The description of our Class A common stock set forth in our registration
statement filed under Section 12 of the Securities Exchange Act on Form
8-A on May 24, 1996, including any amendment or report filed with the SEC
for the purpose of updating such description
. The consolidated financial statements of Ovation Communications, Inc. and
subsidiaries appearing on pages F-1 through F-17 of our definitive
prospectus dated March 24, 1999 and filed with the SEC on March 26, 1999
pursuant to Rule 424(b) under the Securities Act as part of our
Registration Statement on Form S-4 (Registration No. 333-71811).
In the event of conflicting information in these documents, the information
in the latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the
SEC's Web site at the address described above, or directly from us, by
requesting them in writing or by telephone at the following address:
McLeodUSA Incorporated McLeodUSA Technology Park 6400 C Street SW, P.O. Box
3177 Cedar Rapids, IA 52406-3177 Attn: General Counsel Telephone (319) 364-0000
We will provide a copy of any of these documents without charge, excluding
any exhibits unless the exhibit is specifically listed as an exhibit to the
registration statement of which this prospectus forms a part. If you request
any documents from us, we will mail them to you by first class mail, or another
equally prompt means, within two business days after we receive your request.
S-46
<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 or jurisdiction where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated August 4, 1999
P R O S P
E C T U S
$1,750,000,000
McLeodUSA Incorporated
Class A Common Stock, Preferred Stock, Depositary Shares, Debt Securities,
Warrants, Subscription Rights, Stock Purchase Contracts and Stock Purchase
Units
We may offer, from time to time, in one or more series or classes the
following securities:
. Class A common stock
.preferred stock
.preferred stock represented by depositary shares
.debt securities
.warrants to purchase debt securities, Class A common stock, preferred stock
or depositary shares
.subscription rights to purchase any of the above securities
.stock purchase contracts and stock purchase units
The aggregate initial offering price of these securities will not exceed
$1,750,000,000.
We will provide you with specific terms of the applicable offered securities
in supplements to this prospectus. The terms of the securities will include the
initial offering price, aggregate amount of the offering, listing on any
securities exchange or market, risk factors and the agents, dealers or
underwriters, if any, to be used in connection with the sale of these
securities.
You should read this prospectus and any prospectus supplement carefully
before you decide to invest. This prospectus may not be used to consummate
sales of the offered securities unless it is accompanied by a prospectus
supplement describing the method and terms of the offering of those offered
securities.
Neither the Securities and Exchange Commission nor
any state securities commission has approved or
disapproved of these offered securities or
determined if this prospectus is truthful or
complete. It is illegal for any person to tell you
otherwise.
The date of this Prospectus is August , 1999.
<PAGE>
You should rely only on the information provided or incorporated by reference
in this prospectus or any applicable prospectus supplement. We have not
authorized anyone to provide you with different or inconsistent information.
You should assume that the information in this prospectus or any applicable
prospectus supplement is accurate only as of the date on the front cover of
such documents. Our business, financial information, results of operations and
prospects may have changed since those dates.
If it is against the law in any state to make an offer to sell these
securities (or to solicit an offer from someone to buy these securities), then
this offer does not apply to any person in that state, and no offer or
solicitation is made by this prospectus to any such person.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus....................................................... 1
Where You Can Find More Information......................................... 1
Cautionary Note Regarding Forward-Looking Statements........................ 2
About McLeodUSA............................................................. 3
Coverage Ratios............................................................. 4
Use of Proceeds............................................................. 4
Description of Common Stock................................................. 5
Description of Preferred Stock.............................................. 10
Description of Depositary Shares............................................ 13
Description of Debt Securities.............................................. 16
Description of Warrants..................................................... 27
Description of Stock Purchase Contracts and Stock Purchase Units............ 29
Description of Subscription Rights.......................................... 30
Plan of Distribution........................................................ 31
Legal Matters............................................................... 32
Experts..................................................................... 32
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
the shelf process, we may sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$1,750,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement also may add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement, together with the additional information
described below under the heading "Where You Can Find More Information."
As used in this prospectus, "McLeodUSA," "the company," "we," "us," and "our"
refer to McLeodUSA Incorporated, a Delaware corporation, and its subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement of which this prospectus forms a part.
The registration statement, including the attached exhibits and schedules,
contains additional relevant information about us and the securities offered by
this prospectus. The rules and regulations of the SEC allow us to omit some of
the information included in the registration statement from this prospectus and
any applicable prospectus supplement.
We file reports, proxy statements and other information with the SEC under
the Securities Exchange Act of 1934. You may read and copy any of this
information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may obtain information on the operation of the SEC's Public Reference
Room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. The SEC file
number for our documents filed under the Securities Exchange Act is 0-20763.
The SEC also maintains an Internet Web site that contains reports, proxy
statements and other information regarding issuers, like McLeodUSA, that file
electronically with the SEC. The address of that site is http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be a part of this
prospectus, except for any such information that is superseded by information
included directly in this document or any prospectus supplement.
This prospectus incorporates by reference the documents listed below that we
have previously filed or will file with the SEC. They contain important
information about us and our financial condition.
. Our Annual Report on Form 10-K for our fiscal year ended December 31,
1998, filed on March 24, 1999, as amended by Form 10-K/A filed on April
22, 1999
. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999, filed on May 17, 1999
. Our Current Reports on Form 8-K filed on April 15, 1999, April 16, 1999,
June 17, 1999 and July 2, 1999
1
<PAGE>
. All documents filed subsequent to the date of this prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
until all of the securities offered by this prospectus are sold,
effective the date such documents are filed
. The description of our Class A common stock set forth in our
registration statement filed under Section 12 of the Securities Exchange
Act on Form 8-A on May 24, 1996, including any amendment or report filed
with the SEC for the purpose of updating such description
. The consolidated financial statements of Ovation Communications, Inc.
and subsidiaries appearing on pages F-1 through F-17 of our definitive
prospectus dated March 24, 1999 and filed with the SEC on March 26, 1999
pursuant to Rule 424(b) under the Securities Act of 1933 as part of our
Registration Statement on Form S-4 (Registration No. 333-71811)
In the event of conflicting information in these documents, the information
in the latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the
SEC's Web site at the address described above, or directly from us, by
requesting them in writing or by telephone at the following address:
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Attn: General Counsel
Telephone (319) 364-0000
We will provide a copy of any of these documents without charge, excluding
any exhibits unless the exhibit is specifically listed as an exhibit to the
registration statement of which this prospectus forms a part. If you request
any documents from us, we will mail them to you by first class mail, or another
equally prompt means, within two business days after we receive your request.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it include
"forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act. We intend the
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these sections. All statements regarding our
expected financial position and operating results, our business strategy, our
financing plans, our future capital requirements, forecasted demographic and
economic trends relating to our industry, our ability to complete acquisitions,
to realize anticipated cost savings and other benefits from acquisitions and to
recover acquisition-related costs, and similar matters are forward-looking
statements. These statements are subject to known and unknown risks,
uncertainties and other factors that could cause our actual results to differ
materially from the statements. The forward-looking information is based on
various factors and was derived using numerous assumptions. In some cases, you
can identify these statements by our use of forward-looking words such as
"may," "will," "should," "anticipate," "estimate," "expect," "plan," "believe,"
"predict," "potential" or "intend." You should be aware that these statements
only reflect our predictions. Actual events or results may differ
substantially. Important factors that could cause our actual results to be
materially different from our expectations include those discussed in the
applicable prospectus supplement under the caption "Risk Factors." We undertake
no obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
2
<PAGE>
ABOUT McLEODUSA
The following summary highlights selected information regarding McLeodUSA. It
does not contain all of the information that is important to you. You should
carefully read this entire prospectus and any prospectus supplement, together
with the other documents to which this prospectus and any prospectus supplement
refers you. In addition, you should carefully consider the factors set forth
under the caption "Risk Factors" in the applicable prospectus supplement.
Unless otherwise indicated, dollar amounts over $1 million have been rounded to
one decimal place and dollar amounts less than $1 million have been rounded to
the nearest thousand.
Our Company
We provide communications services to business and residential customers in
the Midwestern and Rocky Mountain regions of the United States. We offer local,
long distance, Internet access, data, voice mail and paging services, from a
single company on a single bill. We believe we are the first company in many of
our markets to offer one-stop shopping for communications services tailored to
customers' specific needs.
Our approach makes it easier for both our business and our residential
customers to satisfy their communications needs. It also allows businesses to
receive customized services, such as competitive long distance pricing and
enhanced calling features, that might not otherwise be directly available on a
cost-effective basis.
In addition to our core business of providing competitive local, long
distance and related communications services, we also derive revenue from:
. sale of advertising space in telephone directories
. traditional local telephone company services in east central Illinois and
southeast South Dakota
. special access, private line and data services
. communications network maintenance services
. telephone equipment sales, leasing, service and installation
. video services
. telemarketing services
. computer networking services
. other communications services, including cellular, operator, payphone,
mobile radio, paging services and Web site development and hosting
In most of our markets, we compete with the existing local phone company by
leasing its lines and switches. In other markets, primarily in east central
Illinois and southeast South Dakota, we operate our own lines and switches. We
provide long distance services by using our own communications network
facilities and leasing capacity from long distance and local communications
providers. We are constructing fiber optic communications networks in Iowa,
Illinois, Wisconsin, Indiana, Missouri, Michigan, Minnesota, South Dakota,
North Dakota, Colorado and Wyoming to carry additional communications traffic
on our own network.
----------------
Our principal executive offices are located at McLeodUSA Technology Park,
6400 C Street SW, P.O. Box 3177, Cedar Rapids, Iowa 52406-3177, and our phone
number is (319) 364-0000.
3
<PAGE>
COVERAGE RATIOS
For each of the years ended December 31, 1994, 1995, 1996, 1997 and 1998,
earnings were insufficient to cover fixed charges by $11.4 million, $11.4
million, $22.6 million, $84.4 million and $135.5 million, respectively. For the
three months ended March 31, 1998 and 1999, earnings were insufficient to cover
fixed charges by $32.0 million and $51.7 million, respectively. For the purpose
of calculating the ratio of earnings to fixed charges, earnings consist of net
loss before income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on all debt (including capitalized interest),
amortization of debt discount and deferred loan costs and the portion of rental
expense that is representative of the interest component of rental expense
(deemed to be one-third of rental expense which management believes is a
reasonable approximation of the interest component). Because we did not have
any preferred stock outstanding during any of these periods, the ratio of
earnings to fixed charges and preferred stock dividends is the same as the
ratio of earnings to fixed charges.
USE OF PROCEEDS
Unless we specify otherwise in the applicable prospectus supplement, we will
use the net proceeds from the sale of the offered securities for general
corporate purposes, including working capital, the repayment or refinancing of
our indebtedness, future acquisitions and/or capital expenditures. Until we
apply the net proceeds for specific purposes, we may invest such net proceeds
in short-term or marketable securities.
4
<PAGE>
DESCRIPTION OF COMMON STOCK
The following summary description of our capital stock is based on the
provisions of our certificate of incorporation and bylaws and the applicable
provisions of the Delaware General Corporation Law. For information on how to
obtain copies of our certificate of incorporation and bylaws, see "Where You
Can Find More Information."
General
Under our certificate of incorporation, we have authority to issue
274,000,000 shares of capital stock, consisting of 250,000,000 shares of Class
A common stock, 22,000,000 shares of Class B common stock and 2,000,000 shares
of preferred stock. We have declared a two-for-one stock split to be effected
in the form of a stock dividend for our Class A common stock. The record date
for the stock split was July 12, 1999 and distribution of the additional shares
will take place on July 26, 1999. Giving effect to this stock split, we had
issued and outstanding as of July 1, 1999, 150,417,738 shares of our Class A
common stock, no shares of our Class B common stock and no shares of our
preferred stock.
The rights of the holders of our Class A common stock and our Class B common
stock discussed below are subject to such rights as our board of directors may
from time to time confer on holders of our preferred stock that may be issued
in the future. Such rights may adversely affect the rights of holders of our
Class A common stock or our Class B common stock, or both.
Class A Common Stock
Voting Rights. Each holder of our Class A common stock is entitled to attend
all special and annual meetings of our stockholders and, together with the
holders of all other classes of stock entitled to vote at such meetings, to
vote upon any matter, including, without limitation, the election of directors.
Holders of our Class A common stock are entitled to one vote per share.
Liquidation Rights. In the event of any dissolution, liquidation or winding
up of McLeodUSA, whether voluntary or involuntary, the holders of our Class A
common stock, the holders of our Class B common stock and the holders of any
class or series of stock entitled to participate with our Class A and Class B
common stock, will become entitled to participate in the distribution of any of
our assets remaining after we have paid, or provided for payment of, all of our
debts and liabilities and after we have paid, or set aside for payment, to the
holders of any class of stock having preference over our Class A common stock
in the event of dissolution, liquidation or winding up, the full preferential
amounts, if any, to which they are entitled.
Dividends. Dividends may be paid on our Class A common stock, our Class B
common stock and on any class or series of stock entitled to participate with
our Class A and Class B common stock when and as declared by our board of
directors. We have never paid, however, any cash dividends and the indentures
governing our outstanding debt securities prohibit us from paying cash
dividends.
No Preemptive or Conversion Rights. The holders of our Class A common stock
have no preemptive or subscription rights to purchase additional securities
issued by us nor any rights to convert their Class A common stock into other of
our securities or to have their shares redeemed by us.
Class B Common Stock
Voting Rights. Each holder of our Class B common stock is entitled to attend
all special and annual meetings of our stockholders and, together with the
holders of all other classes of stock entitled to vote at such meetings, to
vote upon any matter or thing, including, without limitation, the election of
directors. Holders of our Class B common stock are entitled to .40 vote per
share.
Liquidation Rights. In the event of any dissolution, liquidation or winding
up of McLeodUSA, whether voluntary or involuntary, the holders of our Class B
common stock, the holders of our Class A common stock
5
<PAGE>
and the holders of any class or series of stock entitled to participate with
our Class B and Class A common stock, will become entitled to participate in
the distribution of any of our assets remaining after we have paid, or provided
for payment of, all of our debts and liabilities and after we have paid, or set
aside for payment, to the holders of any class of stock having preference over
our Class B common stock in the event of dissolution, liquidation or winding up
the full preferential amounts, if any, to which they are entitled.
Dividends. Dividends may be paid on our Class B common stock, our Class A
common stock and on any class or series of stock entitled to participate with
our Class B and Class A common stock when and as declared by our board of
directors.
Conversion into Our Class A Common Stock; No Other Preemptive or Conversion
Rights. The shares of our Class B common stock may be converted at any time at
the option of the holder into fully paid and nonassessable shares of our Class
A common stock at the rate of one share of our Class A common stock for each
share of Class B common stock, as adjusted for any stock split. Except for this
conversion right, the holders of our Class B common stock have no preemptive or
subscription rights to purchase additional securities issued by us nor any
rights to convert their Class B common stock into other of our securities or to
have their shares redeemed by us.
Certain Charter and Statutory Provisions
Classified Board. Our certificate of incorporation provides for the division
of our board of directors into three classes of directors, serving staggered
three-year terms. Our certificate of incorporation further provides that the
approval of the holders of at least two-thirds of the shares entitled to vote
thereon and the approval of a majority of our entire board of directors are
necessary for the alteration, amendment or repeal of certain sections of our
certificate of incorporation relating to the election and classification of our
board of directors, limitation of director liability, indemnification and the
vote requirements for such amendments to our certificate of incorporation.
These provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of our company.
Certain Statutory Provisions. We are subject to the provisions of Section 203
of the Delaware General Corporation Law. In general, this statute prohibits a
publicly held Delaware corporation like us from engaging in a business
combination with an interested stockholder for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless
. before such date, the corporation's board of directors approved either
the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder,
. upon consummation of the transaction that resulted in such person
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding, for purposes of determining the
number of shares outstanding, shares owned by certain directors or
certain employee stock plans, or
. on or after the date the stockholder became an interested stockholder,
the business combination is approved by the corporation's board of
directors and authorized by the affirmative vote, and not by written
consent, of at least two-thirds of the outstanding voting stock of the
corporation excluding that stock owned by the interested stockholder.
A "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder. An "interested
stockholder" is a person, other than the corporation and any direct or indirect
wholly owned subsidiary of the corporation, who together with affiliates and
associates, owns or, as an affiliate or associate, within three years prior,
did own 15% or more of the corporation's outstanding voting stock.
Section 203 expressly exempts from the requirements described above any
business combination by a corporation with an interested stockholder who became
an interested stockholder at a time when the section did not apply to the
corporation. As permitted by the Delaware General Corporation Law, our original
certificate of incorporation provided that it would not be governed by Section
203. Several of our stockholders, including
6
<PAGE>
Clark E. and Mary E. McLeod and Interstate Energy Corporation became interested
stockholders within the meaning of Section 203 while that certificate of
incorporation was in effect. Accordingly, future transactions between us and
any of these stockholders will not be subject to the requirements of Section
203.
Our certificate of incorporation empowers our board of directors to redeem
any of our outstanding capital stock at a price determined by our board of
directors, which price will be at least equal to the lesser of
. fair market value, as determined in accordance with our certificate of
incorporation, or
. in the case of a "Disqualified Holder," such holder's purchase price, if
the stock was purchased within one year of such redemption,
to the extent necessary to prevent the loss or secure the reinstatement of any
license, operating authority or franchise from any governmental agency. A
"Disqualified Holder" is any holder of shares of our capital stock whose
holding of such stock may result in the loss of, or failure to secure the
reinstatement of, any license or franchise from any governmental agency held by
us or any of our subsidiaries to conduct any portion of our business or the
business of any of our subsidiaries. Under the Telecommunications Act of 1996,
non-U.S. citizens or their representatives, foreign governments or their
representatives, or corporations organized under the laws of a foreign country
may not own, in the aggregate, more than 20% of a common carrier licensee or
more than 25% of the parent of a common carrier licensee if the Federal
Communications Commission, or FCC, determines that the public interest would be
served by prohibiting such ownership. Additionally, the FCC's rules may under
some conditions limit the size of investments by foreign telecommunications
carriers in U.S. international carriers.
Limitation of Liability and Indemnification
Limitations of Director Liability. Section 102(b)(7) of the Delaware General
Corporation Law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. Although Section
102(b)(7) does not change directors' duty of care, it enables corporations to
limit available relief to equitable remedies such as injunction or rescission.
Our certificate of incorporation limits the liability of our directors to us or
our stockholders to the full extent permitted by Section 102(b)(7).
Specifically, our directors are not personally liable for monetary damages to
us or our stockholders for breach of the director's fiduciary duty as a
director, except for liability for:
.any breach of the director's duty of loyalty to us or our stockholders
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law
. unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law
. any transaction from which the director derived an improper personal
benefit
Indemnification. To the maximum extent permitted by law, our bylaws provide
for mandatory indemnification of our directors and officers against any
expense, liability or loss to which they may become subject, or which they may
incur as a result of being or having been a director or officer of McLeodUSA.
In addition, we must advance or reimburse directors and officers for expenses
incurred by them in connection with indemnifiable claims. We also maintain
directors' and officers' liability insurance.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A common stock is Norwest Bank
Minnesota, N.A.
Stockholders' Agreements
On November 18, 1998, we entered into a stockholders' agreement (the
"Stockholders' Agreement") with several of our significant stockholders
consisting of IES Investments Inc. (a subsidiary of Interstate Energy), Clark
E. and Mary E. McLeod, and Richard A. and Gail G. Lumpkin and several other
parties related to the Lumpkins.
7
<PAGE>
The Stockholders' Agreement provides, among other things, that:
. until December 31, 2001, the parties will not sell any of our equity
securities without receiving the prior written consent of our board of
directors, except for transfers specifically permitted by the
Stockholders' Agreement
. our board of directors will determine on a quarterly basis starting with
the quarter ending December 31, 1998 and ending on December 31, 2001, the
aggregate number, if any, of shares of our Class A common stock, not to
exceed in the aggregate 150,000 shares per quarter, that the parties may
sell during designated trading periods following the release of our
quarterly or annual financial results
. to the extent our board of directors grants registration rights to a
party to the agreement in connection with a sale of our securities by
such party, it will grant similar registration rights to the other
parties
. our board of directors will determine on an annual basis commencing with
the year ending December 31, 1999 and ending on December 31, 2001 (each
such year, an "Annual Period"), the aggregate number, if any, of shares
of our Class A common stock, not to exceed in the aggregate on an annual
basis a number of shares equal to 15% of the total number of shares of
Class A common stock beneficially owned by the parties as of December 31,
1998 (the "Registrable Amount"), to be registered by us under the
Securities Act for sale by the parties
. in any underwritten offering of shares of Class A common stock by us,
other than an offering on a registration statement on Form S-4 or Form S-
8 or any other form which would not permit the inclusion of shares of our
Class A common stock owned by the parties, we will undertake to register
the shares of our Class A common stock of such parties up to the
Registrable Amount, if any, as determined by our board of directors
. we may subsequently determine not to register any shares of the parties
under the Securities Act and may either not file a registration statement
or otherwise withdraw or abandon a registration statement previously
filed
The Stockholders' Agreement terminates on December 31, 2001. If during any
Annual Period we have not provided a party a reasonable opportunity to sell an
aggregate number of shares of Class A common stock equal to not less than 15%
of the total number of shares of Class A common stock beneficially owned by
such party as of December 31, 1998, then such party may terminate the
Stockholders' Agreement as it applies to such party.
Under the Stockholders' Agreement, each party also agreed, until such party
owns less than 4 million shares of Class A common stock or until December 31,
2001, whichever occurs first, to vote such party's shares and take all action
within its power to:
. establish the size of our board of directors at up to 11 directors
. cause to be elected to our board of directors one director designated by
Interstate Energy for so long as IES Investments owns at least 4 million
shares of Class A common stock
. cause to be elected to our board of directors three directors who are
executive officers of McLeodUSA designated by Clark McLeod for so long as
Clark and Mary McLeod collectively own at least 4 million shares of Class
A common stock
. cause Richard Lumpkin to be elected to our board of directors for so long
as the former stockholders of Consolidated Communications, Inc. who are a
party to the agreement collectively own at least 4 million shares of
Class A common stock
. cause to be elected to our board of directors up to six non-employee
directors nominated by our board
8
<PAGE>
On January 7, 1999, in connection with the Ovation acquisition, M/C Investors
L.L.C. and Media/Communications Partners III Limited Partnership (collectively,
"M/C") entered into a separate stockholders' agreement (the "Ovation
Stockholders' Agreement") with the parties to the Stockholders' Agreement.
The Ovation Stockholders' Agreement provides that, until December 31, 2001,
M/C will not sell any of our equity securities without receiving the prior
written consent of our board of directors. The Ovation Stockholders' Agreement
also contains various provisions intended to insure that M/C is treated on a
basis similar to the parties to the Stockholders' Agreement in connection with
permitted sales of our securities under the Stockholders' Agreement generally
starting December 31, 1999. In addition, for so long as M/C owns at least 2.5
million shares of our Class A common stock, M/C has agreed to vote its shares
in accordance with the voting agreement contained in the Stockholders'
Agreement and the other parties have agreed to vote their shares to cause to be
elected to our board of directors one director designated by M/C.
The Ovation Stockholders' Agreement terminates on December 31, 2001. In
addition, if (1) during each of the years ending December 31, 2000 and December
31, 2001, we have not provided M/C a reasonable opportunity to register under
the Securities Act for sale an aggregate number of shares of our Class A common
stock equal to not less than 15% of the total number of shares of Class A
common stock beneficially owned by M/C as of March 31, 1999, or (2) after
January 1, 2000, the Stockholders' Agreement has been terminated by all parties
to such agreement, then M/C may terminate the Ovation Stockholders' Agreement.
The Ovation Stockholders' Agreement will be terminated with respect to all
parties other than M/C and us at such time as the Stockholders' Agreement is
terminated.
9
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The following description is a general summary of the terms of the preferred
stock which we may issue. The description below and in any prospectus
supplement does not purport to be complete and is subject to and qualified in
its entirety by reference to our certificate of incorporation, the applicable
certificate of designations to our certificate of incorporation which will
determine the terms of the related series of preferred stock and our bylaws,
each of which will be made available upon request.
General
Our certificate of incorporation authorizes our board of directors, from time
to time and without further stockholder action, to provide for the issuance of
up to 2,000,000 shares of preferred stock, par value $.01 per share, in one or
more series, and to fix the relative rights and preferences of the shares,
including voting powers, dividend rights, liquidation preferences, redemption
rights and conversion privileges. As of the date of this prospectus, no shares
of preferred stock are outstanding. As a result of its broad discretion with
respect to the creation and issuance of preferred stock without stockholder
approval, the board of directors could adversely affect the voting power of the
holders of our Class A common stock and Class B common stock and, by issuing
shares of preferred stock with certain voting, conversion and/or redemption
rights, may discourage any attempt to obtain control of us.
The rights, preferences, privileges and restrictions of the preferred stock
of each series will be fixed by the certificate of designations relating to
such issues. You should refer to the prospectus supplement relating to the
class or series of preferred stock being offered for the specific terms of that
class or series, including:
(1) the title and stated value of the preferred stock being offered
(2) the number of shares of preferred stock being offered, their
liquidation preference per share, if any, and their purchase price
(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculating the payment date(s) applicable to the preferred stock
being offered
(4) whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock being
offered shall accumulate
(5) the procedures for any auction and remarketing, if any, for the
preferred stock being offered
(6) the provisions for a sinking fund, if any, for the preferred stock
being offered
(7) the provisions for redemption, if applicable, of the preferred stock
being offered
(8) any listing of the preferred stock being offered on any securities
exchange or market
(9) the terms and conditions, if applicable, upon which the preferred
stock being offered will be convertible into, or exchangeable for, our
Class A common stock or debt securities, including the conversion or
exchange price, or the manner of calculating the price, and the
conversion or exchange period
(10) voting rights, if any, of the preferred stock being offered
(11) whether interests in the preferred stock being offered will be
represented by depositary shares
(12) a discussion of any material and/or special United States federal
income tax considerations applicable to the preferred stock being
offered
10
<PAGE>
(13) the relative ranking and preferences of the preferred stock being
offered as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs
(14) any limitations on the issuance of any class or series of preferred
stock ranking senior to or on a parity with the series of preferred
stock being offered as to dividend rights and rights upon
liquidation, dissolution or winding up of our affairs
(15) any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock being offered
Rank
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will, with respect to distribution rights and rights upon
liquidation, dissolution or winding up of McLeodUSA, rank:
(1) senior to all of our classes or series of common stock and to all
equity securities the terms of which specifically provide that such
equity securities rank junior to the preferred stock being offered
(2) on a parity with all equity securities we have issued, other than
those referred to in clauses (1) and (3) of this subheading
(3) junior to all equity securities we have issued, the terms of which
specifically provide that such equity securities rank senior to the
preferred stock being offered
For purposes of this description, the term "equity securities" does not include
convertible debt securities.
Distributions
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by our board of directors, out of our assets legally
available for payment to stockholders, cash distributions, or distributions in
kind or in other property if expressly permitted and described in the
applicable prospectus supplement, at such rates and on such dates as will be
set forth in the applicable prospectus supplement. Each such distribution shall
be payable to holders of record as they appear on our stock transfer books on
such record dates as shall be fixed by our board of directors. Distributions on
any series of preferred stock, if cumulative, will be cumulative from and after
the date set forth in the applicable prospectus supplement.
Redemption
The terms and conditions, if any, upon which the preferred stock will be
subject to mandatory redemption or redemption at our option, either in whole or
in part, will be described in the applicable prospectus supplement.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
our affairs, then, before any distribution or payment shall be made to the
holders of any Class A common stock or Class B common stock or any other class
or series of shares of our capital stock ranking junior to the preferred stock
in the distribution of assets upon any liquidation, dissolution or winding up
of our company, the holders of each series of preferred stock shall be entitled
to receive out of our assets legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference set forth
in the applicable prospectus supplement, plus an amount equal to all
accumulated and unpaid distributions. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of shares of
preferred stock will have no right or claim to any of our remaining assets. If,
upon any such voluntary or involuntary liquidation, dissolution or winding up,
our available assets are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of preferred stock and the
corresponding amounts payable on all shares of other classes or series of our
shares of capital stock ranking on a parity with the preferred stock in the
distribution of assets, then the holders of the preferred stock and all other
such classes or series of shares of capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
11
<PAGE>
If liquidating distributions shall have been made in full to all holders of
preferred stock, our remaining assets shall be distributed among the holders of
any other classes or series of shares of capital stock ranking junior to the
preferred stock upon liquidation, dissolution or winding up, according to their
respective rights and preferences and in each case according to their
respective number of shares. For such purposes, our consolidation or merger
with or into any other corporation, trust or entity, or the sale, lease or
conveyance of all or substantially all of our property or business, shall not
be deemed to constitute a liquidation, dissolution or winding up of our
company.
Voting Rights
Holders of preferred stock will have the voting rights as indicated in the
applicable prospectus supplement.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred stock is
convertible into Class A common stock will be set forth in the applicable
prospectus supplement relating thereto. Such terms will include the number of
shares of Class A common stock into which the shares of preferred stock are
convertible, the conversion price or the manner of calculating the conversion
price, the conversion date(s) or period(s), provisions as to whether conversion
will be at the option of the holders of the preferred stock or at our option,
the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such series of preferred
stock.
Transfer Agent and Registrar
The transfer agent and registrar for the preferred stock will be set forth in
the applicable prospectus supplement.
12
<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
The following description is a general summary of the terms of the depositary
shares which we may issue. This summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the applicable Deposit Agreement and related depositary receipts.
General
We may issue depositary receipts for depositary shares, each of which will
represent a fractional interest of a share of a particular series of preferred
stock, as specified in the applicable prospectus supplement. Shares of
preferred stock of each series represented by depositary shares will be
deposited under a separate Deposit Agreement between the "depositary" named in
the Deposit Agreement and us. Subject to the terms of the Deposit Agreement,
each owner of a depositary receipt will be entitled, in proportion to the
fractional interest of a share of a particular series of preferred stock
represented by the depositary shares evidenced by that depositary receipt, to
all the rights and preferences of the preferred stock represented by those
depositary shares, including dividend, voting, conversion, redemption and
liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of our preferred stock to the depositary, we will cause
the depositary to issue, on our behalf, the depositary receipts. Copies of the
applicable form of Deposit Agreement and depositary receipt may be obtained
from us upon request, and the statements made in this summary relating to the
Deposit Agreement and the depositary receipts to be issued under the Deposit
Agreement are summaries of provisions of the Deposit Agreement and the related
depositary receipts.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash distributions
received in respect of the preferred stock to the record holders of depositary
receipts evidencing the related depositary shares in proportion to the number
of such depositary receipts owned by such holders, subject to the obligations
of holders to file proofs, certificates and other information and to pay some
charges and expenses to the depositary.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
entitled to that property, subject to the obligations of holders to file
proofs, certificates and other information and to pay some charges and expenses
to the depositary, unless the depositary determines that it is not feasible to
make the distribution, in which case the depositary may, with our approval,
sell the property and distribute the net proceeds from the sale to the holders.
No distribution will be made in respect of any depositary share to the extent
that it represents any preferred stock converted into other securities.
Withdrawal of Preferred Stock
Upon surrender of the depositary receipts at the corporate trust office of
the depositary, unless the related depositary shares have previously been
called for redemption or converted into other securities, the holders of those
depositary receipts will be entitled to delivery at the corporate trust office,
to or upon the holder's order, of the number of whole or fractional shares of
the preferred stock and any money or other property represented by the
depositary shares evidenced by the depositary receipts. Holders of depositary
receipts will be entitled to receive whole or fractional shares of the related
preferred stock on the basis of the proportion of preferred stock represented
by the depositary share as specified in the applicable prospectus supplement,
but holders of the shares of preferred stock will not thereafter be entitled to
receive depositary shares therefor. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of shares of preferred stock to be
withdrawn, the depositary will deliver to the holder at the same time a new
depositary receipt evidencing the excess number of depositary shares.
13
<PAGE>
Redemption of Depositary Shares
Whenever we redeem shares of preferred stock held by the depositary, the
depositary will redeem, as of the same redemption date, the number of
depositary shares representing shares of the preferred stock so redeemed,
provided we have paid in full to the depositary the redemption price of the
preferred stock to be redeemed plus an amount equal to any accrued and unpaid
dividends thereon to the date fixed for redemption. The redemption price per
depositary share will be equal to the corresponding proportion of the
redemption price and any other amounts per share payable with respect to the
preferred stock. If fewer than all the depositary shares are to be redeemed,
the depositary shares to be redeemed will be selected pro rata, as nearly as
may be practicable without creating fractional depositary shares, or by another
equitable method.
From and after the date fixed for redemption, all dividends in respect of the
shares of preferred stock called for redemption will cease to accrue, the
depositary shares called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary receipts evidencing
the depositary shares called for redemption will cease, except the right to
receive any moneys payable upon the redemption and any money or other property
to which the holders of the depositary receipts were entitled upon the
redemption and surrender thereof to the depositary.
Voting of the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
evidencing the depositary shares which represent such preferred stock. Each
record holder of depositary receipts evidencing depositary shares on the record
date, which will be the same date as the record date for the preferred stock,
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock represented by the holder's
depositary shares. The depositary will vote the amount of preferred stock
represented by the depositary shares in accordance with the instructions, and
we will agree to take all reasonable action which may be deemed necessary by
the depositary in order to enable the depositary to do so. The depositary will
abstain from voting the amount of preferred stock represented by the depositary
shares to the extent it does not receive specific instructions from the holders
of depositary receipts evidencing the depositary shares. The depositary shall
not be responsible for any failure to carry out any instruction to vote, or for
the manner or effect of any such vote made, as long as such action or non-
action is in good faith and does not result from negligence or willful
misconduct of the depositary.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, whether voluntary
or involuntary, the holders of each depositary receipt will be entitled to the
fraction of the liquidation preference accorded each share of preferred stock
represented by the depositary shares evidenced by such depositary receipt, as
set forth in the applicable prospectus supplement.
Conversion of Preferred Stock
The depositary shares, as such, are not convertible into our common stock or
any of our other securities or property. Nevertheless, if specified in the
applicable prospectus supplement relating to an offering of depositary shares,
the depositary receipts may be surrendered by their holders to the depositary
with written instructions to the depositary to instruct us to cause conversion
of the preferred stock represented by the depositary shares evidenced by the
depositary receipts into whole shares of our Class A common stock, other shares
of our preferred stock or other of our equity or debt securities, and we have
agreed that upon receipt of those instructions and any amounts payable in
respect thereof, we will cause the conversion thereof utilizing the same
procedures as those provided for delivery of preferred stock to effect such
conversion. If the depositary shares evidenced by a depositary receipt are to
be converted in part only, a new depositary receipt or receipts will be issued
for any depositary shares not to be converted. No fractional shares of Class A
common stock will be issued upon conversion, and if such conversion would
result in a fractional share being issued, we will pay an amount in cash equal
to the value of the fractional interest based upon the average of the closing
prices of the Class A common stock for a specified period of time prior to the
conversion.
14
<PAGE>
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares which
represent the preferred stock and any provision of the Deposit Agreement may
at any time be amended by agreement between the depositary and us. However,
any amendment that materially and adversely alters the rights of the holders
of depositary receipts or that would be materially and adversely inconsistent
with the rights granted to the holders of the related preferred stock will not
be effective unless such amendment has been approved by the existing holders
of at least a majority of the depositary shares evidenced by the depositary
receipts then outstanding. No amendment shall impair the right, subject to
certain exceptions in the Deposit Agreement, of any holder of depositary
receipts to surrender any depositary receipt with instructions to deliver to
the holder the related preferred stock and all money and other property, if
any, represented thereby, except in order to comply with law. Every holder of
an outstanding depositary receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such receipt, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby.
Unless specified otherwise in the applicable prospectus supplement, we may
terminate the Deposit Agreement upon not less than 30 days prior written
notice to the depositary if a majority of each class of depositary shares
affected by such termination consents, whereupon the depositary shall deliver
or make available to each holder of depositary receipts, upon surrender of the
depositary receipts held by such holder, such number of whole or fractional
shares of preferred stock as are represented by the depositary shares
evidenced by such depositary receipts together with any other property held by
the depositary with respect to such depositary receipt. In addition, the
Deposit Agreement will automatically terminate if:
(1) all outstanding depositary shares shall have been redeemed
(2) there shall have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution or
winding up of our company and such distribution shall have been
distributed to the holders of depositary receipts evidencing the
depositary shares representing such preferred stock
(3) each share of the related preferred stock shall have been converted
into our securities not represented by depositary shares
Charges of Preferred Stock Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the Deposit Agreement. In addition, we will pay
the fees and expenses of the depositary in connection with the performance of
its duties under the Deposit Agreement. However, holders of depositary
receipts will pay the fees and expenses of the depositary for any duties
requested by such holders to be performed which are outside of those expressly
provided for in the Deposit Agreement.
Miscellaneous
The depositary will forward to holders of depositary receipts any reports
and communications from us which are received by the depositary with respect
to the related preferred stock.
Unless specified otherwise in the applicable prospectus supplement, neither
we nor the depositary will be liable if either of us is prevented from or
delayed in, by law or any circumstances beyond its control, performing its
obligations under the Deposit Agreement. The obligations of the depositary and
our company under the Deposit Agreement will be limited to performing their
duties thereunder in good faith and without negligence, in the case of any
action or inaction in the voting of preferred stock represented by the
depositary shares, gross negligence or willful misconduct, and we and the
depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any depositary receipts, depositary shares or shares of
preferred stock represented thereby unless satisfactory indemnity is
furnished. We and the depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting shares of preferred
stock represented thereby for deposit, holders of depositary receipts or other
persons believed in good faith to be competent to give such information, and
on documents believed in good faith to be genuine and signed by a proper
party.
In the event the depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and us,
on the other hand, the depositary shall be entitled to act on such claims,
requests or instructions received from us.
15
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following discussion describes certain general provisions of the debt
securities to which this prospectus and any applicable prospectus supplement
may relate. The particular terms of the debt securities being offered and the
extent to which these general provisions may apply will be set forth in the
indenture or supplemental indenture under which the particular debt securities
are issued, and will be described in a prospectus supplement relating to such
debt securities. A form of the senior indenture and a form of the subordinated
indenture under which the debt securities may be issued have been filed as
exhibits to the registration statement of which this prospectus is a part. All
section references appearing in this prospectus are to sections of each
indenture unless otherwise indicated, and capitalized terms used but not
defined below shall have the respective meanings set forth in each Indenture.
General
Our debt securities will be unsecured general obligations and may be either
senior debt securities, which we refer to as Senior Securities, or subordinated
debt securities, which we refer to as Subordinated Securities. The debt
securities will be issued pursuant to a written agreement, known as an
Indenture, to be entered into by us and an independent third party, known as a
Trustee, who will be legally obligated to carry out the terms of the Indenture.
Senior Securities and Subordinated Securities will be issued under separate
indentures referred to as a Senior Indenture and a Subordinated Indenture,
respectively, or together referred to as the Indentures. The statements made
under this heading relating to the debt securities and the Indentures are
summaries of their anticipated provisions, do not purport to be complete and
are qualified in their entirety by reference to the Indentures and the debt
securities themselves.
The indebtedness represented by Subordinated Securities will be subordinated
in right of payment to the prior payment in full of our Senior Indebtedness
(which term includes our Senior Securities), as described below under "--
Ranking."
All of our operations are conducted through subsidiaries. Our subsidiaries
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the debt securities or to make
any funds available therefor, whether by dividends, loans or other payments,
other than as expressly provided in a guarantee. The payment of dividends or
the making of loans and advances to us by our subsidiaries may be subject to
contractual, statutory or regulatory restrictions, which, if material, would be
disclosed in the applicable prospectus supplement. Moreover, such payments,
loans and advances would be contingent upon the earnings of the subsidiaries.
Any right we may have to receive assets of any of our subsidiaries upon
liquidation or recapitalization of the subsidiaries (and the consequent right
of the holders of debt securities to participate in those assets) will be
subject to the claims of the subsidiaries' creditors. In the event that we are
recognized as a creditor of a subsidiary, our claims would still be subject to
any security interest in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that of the debt securities, and would be dependent
primarily upon the receipt of funds from our subsidiaries.
Except as set forth in the applicable Indenture or in one or more
supplemental indentures and described in an applicable prospectus supplement,
the debt securities may be issued without limit as to aggregate principal
amount, in one or more series, in each case as established from time to time in
or under authority granted by a resolution of our board of directors or as
established in the applicable Indenture or in one or more supplemental
indentures. All debt securities of one series need not be issued at the same
time and, unless otherwise provided, a series may be reopened, without the
consent of the holders of the debt securities of such series, for issuances of
additional debt securities of such series.
It is expected that each Indenture will provide that there may be more than
one Trustee thereunder, each with respect to one or more series of debt
securities. Any Trustee under an Indenture may resign or be removed with
respect to one or more series of debt securities, and a successor Trustee may
be appointed to act with
16
<PAGE>
respect to such series. In the event that two or more persons are acting as
Trustee with respect to different series of debt securities, each such Trustee
will be a trustee of a trust under the applicable Indenture separate and apart
from the trust administered by any other Trustee, and, except as otherwise
provided in the Indenture or supplemental indenture, any action permitted to be
taken by each Trustee may be taken by each such Trustee with respect to, and
only with respect to, the one or more series of debt securities for which it is
Trustee under the applicable Indenture.
The applicable prospectus supplement will describe the specific terms of any
series of debt securities being offered, including:
(1) The title of such debt securities and whether such debt securities are
Senior Securities or Subordinated Securities
(2) The aggregate principal amount of such debt securities and any limit
on such aggregate principal amount
(3) The percentage of the principal amount at which such debt securities
will be issued and, if other than the full principal amount thereof,
the portion of the principal amount payable upon declaration of
acceleration of the maturity thereof
(4) The date or dates, or the method for determining such date or dates,
on which the principal of such debt securities will be payable and the
amount of principal payable thereon
(5) The rate or rates (which may be fixed or variable), or the method by
which such rate or rates will be determined, at which such debt
securities will bear interest, if any
(6) The date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the regular record dates for such interest
payment dates, or the method by which record dates may be determined,
the persons to whom such interest will be payable, and the basis upon
which interest is to be calculated if other than a 360-day year of
twelve 30-day months
(7) The place or places where the principal of (and premium, if any) and
interest, if any, on such debt securities will be payable, where such
debt securities may be surrendered for registration of transfer or
exchange and where notices or demands to or upon us in respect of such
debt securities and the applicable Indenture may be served
(8) The period or periods within which, the price or prices at which, and
the other terms and conditions upon which, such debt securities may be
redeemed, in whole or in part, at our option if we have such an option
(9) Our obligation, if any, to redeem, repay or purchase such debt
securities pursuant to any sinking fund or analogous provision or at
the option of a holder thereof, and the period or periods within
which, the date and dates on which, the price or prices at which, and
the other terms and conditions upon which, such debt securities will
be redeemed, repaid or purchased, in whole or in part, pursuant to
such obligation
(10) If other than U.S. dollars, the currency or currencies in which such
debt securities are denominated or in which the principal of (and
premium, if any) or interest or Additional Amounts (as defined below),
if any, on the debt securities is payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto
(11) Whether the amount of payments of principal of (and premium, if any)
or interest or Additional Amounts, if any, on such debt securities
may be determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on a
currency, currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts are to be determined
17
<PAGE>
(12) Whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the debt securities are to be payable,
at our election or at the election of a holder thereof, in a currency
or currencies, currency unit or units or composite currency or
currencies other than that in which such debt securities are
denominated or stated to be payable, the period or periods within
which (including the election date), and the terms and conditions
upon which, such election may be made, and the time and manner of,
and identity of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or currencies,
currency unit or units or composite currency or currencies in which
such debt securities are denominated or stated to be payable and the
currency or currencies, currency unit or units or composite currency
or currencies in which such debt securities are to be so payable
(13) Any additions to, modifications of or deletions from the terms of
such debt securities with respect to events of default, amendments,
merger, consolidation and sale of assets or covenants set forth in
the applicable Indenture
(14) Whether such debt securities will be issued in certificate or book-
entry form
(15) Whether such debt securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form, the
denominations thereof if other than $5,000, and terms and conditions
relating thereto
(16) The applicability, if any, of the defeasance and covenant defeasance
provisions of the Indenture and any additional or different terms on
which such series of debt securities may be defeased
(17) Whether and under what circumstances we will pay any additional
amounts (which we refer to as Additional Amounts) on such debt
securities to a holder that is not a United States person in respect
of any tax, assessment or governmental charge and, if so, whether we
will have the option to redeem such debt securities in lieu of making
such payment
(18) Whether and the extent to which the payment of principal of, and
premium, if any and interest on such debt securities are guaranteed
by one or more of our Subsidiaries or by other persons
(19) Whether and under what circumstances the debt securities are
convertible into our Class A common stock, our preferred stock or
other debt securities
(20) If the debt securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such debt securities to be
authenticated and delivered
(21) Any other terms of such debt securities not inconsistent with the
provisions of the applicable Indenture (Section 301)
The debt securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
or bear no interest or bear interest at a rate which at the time of issuance is
below market rates, which we refer to as Original Issue Discount Securities.
Special U.S. federal income tax, accounting and other considerations applicable
to Original Issue Discount Securities will be described in the applicable
prospectus supplement.
Except as set forth in the applicable Indenture or in one or more
supplemental indentures, the applicable Indenture will not contain any
provisions that would limit our ability to incur indebtedness or that would
afford you protection in the event of a highly leveraged or similar transaction
involving us or in the event of a change of control. You should refer to the
applicable prospectus supplement for information with respect to any deletions
from, modifications of or additions to the Events of Default or our covenants
that are described below, including any addition of a covenant or other
provision providing event risk or similar protection.
For the purposes of certain Events of Default described below and any
additional covenants or other provisions that may be set forth in one or more
supplemental indentures, we may designate certain of our Subsidiaries as
"Unrestricted Subsidiaries." All Subsidiaries that are not designated as
Unrestricted Subsidiaries will be "Restricted Subsidiaries." The terms and
conditions, if any, under which a Subsidiary may be designated as an
Unrestricted Subsidiary will be set forth in the applicable supplemental
indenture and described in the applicable prospectus supplement.
18
<PAGE>
We refer to a corporation, partnership, limited liability company, joint
venture or similar entity in which we or one or more of our other Subsidiaries
own or control, directly or indirectly, a majority of the outstanding voting
stock, partnership interests, membership interests or similar interests, as the
case may be, as a "Subsidiary." For the purposes of this definition, "voting
stock" means stock or other equity interests having voting power for the
election of directors, or comparable governing body, as the case may be,
whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus supplement, dollar-
denominated debt securities that are in registered form will be issuable in
denominations of $1,000 and any integral multiple thereof (except for
registered debt securities issued in global form, which may be of any
denomination), and dollar-denominated debt securities that are in bearer form
will be issuable in denominations of $5,000 (except for bearer debt securities
issued in global form, which may be of any denomination) (Section 302).
Unless otherwise specified in the applicable prospectus supplement, the
principal of (and applicable premium, if any) and interest (and Additional
Amounts, if any) on any series of debt securities that are in registered form
will be payable at the corporate trust office of the Trustee, the address of
which will be stated in the applicable prospectus supplement. At our option,
payment of interest on debt securities that are in registered form may be made
by check mailed to the address of the person entitled thereto as it appears in
the applicable register for such debt securities or by wire transfer of funds
to such person at an account maintained within the United States. Unless
otherwise specified in the applicable prospectus supplement, payment of the
principal of (and applicable premium, if any) and interest (and Additional
Amounts, if any) on any debt securities that are in bearer form will be made
only at an office or agency of ours located outside the United States (Sections
301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any interest payment
date with respect to a debt security, which we refer to as Defaulted Interest,
will forthwith cease to be payable to the holder on the applicable regular
record date and may either be paid to the person in whose name such debt
security is registered at the close of business on a special record date, which
we refer to as the Special Record Date, for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof is to be given to the
holder of such debt security not less than ten days before such Special Record
Date, or may be paid at any time in any other lawful manner, all as more
completely described in the applicable Indenture or supplemental indenture
(Section 307).
Subject to certain limitations imposed upon debt securities issued in book-
entry form, the debt securities of any series will be exchangeable for other
debt securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations upon surrender of such debt
securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee. Every debt security surrendered for registration of
transfer or exchange must be duly endorsed or accompanied by a written
instrument of transfer. No service charge will be made for any registration of
transfer or exchange of any debt securities, but we may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith (Section 305). If the applicable prospectus supplement
refers to any transfer agent (in addition to the applicable Trustee) initially
designated by us with respect to any series of debt securities, we may at any
time rescind the designation of such transfer agent or approve a change in the
location through which any such transfer agent acts, except that we will be
required to maintain a transfer agent in each place of payment for such series.
We may at any time designate additional transfer agents with respect to any
series of debt securities (Section 1002).
19
<PAGE>
Neither we nor any Trustee will be required to:
(1) issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series to be redeemed
and ending at the close of business on the day of mailing of the
relevant notice of redemption
(2) register the transfer of or exchange any debt security, or portion
thereof, called for redemption, except the unredeemed portion of any
debt security being redeemed in part, or
(3) issue, register the transfer of or exchange any debt security that has
been surrendered for repayment at the option of the holder, except the
portion, if any, of such debt security not to be repaid (Section 305)
Merger, Consolidation or Sale of Assets
We will be permitted to consolidate with, or sell, lease or convey all or
substantially all of our assets to, or merge with or into, any other entity,
provided that:
(1) either we are the continuing entity, or the successor entity (if other
than us) formed by or resulting from any such consolidation or merger
or which has received the transfer of such assets is an entity
organized or existing under the laws of the United States, any state
thereof or the District of Columbia and expressly assumes payment of
the principal of (and premium, if any), interest on, and all other
amounts payable in connection with, all of the outstanding debt
securities and the due and punctual performance and observance of all
of the covenants and conditions contained in each Indenture
(2) immediately after giving effect to such transaction and treating any
indebtedness that becomes an obligation of us or any Subsidiary as a
result thereof as having been incurred by us or such Subsidiary at the
time of such transaction, no Event of Default under the Indentures or
supplemental indentures, and no event which, after notice or the lapse
of time, or both, would become such an Event of Default, will have
occurred and be continuing, and
(3) an officer's certificate and legal opinion covering such conditions
are delivered to each Trustee (Sections 801 and 803)
Certain Covenants
Existence. Except as described above under "Merger, Consolidation or Sale of
Assets," we will be required to do or cause to be done all things necessary to
preserve and keep in full force and effect our existence, rights (by
certificate of incorporation, by-laws and statute) and franchises, and those of
our Restricted Subsidiaries, but we and any such Restricted Subsidiary will not
be required to preserve the existence of a Restricted Subsidiary or any such
right or franchise if we determine that the preservation of such existence,
right or franchise is no longer desirable in the conduct of our business and
that the loss of such right or franchise is not disadvantageous in any material
respect to the holders of the debt securities. Furthermore, any Restricted
Subsidiary may consolidate with, merge into, or sell, convey, lease or
otherwise dispose of all of its property and assets to us or any wholly owned
Restricted Subsidiary (Section 1004).
Maintenance of Properties. We will be required to cause all of our properties
used or useful in the conduct of our business or the business of any Restricted
Subsidiary and material to us and our Restricted Subsidiaries taken as a whole
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and to cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in our judgment may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, but we and
our Restricted Subsidiaries will not be prevented from discontinuing the
operation or maintenance of any of such property if such discontinuance is in
our judgment, desirable on the conduct of our business or the business of any
of our Restricted Subsidiaries (Section 1005).
20
<PAGE>
Payment of Taxes and Other Claims. We will be required to pay or discharge or
cause to be paid or discharged, before the same become delinquent:
(1) all material taxes, assessments and governmental charges levied or
imposed upon us or any Restricted Subsidiary or upon our income,
profits or property or that of any Restricted Subsidiary and
(2) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a lien upon our property or that of any
Restricted Subsidiary; but we will not be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in
good faith in appropriate proceedings upon stay of execution or the
enforcement thereof and for which adequate reserves in accordance with
GAAP or other appropriate provision has been made. (Section 1007).
Additional Covenants and/or Modifications to the Covenants Described Above
Any additional covenants and/or modifications to the covenants described
above with respect to any series of our debt securities, including any
covenants relating to limitations on incurrence of indebtedness or other
financial covenants, will be set forth in the applicable Indenture or
supplemental indenture and described in the related prospectus supplement.
Events of Default, Notice and Waiver
Each Indenture may provide that some or all of the following events are
"Events of Default" with respect to any series of debt securities issued
thereunder, subject to any modifications, additions or deletions provided in
any supplemental indenture with respect to any series of debt securities:
(1) default for 30 days in the payment of any installment of interest on
or any Additional Amounts payable in respect of any debt security of
such series
(2) default in the payment of principal of (or premium, if any, on) any
debt security of such series when such amount becomes due and payable,
whether upon its maturity, declaration of acceleration, call for
redemption or otherwise
(3) default in making any sinking fund payment as required for any debt
security of such series
(4) default in the performance, or breach, of any of our other covenants
or warranties contained in the applicable Indenture (other than any
covenant or warranty otherwise provided for in the provisions relating
to Events of Default), continued for 60 days after written notice as
provided in the applicable Indenture
(5) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of us or any
Restricted Subsidiary or either of their property
(6) any other Event of Default provided with respect to a particular
series of debt securities (Section 501)
If an Event of Default under an Indenture (other than an Event of Default
described in clause 5 above) with respect to debt securities of any series at
the time outstanding occurs and is continuing, then in every such case, unless
the principal amount of all of the outstanding debt securities of such series
has already become due and payable, the applicable Trustee or, generally, the
holders of not less than 25% of the principal amount of the outstanding debt
securities of that series will have the right to declare the principal amount
(or, if the debt securities of that series are Original Issue Discount
Securities or indexed securities, such portion of the principal amount as may
be specified in the terms thereof) of all the debt securities of that series,
and any accrued and unpaid interest thereon, to be due and payable immediately
by written notice thereof to us (and to the applicable Trustee if given by the
holders) and upon any such declaration such principal or specified portion
thereof and any accrued and unpaid interest thereon shall become immediately
due and payable. If an Event of Default described in clause 5 above occurs with
respect to the debt securities of any series, then the principal amount of all
debt securities of that series and any accrued and unpaid interest thereon
shall become immediately due and payable without any act on the part of the
Trustee or any holder of such debt securities. At any time after such a
declaration of acceleration with respect to debt securities of such series (or
of all debt securities then outstanding under any Indenture, as the case may
be)
21
<PAGE>
has been made, but before a judgment or decree for payment of the money due has
been obtained by the applicable Trustee, however, the holders of not less than
a majority in principal amount of the outstanding debt securities of such
series (or of all debt securities then outstanding under the applicable
Indenture, as the case may be) may rescind and annul such declaration and its
consequences if:
(1) we have deposited with the applicable Trustee all required payments of
the principal of (and premium, if any) and interest and Additional
Amounts, if any, on the debt securities of such series (or of all debt
securities then outstanding under the applicable Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances
of the applicable Trustee, and
(2) all Events of Default, other than the non-payment of accelerated
principal (or specified portion thereof), with respect to debt
securities of such series (or of all debt securities then outstanding
under the applicable Indenture, as the case may be) have been cured or
waived as provided in such Indenture (Section 502)
Each Indenture also will provide that the holders of not less than a majority
in principal amount of the outstanding debt securities of any series (or of all
debt securities then outstanding under the applicable Indenture, as the case
may be) may waive any past default with respect to such series and its
consequences, except a default:
(1) in the payment of the principal of (or premium, if any) or interest or
Additional Amounts, if any, on any debt security of such series, or
(2) in respect of a covenant or provision contained in the applicable
Indenture that cannot be modified or amended without the consent of
the holder of each outstanding debt security affected thereby (Section
513)
Each Trustee will be required to give notice to the holders of the applicable
debt securities within 90 days of a default under the applicable Indenture
unless such default has been cured or waived; but the Trustee may withhold
notice of any default (except a default in the payment of the principal of (or
premium, if any) or interest or Additional Amounts, if any, on such debt
securities or in the payment of any sinking fund installment in respect of such
debt securities) if specified responsible officers of such Trustee consider
such withholding to be in the interest of such holders (Section 601).
Each Indenture will provide that no holders of debt securities of any series
may institute any proceedings, judicial or otherwise, with respect to such
Indenture or for any remedy thereunder, except in the cases of failure of the
applicable Trustee, for 60 days, to act after it has received a written request
to institute proceedings in respect of an Event of Default from the holders of
not less than 25% in principal amount of the outstanding debt securities of
such series, as well as an offer of indemnity reasonably satisfactory to it
(Section 507). This provision will not prevent any holder of debt securities
from instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest and Additional Amounts, if any, on such debt
securities at the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any holders of any
series of debt securities then outstanding under such Indenture, unless such
holders offer to the Trustee reasonable security or indemnity (Section 602).
The holders of not less than a majority in principal amount of the outstanding
debt securities of any series (or of all debt securities then outstanding under
an Indenture, as the case may be) will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
applicable Trustee, or of exercising any trust or power conferred upon such
Trustee. A Trustee may refuse, however, to follow any direction that is in
conflict with any law or with the applicable Indenture or that may involve such
Trustee in personal liability or may be unduly prejudicial to the holders of
debt securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, we will be required to
deliver to each Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default
under the applicable Indenture and, if so, specifying each such default and the
nature and status thereof (Section 1008).
22
<PAGE>
Modification of the Indentures
Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the holders of not less than a majority in principal
amount of all outstanding debt securities issued under such Indenture that are
affected by such modification or amendment; but no such modification or
amendment may, without the consent of the holder of each such debt security
affected thereby:
(1) change the stated maturity of the principal of (or the premium, if
any), or any installment of interest (or Additional Amounts, if any)
on, any such debt security
(2) reduce the principal amount of, or the rate or amount of interest on,
or any premium payable on redemption of, or any Additional Amounts
payable with respect to, any such debt security, or reduce the amount
of principal of an Original Issue Discount Security that would be due
and payable upon declaration of acceleration of the maturity thereof
or would be provable in bankruptcy, or adversely affect any right of
repayment of the holder of any such debt security
(3) change the place of payment, or the coin or currency for payment, of
principal (or premium, if any) or interest or Additional Amounts, if
any, on any such debt security
(4) impair the right to institute suit for the enforcement of any payment
on or with respect to any such debt security
(5) release any guarantors from their guarantees of any such debt
securities, or, except as contemplated in any supplemental indenture,
make any change in a guarantee of such debt securities that would
adversely affect the interests of the holders thereof
(6) reduce the percentage in principal amount of outstanding debt
securities of any series necessary to modify or amend the Indenture, to
wave compliance with certain provisions thereof or certain defaults or
consequences thereunder or to reduce the quorum or voting requirements
in the Indenture, or
(7) modify the ranking or priority of such debt securities (Section 902)
The holders of not less than a majority in principal amount of the
outstanding debt securities of each series affected thereby will have the right
to waive compliance by us with certain covenants in such Indenture (Section
1010).
Modifications and amendments of an Indenture will be permitted to be made by
us and the Trustee thereunder without the consent of any holder of debt
securities for any of the following purposes:
(1) to evidence the succession of another person to us as obligor under
such Indenture
(2) to add to our covenants for the benefit of the holders of all or any
series of debt securities or to surrender any right or power conferred
upon us in the Indenture
(3) to add Events of Default for the benefit of the holders of all or any
series of debt securities
(4) to add or change any provisions of an Indenture to facilitate the
issuance of, or to liberalize certain terms of, debt securities in
bearer form, or to permit or facilitate the issuance of debt
securities in uncertificated form, provided that such action shall not
adversely affect the interests of the holders of the debt securities
of any series in any material respect
(5) to change or eliminate any provisions of an Indenture, if such change
or elimination becomes effective only when there are no debt
securities outstanding of any series created prior thereto that are
entitled to the benefit of such provision
(6) to secure the debt securities
(7) to establish the form or terms of debt securities of any series
(8) to provide for the acceptance of appointment by a successor Trustee or
facilitate the administration of the trusts under an Indenture by more
than one Trustee
(9) to cure any ambiguity, defect or inconsistency in an Indenture,
provided that such modifications shall not adversely affect the
interests of the holders of debt securities of any series
23
<PAGE>
(10) to supplement any of the provisions of an Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any
series of such debt securities, if such action does not adversely
affect the interests of the holders of the debt securities of any
series in any material respect
(11) to make any change that does not adversely affect the legal rights
under an Indenture of any holder of debt securities of any series
issued thereunder
(12) to add a guarantor of the securities of any series, or
(13) to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture
Act (Section 901)
Ranking
The Senior Securities will constitute part of our Senior Indebtedness (as
defined below) and will rank pari passu with all of our outstanding senior
debt. Except as set forth in the applicable prospectus supplement, the
Subordinated Securities will be subordinated, in right of payment, to the prior
payment in full of the Senior Indebtedness, including the Senior Securities.
However, our obligation to pay the principal of (and premium, if any) and
interest and Additional Amounts (if any) on such Subordinated Securities will
not otherwise be impaired (Section 1603 of the Subordinated Indenture).
In the event of any distribution of our assets in connection with any
dissolution, winding up, liquidation or reorganization of us, whether in a
bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshalling of our assets
and liabilities or otherwise, except a distribution in connection with a
merger, consolidation or sale of assets that complies with the requirements
described above under "Merger, Consolidation or Sale of Assets," the holders of
all Senior Indebtedness will first be entitled to receive payment of the full
amount due thereon before the holders of any of the Subordinated Securities
will be entitled to receive any payment in respect of the Subordinated
Securities. If a payment default occurs and is continuing with respect to any
amount payable in respect of any Senior Indebtedness, or if any event occurs
that would permit the holders of any Senior Indebtedness to accelerate the
maturity thereof, the holders of all Senior Indebtedness will first be entitled
to receive payment of the full amount due thereon before the holders of any of
the Subordinated Securities will be entitled to receive any payment in respect
of the Subordinated Securities. If the principal amount of the Subordinated
Securities of any series is declared due and payable pursuant to the
Subordinated Indenture and such declaration has not been rescinded and
annulled, the holders of all Senior Indebtedness outstanding at the time of
such declaration will first be entitled to receive payment of the full amount
due thereon before the holders of any of the Subordinated Securities will be
entitled to receive any payment in respect of the Subordinated Securities
(Section 1601 of the Subordinated Indenture).
After all Senior Indebtedness is paid in full and until the Subordinated
Securities are paid in full, holders of Subordinated Securities will be
subrogated to the right of holders of Senior Indebtedness to the extent that
distributions otherwise payable to holders of Subordinated Securities have been
applied to the payment of Senior Indebtedness (Section 1602 of the Subordinated
Indenture). By reason of such subordination, in the event of a distribution of
assets upon insolvency, certain of our general creditors may recover more,
ratably, than holders of Subordinated Securities.
Senior Indebtedness will be defined in the Subordinated Indenture as the
principal of (and premium, if any) and interest and Additional Amounts, if any,
on, or substantially similar payments to be made by us in respect of, the
following, whether outstanding at the date of execution of the applicable
Indenture or thereafter incurred, created, guaranteed or assumed, and whether
or not contingent:
(1) any obligation for money borrowed
(2) any obligation evidenced by bonds, debentures, notes, guarantees or
other similar instruments, including, without limitation, any such
obligations incurred in connection with the acquisition of property,
assets or businesses, excluding trade accounts payable made in the
ordinary course of business
24
<PAGE>
(3) any reimbursement obligation with respect to letters of credit,
bankers' acceptances or similar facilities
(4) any obligation issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business, which in either
case are not more than 60 days overdue or which are being contested in
good faith)
(5) any capital lease obligation
(6) the maximum fixed redemption or repurchase price of capital stock
which, by its terms, matures, is mandatorily redeemable or redeemable
at the option of the holder thereof, or is exchangeable for
indebtedness at any time, and, to the extent held by persons other than
us or our Restricted Subsidiaries, the maximum fixed redemption or
repurchase price of any such stock of our Restricted Subsidiaries, at
the time of determination
(7) every obligation under interest rate and currency protection agreements
(8) any attributable indebtedness with respect to any sale and leaseback
transaction and
(9) any obligation of the type referred to in clauses (1) through (8) of
another person and all dividends and distributions of another person
the payment of which, in either case, we have guaranteed or are
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise
in each case other than (i) any such indebtedness, obligation or liability
referred to in clauses (1) through (9) above as to which, in the instrument
creating or evidencing the same pursuant to which the same is outstanding, it
is provided that such indebtedness, obligation or liability is not superior in
right of payment to the Subordinated Securities or ranks equally with the
Subordinated Securities, (ii) any such indebtedness, obligation or liability
which is subordinated to our indebtedness to substantially the same extent as
or to a greater extent than the Subordinated Securities are subordinated, and
(iii) the Subordinated Securities.
Satisfaction and Discharge of the Indentures
We may terminate our obligations under either Indenture with respect to debt
securities of any series when:
(1) either (A) all outstanding debt securities of such series have been
delivered to the Trustee for cancellation or (B) all debt securities of
such series not theretofore delivered to the Trustee for cancellation
have become due and payable, will become due and payable at their
Stated Maturity within one year or, if redeemable at our option, are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by
the Trustee in our name and at our expense, and we have irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire indebtedness on such debt
securities not theretofore delivered to the Trustee for cancellation,
for the principal of (and premium, if any,) and interest and Additional
Amounts, if any, to the date of deposit or Stated Maturity or date of
redemption,
(2) we have paid or caused to be paid all sums payable by us under such
Indenture, and
(3) we have delivered a Company Certificate and an Opinion of Counsel
relating to compliance with the conditions set forth in such Indenture
(Section 401).
Defeasance and Covenant Defeasance
Each Indenture will provide that, if the provisions relating to defeasance or
covenant defeasance or both are made applicable to the debt securities of or
within any series, we may elect either:
(1) to defease and be deemed to have paid and be discharged from any and
all obligations with respect to such debt securities, which we refer to
as defeasance (except for the obligation to pay additional amounts, if
any, upon the occurrence of certain events of tax, assessment or
governmental charge
25
<PAGE>
with respect to payments on such debt securities, and the obligations to
register the transfer or exchange of such debt securities, to replace
temporary or mutilated, destroyed, lost or stolen debt securities, to
maintain an office or agency in respect of such debt securities and to
hold moneys for payment in trust) (Section 1402), or
(2) to be released from our obligations with respect to such debt
securities under certain specified covenants contained in Article Ten
of such Indenture and, if so specified in any supplemental indenture
relating to a series of debt securities, from any obligations arising
under additional covenants applicable to such series of debt
securities, all as described in the applicable prospectus supplement,
and any omission to comply with such obligations shall not constitute
an Event of Default with respect to such debt securities, which we
refer to as covenant defeasance (Section 1403)
in either case upon the irrevocable deposit by us with the applicable Trustee,
in trust, of an amount, in such currency or currencies, currency unit or units
or composite currency or currencies in which such debt securities are payable
at stated maturity, or government obligations, or both, applicable to such debt
securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient without
reinvestment to pay the principal of (and premium, if any) and interest and
Additional Amounts, if any, on such debt securities, and any mandatory sinking
fund or analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other things,
we have delivered to the applicable Trustee an opinion of counsel (as specified
in the applicable Indenture) to the effect that the holders of such debt
securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or 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 defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, will be required to refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture (Section 1404).
The applicable prospectus supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for Class A common stock, preferred stock, or other debt
securities, including the initial conversion price or conversion rate, any
adjustments to such conversion price or conversion rate and the conversion
period, and the conditions upon which such conversion will be effected, will be
set forth in the applicable prospectus supplement. Such terms may include
provisions for conversion or exchange to be either mandatory or at the option
of the holders or ourselves.
Redemption and Repurchase
The debt securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be subject
to repurchase by us at the option of the holders, in each case upon the terms,
at the times and at the prices set forth in the applicable prospectus
supplement.
Global Securities
The debt securities of a series may be issued in whole or in part in the form
of one or more global securities, which we refer to as the Global Securities,
to be deposited with, or on behalf of, a depository identified in the
applicable prospectus supplement relating to such series. Global Securities may
be issued in either registered or bearer form and in either temporary or
permanent form. The specific terms of the depository arrangement with respect
to a series of debt securities will be described in the applicable prospectus
supplement relating to such series.
26
<PAGE>
DESCRIPTION OF WARRANTS
General
We may issue, together with other securities or separately, warrants to
purchase our debt securities, Class A common stock, Class B common stock,
preferred stock or depositary shares. We will issue the warrants under Warrant
Agreements to be entered into between us and a bank or trust company, as
warrant agent, all as shall be set forth in the applicable prospectus
supplement. The warrant agent will act solely as our agent in connection with
the warrants of the series being offered and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners
of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of warrants in respect of which this prospectus is being
delivered:
(1) the title of the warrants
(2) the designation, amount and terms of the securities for which the
warrants are exercisable and the procedures and conditions relating to
the exercise of such warrants
(3) the designation and terms of the other securities, if any, with which
the warrants are to be issued and the number of warrants issued with
each such security
(4) the price or prices at which the warrants will be issued
(5) the aggregate number of warrants
(6) any provisions for adjustment of the number or amount of securities
receivable upon exercise of the warrants or the exercise price of the
warrants
(7) the price or prices at which the securities purchasable upon exercise
of the warrants may be purchased
(8) if applicable, the date on and after which the warrants and the
securities purchasable upon exercise of the warrants will be
separately transferable
(9) if applicable, a discussion of the material United States federal
income tax considerations applicable to the exercise of the warrants
(10) any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants
(11) the date on which the right to exercise the warrants shall commence,
and the date on which the right shall expire
(12) the maximum or minimum number of warrants which may be exercised at
any time
(13) information with respect to book-entry procedures, if any
Exercise of Warrants
Each warrant will entitle the holder thereof to purchase for cash the amount
of debt securities, shares of preferred stock, shares of Class A common stock,
shares of Class B common stock or depositary shares at the exercise price as
shall in each case be set forth in, or be determinable as set forth in, the
applicable prospectus supplement. Warrants may be exercised at any time up to
the close of business on the expiration date set forth in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants will become void.
27
<PAGE>
Warrants may be exercised as set forth in the applicable prospectus
supplement relating to the warrants offered thereby. Upon receipt of payment
and the warrant certificate properly completed and duly executed at the
corporate trust office of the warrant agent or any other office indicated in
the applicable prospectus supplement, we will, as soon as practicable, forward
the purchased securities. If less than all of the warrants represented by the
warrant certificate are exercised, a new warrant certificate will be issued for
the remaining warrants.
28
<PAGE>
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating holders
to purchase from us, and obligating us to sell to the holders, a specified
number of shares of Class A common stock, Class B common stock or preferred
stock at a future date or dates. The price per share of Class A common stock,
Class B common stock or preferred stock may be fixed at the time the stock
purchase contracts are issued or may be determined by a specific reference to a
formula set forth in the stock purchase contracts. The stock purchase contracts
may be issued separately or as part of stock purchase units consisting of (1) a
stock purchase contract and (2) debt securities, preferred securities or debt
obligations of third parties, including U.S. Treasury securities, securing the
holders' obligations to purchase the Class A common stock, Class B common stock
or the preferred stock under the stock purchase contracts. The stock purchase
contracts may require us to make periodic payments to the holders of the stock
purchase units or vice versa, and such payments may be unsecured or prefunded
on some basis. The stock purchase contracts may require holders to secure their
obligations thereunder in a specified manner.
Unless otherwise specified in the applicable prospectus supplement, the
securities related to the stock purchase contracts will be pledged to a
collateral agent, for our benefit, pursuant to a pledge agreement. The pledged
securities will secure the obligations of holders of stock purchase contracts
to purchase Class A common stock, Class B common stock or preferred stock under
the related stock purchase contracts. The rights of holders of stock purchase
contracts to the related pledged securities will be subject to our security
interest in those pledged securities. That security interest will be created by
the pledge agreement. No holder of stock purchase contracts will be permitted
to withdraw the pledged securities related to such stock purchase contracts
from the pledge arrangement except upon the termination or early settlement of
the related stock purchase contracts. Subject to that security interest and the
terms of the purchase contract agreement and the pledge agreement, each holder
of a stock purchase contract will retain full beneficial ownership of the
related pledged securities.
Except as described in the applicable prospectus supplement, the collateral
agent will, upon receipt of distributions on the pledged securities, distribute
such payments to us or a purchase contract agent, as provided in the pledge
agreement. The purchase contract agent will in turn distribute payments it
receives as provided in the stock purchase contract. The applicable prospectus
supplement will describe the terms of any stock purchase contracts or stock
purchase units.
29
<PAGE>
DESCRIPTION OF SUBSCRIPTION RIGHTS
General
We may issue subscription rights to purchase our debt securities, Class A
common stock, Class B common stock, preferred stock, depositary shares or
warrants to purchase debt securities, preferred stock, Class A common stock or
Class B common stock. We may issue subscription rights independently or
together with any other offered security. The subscription rights may or may
not be transferable by the purchaser receiving the subscription rights. In
connection with any subscription rights offering to our stockholders, we may
enter into a standby underwriting arrangement with one or more underwriters
pursuant to which the underwriter(s) will purchase any offered securities
remaining unsubscribed for after the subscription rights offering. In
connection with a subscription rights offering to our stockholders,
certificates evidencing the subscription rights and a prospectus supplement
will be distributed to our stockholders on the record date for receiving
subscription rights in the subscription rights offering set by us.
The applicable prospectus supplement will describe the following terms of
subscription rights in respect of which this prospectus is being delivered:
(1) the title of the subscription rights
(2) the securities for which the subscription rights are exercisable
(3) the exercise price for the subscription rights
(4) the number of subscription rights issued to each stockholder
(5) the extent to which the subscription rights are transferable
(6) if applicable, a discussion of the material United States federal
income tax considerations applicable to the issuance or exercise of
the subscription rights
(7) any other terms of the subscription rights, including terms,
procedures and limitations relating to the exchange and exercise of
the subscription rights
(8) the date on which the right to exercise the subscription rights shall
commence, and the date on which the right shall expire
(9) the extent to which the subscription rights include an over-
subscription privilege with respect to unsubscribed securities
(10) if applicable, the material terms of any standby underwriting
arrangement entered into by us in connection with the subscription
rights offering
Exercise Of Subscription Rights
Each subscription right will entitle the holder of subscription rights to
purchase for cash the principal amount of debt securities, shares of preferred
stock, depositary shares, Class A common stock, Class B common stock, warrants
or any combination thereof, at the exercise price as shall in each case be set
forth in, or be determinable as set forth in, the applicable prospectus
supplement. Subscription rights may be exercised at any time up to the close of
business on the expiration date for such subscription rights set forth in the
applicable prospectus supplement. After the close of business on the expiration
date, all unexercised subscription rights will become void.
Subscription rights may be exercised as set forth in the applicable
prospectus supplement. Upon receipt of payment and the subscription rights
certificate properly completed and duly executed at the corporate trust office
of the subscription rights agent or any other office indicated in the
prospectus supplement, we will, as soon as practicable, forward the debt
securities, shares of preferred stock, Class A common stock or Class B common
stock, depositary shares or warrants purchasable upon such exercise. In the
event that not all of the subscription rights issued in any offering are
exercised, we may determine to offer any unsubscribed offered securities
directly to persons other than stockholders, to or through agents, underwriters
or dealers or through a combination of such methods, including pursuant to
standby underwriting arrangements, as set forth in the applicable prospectus
supplement.
30
<PAGE>
PLAN OF DISTRIBUTION
The following summary of our plan for distributing the securities offered
under this prospectus will be supplemented by a description of our specific
plan for each offering in the applicable prospectus supplement relating to
such offering. Such description will include, among other things, the terms of
the underwriting arrangements applicable to such offering.
We may sell the securities in any of the following ways, or in any
combination thereof, as follows:
. through underwriters or dealers
. directly to one or more purchasers
. through agents
A prospectus supplement will set forth the terms of the offering of the
securities offered thereby, including:
. the name or names of any underwriters and the respective amounts of such
securities underwritten or purchased by each of them
. the purchase price of such securities and the proceeds to us
. any discounts, commissions or concessions allowed or paid to dealers
constituting underwriters' compensation, to the purchase price
. any securities exchanges or markets on which such securities may be listed or
quoted
If underwriters are used in the sale of any securities, such securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. Such securities may be either offered to the public through
underwriting syndicates represented by one or more managing underwriters, or
directly by one or more underwriters. Only underwriters named in such
prospectus supplement are deemed to be underwriters in connection with the
securities offered thereby. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase such
securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all of such securities if any are
purchased. Any purchase price and any discounts or concessions allowed or paid
to dealers may be changed from time to time.
The securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities
in respect of which a prospectus supplement is delivered will be named, and
any commissions payable by us to such agent will be set forth, in the
prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers by institutional investors
to purchase the securities from us at the public offering price set forth in
the prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. There may be
limitations on the minimum amount which may be purchased by any such
institutional investor or on the portion of the aggregate principal amount of
the particular securities which may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and such other
institutions as may be approved by us. The obligations of any such purchasers
pursuant to such delayed delivery and payment arrangements will be subject
only to those
31
<PAGE>
conditions set forth in the prospectus supplement, and the prospectus
supplement will set forth the commission payable for solicitation of such
contracts. Underwriters, dealers or agents will not have any responsibility in
respect of the validity of such arrangements or the performance of McLeodUSA or
such institutional investors thereunder.
Securities offered other than Class A common stock may be a new issue of
securities with no established trading market. Unless otherwise indicated in
the applicable prospectus supplement, we do not intend to list any offered
securities other than our Class A common stock on any securities exchange or
other market. Any underwriters to whom such securities are sold by us for
public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the
liquidity of or the trading markets for any such securities.
Agents and underwriters may be entitled under agreements entered into with us
to indemnification by us against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the agents, dealers or underwriters may be required to make
in respect thereof. Agents, dealers and underwriters may be customers of,
engage in transactions with, or perform services for us in the ordinary course
of business.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
McLeodUSA by Hogan & Hartson L.L.P., Washington, D.C., special counsel for
McLeodUSA.
EXPERTS
The consolidated financial statements and schedule of McLeodUSA and
subsidiaries as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of Ovation Communications, Inc. as of
December 31, 1998 and 1997 and for the period from March 27, 1997 (inception)
to December 31, 1997 and the year ended December 31, 1998 incorporated by
reference in this registration statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report, and are incorporated
by reference herein in reliance upon such report given upon the authority of
said firm as experts in accounting and auditing.
32
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $486,500
Fees of Rating Agencies.......................................... 20,000
Printing and Duplicating Expenses................................ 150,000
Legal Fees and Expenses.......................................... 150,000
Accounting Fees and Expenses..................................... 50,000
NASD Fees........................................................ 35,000
Blue Sky Fees and Expenses....................................... 15,000
Miscellaneous.................................................... 43,500
--------
Total.......................................................... $950,000
</TABLE>
Item 15. Indemnification of Directors and Officers
Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and
its former directors, officers, employees and agents and those who serve, at
the corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have
had no reasonable cause to believe his or her conduct was unlawful. In
addition, the DGCL does not permit indemnification in an action or suit by or
in the right of the corporation, where such person has been adjudged liable to
the corporation, unless, and only to the extent that, a court determines that
such person fairly and reasonably is entitled to indemnity for costs the court
deems proper in light of liability adjudication. Indemnity is mandatory to the
extent a claim, issue or matter has been successfully defended.
The Amended and Restated Certificate of Incorporation of the Company (the
"Restated Certificate") contains provisions that provide that no director of
the Company shall be liable for breach of fiduciary duty as a director except
for (1) any breach of the directors' duty of loyalty to the Company or its
stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (3) liability under
Section 174 of the DGCL; or (4) any transaction from which the director
derived an improper personal benefit. The Restated Certificate contains
provisions that further provide for the indemnification of directors and
officers to the fullest extent permitted by the DGCL. Under the Bylaws of the
Company, the Company is required to advance expenses incurred by an officer or
director in defending any such action if the director or officer undertakes to
repay such amount if it is determined that the director or officer is not
entitled to indemnification. In addition, the Company has entered into
indemnity agreements with each of its directors pursuant to which the Company
has agreed to indemnify the directors as permitted by the DGCL. The Company
has obtained directors and officers liability insurance against certain
liabilities, including liabilities under the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
*1.1 Form of Debt Securities Underwriting Agreement.
*1.2 Form of Common Stock Underwriting Agreement.
*1.3 Form of Preferred Stock Underwriting Agreement.
*1.4 Form of Depositary Shares Underwriting Agreement.
*1.5 Form of Warrants Underwriting Agreement.
*1.6 Form of Subscription Rights Underwriting Agreement.
1.7 Form of Underwriting Agreement between McLeodUSA Incorporated and
Salomon Smith Barney Inc., Goldman, Sachs & Co. and Morgan Stanley &
Co. Incorporated relating to the % Series A Cumulative Convertible
Preferred Stock of McLeodUSA Incorporated.
3.1 Amended and Restated Certificate of Incorporation of McLeod, Inc.
(Filed as Exhibit 3.1 to Registration Statement on Form S-1, File No.
333-3112 ("Initial Form S-1"), and incorporated herein by reference).
3.2 Amended and Restated Bylaws of McLeod, Inc. (Filed as Exhibit 3.2 to
Registration Statement on Form S-1, File No. 333-13885 (the "November
1996 Form S-1"), and incorporated herein by reference).
3.3 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of McLeod Inc. (Filed as Exhibit 3.3 to Registration
Statement on Form S-4, File No. 333-27647 (the "July 1997 Form S-4"),
and incorporated herein by reference).
3.4 Certificate of Change of Registered Agent and Registered Office of
McLeodUSA Incorporated. (Filed as Exhibit 3.4 to Annual Report on
Form 10-K, File No. 0-20763, filed with the Commission on March 6,
1998 (the "1997 Form 10-K") and incorporated herein by reference).
4.1 Form of Class A Common Stock Certificate of McLeod, Inc. (Filed as
Exhibit 4.1 to Initial Form S-1 and incorporated herein by
reference).
4.2 Indenture dated March 4, 1997 between McLeod, Inc. and United States
Trust Company of New York, as Trustee, relating to the 10 1/2% Senior
Discount Notes Due 2007 of McLeod, Inc. (Filed as Exhibit 4.2 to
Annual Report on Form 10-K, File No. 0-20763, filed with the
Commission on March 31, 1997 (the "1996 Form 10-K") and incorporated
herein by reference).
4.3 Initial Global 10 1/2% Senior Discount Note Due March 1, 2007 of
McLeod, Inc., dated March 4, 1997. (Filed as Exhibit 4.3 to the 1996
Form 10-K and incorporated herein by reference).
4.4 Form of Certificated 10 1/2% Senior Discount Note Due March 1, 2007
of McLeod, Inc. (Filed as Exhibit 4.4 to the 1996 Form 10-K and
incorporated herein by reference).
4.5 Investor Agreement dated as of April 1, 1996 among McLeod, Inc., IES
Investments Inc., Midwest Capital Group Inc., MWR Investments Inc.,
Clark and Mary McLeod, and certain other stockholders. (Filed as
Exhibit 4.8 to Initial Form S-1 and incorporated herein by
reference).
4.6 Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by
and among McLeod, Inc., IES Investments Inc., Midwest Capital Group
Inc., MWR Investments Inc., Clark E. McLeod and Mary E. McLeod.
(Filed as Exhibit 4.3 to the November 1996 Form S-1 and incorporated
herein by reference).
4.7 Form of 10 1/2% Senior Discount Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.8 to the July 1997 Form S-4 and
incorporated herein by reference).
4.8 Indenture dated as of July 21, 1997 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/4% Senior Notes Due 2007 of McLeodUSA Incorporated. (Filed as
Exhibit 4.9 to the July 1997 Form S-4 and incorporated herein by
reference).
4.9 Form of Initial Global 9 1/4% Senior Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.10 to the July 1997 Form S-4 and
incorporated herein by reference).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.10 Stockholders' Agreement dated June 14, 1997 among McLeodUSA
Incorporated, IES Investments Inc., Midwest Capital Group, Inc., MWR
Investments Inc., Clark E. McLeod, Mary E. McLeod and Richard A.
Lumpkin on behalf of each of the shareholders of Consolidated
Communications Inc. listed on Schedule 1 of the Stockholders'
Agreement. (Filed as Exhibit 4.12 to the July 1997 Form S-4 and
incorporated herein by reference).
4.11 Amendment No. 1 to Stockholders' Agreement dated as of September 19,
1997 by and among McLeodUSA Incorporated, IES Investments Inc.,
Midwest Capital Group, Inc., MWR Investments Inc., Clark E. McLeod,
Mary E. McLeod and Richard A. Lumpkin on behalf of each of the
shareholders of Consolidated Communications Inc. listed in Schedule I
thereto. (Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q,
File No. 0-20763, filed with the Commission on November 14, 1997 and
incorporated herein by reference).
4.12 Form of 9 1/4% Senior Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.14 to the 1997 Form 10-K and
incorporated herein by reference).
4.13 Indenture dated as of March 16, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 8 3/8% Senior Notes Due 2008 of McLeodUSA Incorporated. (Filed as
Exhibit 4.15 to Registration Statement on Form S-4, File No. 333-
52793 (the "May 1998 Form S-4") and incorporated herein by
reference).
4.14 Form of Global 8 3/8% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.16 to the May 1998 Form S-4 and incorporated
herein by reference).
4.15 Stockholders' Agreement dated as of November 18, 1998 by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod and Richard A. Lumpkin, Gail G. Lumpkin and certain of the
former shareholders of Consolidated Communications Inc. ("CCI") and
certain permitted transferees of the former CCI shareholders in each
case who are listed in Schedule I thereto. (Filed as Exhibit 99.1 to
the Current Report on Form 8-K, File No. 0-20763, filed with the
Commission on November 19, 1998 and incorporated herein by
reference).
4.16 Indenture dated as of October 30, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/2% Senior Notes Due 2008 of McLeodUSA Incorporated (Filed as
Exhibit 4.19 to Registration Statement on Form S-4, File No. 333-
69621 (the "December 1998 Form S-4") and incorporated herein by
reference).
4.17 Form of Global 9 1/2% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.20 to the December 1998 Form S-4 and incorporated
herein by reference).
4.18 Stockholders' Agreement dated as of January 7, 1999, by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod, Richard A. Lumpkin, Gail G. Lumpkin, M/C Investors L.L.C.
and Media/Communications Partners III Limited Partnership (Filed as
Exhibit 4.1 to the Current Report on Form 8-K, File No. 0-20763,
filed with the Commission on January 14, 1999 and incorporated herein
by reference).
4.19 Indenture dated as of February 22, 1999 between McLeodUSA
Incorporated and United States Trust Company of New York, as Trustee,
relating to the 8 1/8% Senior Notes Due 2009 of McLeodUSA
Incorporated (Filed as Exhibit 4.22 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, File No. 0-20763,
filed with the Commission on March 24, 1999 (the "1998 Form 10-K")
and incorporated herein by reference).
4.20 Form of Global 8 1/8% Senior Note Due 2009 of McLeodUSA Incorporated
(Filed as Exhibit 4.23 to the 1998 Form 10-K and incorporated herein
by reference).
4.21 Form of Senior Debt Securities Indenture.
4.22 Form of Subordinated Debt Securities Indenture.
*4.23 Form of Deposit Agreement.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.24 Form of Certificate of Designations of the Powers, Preferences and
Relative, Participation, Optional and Other Special Rights of Series A
% Cumulative, Convertible Preferred Stock and Qualifications,
Limitations and Restrictions Thereof.
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of the
securities being registered.
5.2 Opinion of Hogan & Hartson L.L.P. regarding the legality of the Series
A Preferred Stock being registered.
12.1 Statement regarding Computation of Ratios.
12.2 Statement regarding Computation of Ratios.
21.1 Subsidiaries of McLeodUSA Incorporated (Filed as Exhibit 21.1 to the
1998 Form 10-K and incorporated herein by reference).
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young LLP.
24.1 Power of attorney (included on signature page).
25.1 Statement on Form T-1 of Eligibility of Trustee for the Senior Debt
Securities.
25.2 Statement on Form T-1 of Eligibility of Trustee for the Subordinated
Debt Securities.
27.1 Financial Data Schedule (Filed as Exhibit 27.1 to the Quarterly Report
on Form 10-Q, File No. 0-20763, filed with the Commission on May 17,
1999 and incorporated herein by reference).
</TABLE>
- --------
* To be incorporated by reference herein in connection with the offering of
each series of securities.
(b) Financial Statement Schedules.
The following financial statement schedule was filed with the Company's
Annual Report on Form 10-K (File No. 0-20763), filed with the Commission on
March 24, 1999, as amended by Form 10-K/A filed on April 22, 1999 and is
incorporated herein by reference:
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because they are inapplicable
or the information required to be set forth therein is contained, or
incorporated by reference, in the Consolidated Financial Statements of the
Company or notes thereto.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement;
II-4
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Act of 1934 that are
incorporated by reference in this registration statement.
(2) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the Securities offered herein, and the
offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of
the subscription offer, the transactions by the underwriters during the
subscription period, the amount of unsubscribed securities to be purchased by
the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from
those set forth on the cover page of the prospectus, a post-effective
amendment will be filed to set forth the terms of such offering.
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 under Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 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 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 against the Registrant by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of each issue.
The undersigned Registrant hereby undertakes to file an application for
purposes of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cedar Rapids, Iowa, on
this 4th day of August, 1999.
McLeodUSA Incorporated
/s/ Clark E. McLeod
By: _________________________________
Clark E. McLeod
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons, in the capacities
indicated below, on this 4th day of August, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Clark E. McLeod Chairman, Chief Executive Officer
______________________________________ and Director (Principal Executive
Clark E. McLeod Officer)
* Vice Chairman and Director
______________________________________
Richard A. Lumpkin
* President, Chief Operating Officer
______________________________________ and Director
Stephen C. Gray
* Group Vice President and Director
______________________________________
Blake O. Fisher, Jr.
* Group Vice President, Chief
______________________________________ Financial Officer and Treasurer
J. Lyle Patrick (Principal Financial Officer and
Principal Accounting Officer)
Director
______________________________________
Anne K. Bingaman
* Director
______________________________________
Peter H.O. Claudy
* Director
______________________________________
Thomas M. Collins
* Director
______________________________________
Robert J. Currey
* Director
______________________________________
Lee Liu
* Director
______________________________________
Paul D. Rhines
* Director
______________________________________
Roy A. Wilkens
</TABLE>
*By: /s/ Clark E. McLeod
-------------------------------
Clark E. McLeod
Attorney-In-Fact
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
*1.1 Form of Debt Securities Underwriting Agreement.
*1.2 Form of Common Stock Underwriting Agreement.
*1.3 Form of Preferred Stock Underwriting Agreement.
*1.4 Form of Depositary Shares Underwriting Agreement.
*1.5 Form of Warrants Underwriting Agreement.
*1.6 Form of Subscription Rights Underwriting Agreement.
1.7 Form of Underwriting Agreement between McLeodUSA Incorporated and
Salomon Smith Barney Inc., Goldman, Sachs & Co. and Morgan Stanley &
Co. Incorporated relating to the % Series A Cumulative Convertible
Preferred Stock of McLeodUSA Incorporated.
3.1 Amended and Restated Certificate of Incorporation of McLeod, Inc.
(Filed as Exhibit 3.1 to Registration Statement on Form S-1, File No.
333-3112 ("Initial Form S-1"), and incorporated herein by reference).
3.2 Amended and Restated Bylaws of McLeod, Inc. (Filed as Exhibit 3.2 to
Registration Statement on Form S-1, File No. 333-13885 (the "November
1996 Form S-1"), and incorporated herein by reference).
3.3 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of McLeod Inc. (Filed as Exhibit 3.3 to Registration
Statement on Form S-4, File No. 333-27647 (the "July 1997 Form S-4"),
and incorporated herein by reference).
3.4 Certificate of Change of Registered Agent and Registered Office of
McLeodUSA Incorporated. (Filed as Exhibit 3.4 to Annual Report on
Form 10-K, File No. 0-20763, filed with the Commission on March 6,
1998 (the "1997 Form 10-K") and incorporated herein by reference).
4.1 Form of Class A Common Stock Certificate of McLeod, Inc. (Filed as
Exhibit 4.1 to Initial Form S-1 and incorporated herein by
reference).
4.2 Indenture dated March 4, 1997 between McLeod, Inc. and United States
Trust Company of New York, as Trustee, relating to the 10 1/2% Senior
Discount Notes Due 2007 of McLeod, Inc. (Filed as Exhibit 4.2 to
Annual Report on Form 10-K, File No. 0-20763, filed with the
Commission on March 31, 1997 (the "1996 Form 10-K") and incorporated
herein by reference).
4.3 Initial Global 10 1/2% Senior Discount Note Due March 1, 2007 of
McLeod, Inc., dated March 4, 1997. (Filed as Exhibit 4.3 to the 1996
Form 10-K and incorporated herein by reference).
4.4 Form of Certificated 10 1/2% Senior Discount Note Due March 1, 2007
of McLeod, Inc. (Filed as Exhibit 4.4 to the 1996 Form 10-K and
incorporated herein by reference).
4.5 Investor Agreement dated as of April 1, 1996 among McLeod, Inc., IES
Investments Inc., Midwest Capital Group Inc., MWR Investments Inc.,
Clark and Mary McLeod, and certain other stockholders. (Filed as
Exhibit 4.8 to Initial Form S-1 and incorporated herein by
reference).
4.6 Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by
and among McLeod, Inc., IES Investments Inc., Midwest Capital Group
Inc., MWR Investments Inc., Clark E. McLeod and Mary E. McLeod.
(Filed as Exhibit 4.3 to the November 1996 Form S-1 and incorporated
herein by reference).
4.7 Form of 10 1/2% Senior Discount Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.8 to the July 1997 Form S-4 and
incorporated herein by reference).
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.8 Indenture dated as of July 21, 1997 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/4% Senior Notes Due 2007 of McLeodUSA Incorporated. (Filed as
Exhibit 4.9 to the July 1997 Form S-4 and incorporated herein by
reference).
4.9 Form of Initial Global 9 1/4% Senior Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.10 to the July 1997 Form S-4 and
incorporated herein by reference).
4.10 Stockholders' Agreement dated June 14, 1997 among McLeodUSA
Incorporated, IES Investments Inc., Midwest Capital Group, Inc., MWR
Investments Inc., Clark E. McLeod, Mary E. McLeod and Richard A.
Lumpkin on behalf of each of the shareholders of Consolidated
Communications Inc. listed on Schedule 1 of the Stockholders'
Agreement. (Filed as Exhibit 4.12 to the July 1997 Form S-4 and
incorporated herein by reference).
4.11 Amendment No. 1 to Stockholders' Agreement dated as of September 19,
1997 by and among McLeodUSA Incorporated, IES Investments Inc.,
Midwest Capital Group, Inc., MWR Investments Inc., Clark E. McLeod,
Mary E. McLeod and Richard A. Lumpkin on behalf of each of the
shareholders of Consolidated Communications Inc. listed in Schedule I
thereto. (Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q,
File No. 0-20763, filed with the Commission on November 14, 1997 and
incorporated herein by reference).
4.12 Form of 9 1/4% Senior Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.14 to the 1997 Form 10-K and
incorporated herein by reference).
4.13 Indenture dated as of March 16, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 8 3/8% Senior Notes Due 2008 of McLeodUSA Incorporated. (Filed as
Exhibit 4.15 to Registration Statement on Form S-4, File No. 333-
52793 (the "May 1998 Form S-4") and incorporated herein by
reference).
4.14 Form of Global 8 3/8% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.16 to the May 1998 Form S-4 and incorporated
herein by reference).
4.15 Stockholders' Agreement dated as of November 18, 1998 by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod and Richard A. Lumpkin, Gail G. Lumpkin and certain of the
former shareholders of Consolidated Communications Inc. ("CCI") and
certain permitted transferees of the former CCI shareholders in each
case who are listed in Schedule I thereto. (Filed as Exhibit 99.1 to
the Current Report on Form 8-K, File No. 0-20763, filed with the
Commission on November 19, 1998 and incorporated herein by
reference).
4.16 Indenture dated as of October 30, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/2% Senior Notes Due 2008 of McLeodUSA Incorporated (Filed as
Exhibit 4.19 to Registration Statement on Form S-4, File No. 333-
69621 (the "December 1998 Form S-4") and incorporated herein by
reference).
4.17 Form of Global 9 1/2% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.20 to the December 1998 Form S-4 and incorporated
herein by reference).
4.18 Stockholders' Agreement dated as of January 7, 1999, by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod, Richard A. Lumpkin, Gail G. Lumpkin, M/C Investors L.L.C.
and Media/Communications Partners III Limited Partnership (Filed as
Exhibit 4.1 to the Current Report on Form 8-K, File No. 0-20763,
filed with the Commission on January 14, 1999 and incorporated herein
by reference).
4.19 Indenture dated as of February 22, 1999 between McLeodUSA
Incorporated and United States Trust Company of New York, as Trustee,
relating to the 8 1/8% Senior Notes Due 2009 of McLeodUSA
Incorporated (Filed as Exhibit 4.22 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, File No. 0-20763,
filed with the Commission on March 24, 1999 (the "1998 Form 10-K")
and incorporated herein by reference).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.20 Form of Global 8 1/8% Senior Note Due 2009 of McLeodUSA Incorporated
(Filed as Exhibit 4.23 to the 1998 Form 10-K and incorporated herein
by reference).
4.21 Form of Senior Debt Securities Indenture.
4.22 Form of Subordinated Debt Securities Indenture.
*4.23 Form of Deposit Agreement.
4.24 Form of Certificate of Designations of the Powers, Preferences and
Relative, Participation, Optional and Other Special Rights of Series A
% Cumulative, Convertible Preferred Stock and Qualifications,
Limitations and Restrictions Thereof.
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of the
securities being registered.
5.2 Opinion of Hogan & Hartson L.L.P. regarding the legality of the Series
A Preferred Stock being registered.
12.1 Statement regarding Computation of Ratios.
12.2 Statement regarding Computation of Ratios.
21.1 Subsidiaries of McLeodUSA Incorporated (Filed as Exhibit 21.1 to the
1998 Form 10-K and incorporated herein by reference).
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young LLP.
24.1 Power of attorney (included on signature page).
25.1 Statement on Form T-1 of Eligibility of Trustee for the Senior Debt
Securities.
25.2 Statement on Form T-1 of Eligibility of Trustee for the Subordinated
Debt Securities.
27.1 Financial Data Schedule (Filed as Exhibit 27.1 to the Quarterly Report
on Form 10-Q, File No. 0-20763, filed with the Commission on May 17,
1999 and incorporated herein by reference).
</TABLE>
- --------
* To be incorporated by reference herein in connection with the offering of
each series of securities.
3
<PAGE>
EXHIBIT 1.7
MCLEODUSA INCORPORATED
400,000 Shares
___% Series A Cumulative Convertible Preferred Stock
($.01 par value)
UNDERWRITING AGREEMENT
August __, 1999
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
As Representatives of the several Underwriters
c/o Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Dear Ladies and Gentlemen:
McLeodUSA Incorporated, a corporation organized under the laws of the State
of Delaware (the "Company") proposes to issue and sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 400,000 shares of ___% Series
A Cumulative Convertible Preferred Stock, $.01 par value ("Series A Preferred
Stock"), of the Company (the "Securities") (said shares to be issued and sold by
the Company being hereinafter called the "Underwritten Securities"). The
Company also proposes to grant to the Underwriters an option to purchase up to
60,000 additional shares of Series A Preferred Stock to cover over-allotments
(the "Option Securities"; the Option Securities, together with the Underwritten
Securities, being hereinafter called the "Securities"). To the extent there are
no additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Any reference herein to the Registration Statement, the Base
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue date of the
Base Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Base Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of any
Preliminary Final Prospectus or the Final Prospectus, as the case may be, deemed
to be
<PAGE>
incorporated therein by reference. Certain terms used herein are defined in
Section 17 hereof.
1. Representations and Warranties.
------------------------------
The Company represents and warrants to, and agrees with, each
Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Act and has prepared and filed with the Commission a registration statement
(File No. 333-82851) on Form S-3, including a related base prospectus,
for registration under the Act of the offering and sale of the Securities.
The Company may have filed one or more amendments thereto, including a
related Preliminary Final Prospectus, each of which has previously been
furnished to you. The Company will next file with the Commission one of
the following: either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement (including
the form of final prospectus supplement), (2) after the Effective Date of
such registration statement, a final prospectus supplement in accordance
with Rules 430A and 424(b) or (3) after the Effective Date of such
registration statement, a post-effective amendment to such registration
statement (including a final prospectus) in accordance with Rules 415 and
424(b). In the case of clause (2), the Company has included in such
registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and the Final
Prospectus. As filed, such final prospectus supplement or such amendment
and form of final prospectus supplement, or such post-effective amendment
and final prospectus supplement shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond
that contained in the Base Prospectus and any Preliminary Final Prospectus)
as the Company has advised you, prior to the Execution Time, will be
included or made therein. The Registration Statement, at the Execution
Time, meets the requirements set forth in Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date on
which Option Securities are purchased, if such date is not the Closing Date
(a "settlement date"), the Final Prospectus (and any supplements thereto),
will comply in all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective Date,
the Final Prospectus, if not filed pursuant to Rule 424(b), will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date
and any settlement date, the Final Prospectus (together with any amendment
or supplement
<PAGE>
thereto) will not, include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
-------- -------
warranties as to the information contained in or omitted from the
Registration Statement or the Final Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion in the Registration
Statement or the Final Prospectus (or any amendment or supplement thereto).
(c) The Company's authorized equity capitalization is as set forth in
the Final Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Final
Prospectus; the outstanding shares of Class A common stock have been duly
and validly authorized and issued and are fully paid and nonassessable; the
Securities are authorized for listing, subject to official notice of
issuance, on the Nasdaq National Market; and the certificates for the
Securities are in valid and sufficient form.
(d) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act,
in connection with the offering of the Securities.
(e) The documents filed by the Company under the Exchange Act and
incorporated by reference in the Final Prospectus, at the time they were
filed with the Commission, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein, in
light of the circumstances under which they were made, or necessary to make
the statements therein not misleading; and any further documents so filed
and incorporated by reference in the Final Prospectus, when such documents
are filed with the Commission, will conform in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein, in light of
the circumstances under which they were made, or necessary to make the
statements therein not misleading.
(f) Since the date of the most recent financial statements included or
incorporated by reference in the Final Prospectus, there has been no
material adverse change, or any development which could reasonably be
expected to result in a material adverse change, in the condition
(financial or other), earnings, business, prospects or properties of the
Company and its subsidiaries, whether or not arising from transactions in
the ordinary course of business, except as set forth in or incorporated by
reference in the Final Prospectus; and, since the respective dates as of
which information is given or incorporated by reference in the Final
Prospectus, there has not been any change in the
<PAGE>
capital stock (other than grants of options and issuances of common stock
in connection with a two-for-one stock split effected as a stock dividend
on July 26, 1999 and the Company's acquisitions of Millenium L.L.C. and
Noverr Publishing, Inc., or pursuant to existing employee stock option
plans, 401(k) plans, stock ownership plans or stock purchase plans,
repurchases by the Company of its common stock in the ordinary course of
business or conversions of outstanding convertible securities) of the
Company or any of its subsidiaries or long-term debt (other than the
issuance of $400 million aggregate principal amount of the Company's __%
senior notes due 2009 being offered concurrently with the Underwritten
Securities, changes in connection with the Company's acquisitions of
Millenium L.L.C. and Noverr Publishing, Inc., changes as a result of
borrowings of the Company or any of its subsidiaries in the ordinary course
of business not exceeding $12,000,000, maturities, regularly scheduled
payments and payments contemplated as a result of the application of
proceeds of the offering of the Securities as described in the Final
Prospectus, amortization of debt discount or currency fluctuations) of the
Company or any of its subsidiaries.
(g) Each of (i) the Company, and (ii) McLeodUSA Telecommunications
Services, Inc., McLeodUSA Network Services, Inc., McLeodUSA Publishing
Company, McLeodUSA Media Group, Inc., McLeodUSA Diversified, Inc., Ruffalo,
Cody & Associates, Inc., Consolidated Communications Inc., Illinois
Consolidated Telephone Company, Consolidated Communications Directories,
Inc., Talking Directories, Inc., Ovation Communications, Inc., Ovation
Communications of Minnesota, Inc., BRE Communications L.L.C. and Dakota
Telecommunications Group, Inc., (individually a "Subsidiary" and
collectively the "Subsidiaries") has been duly incorporated or organized
and is validly existing as a corporation or, as applicable, limited
liability company in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate or organizational
power and authority to own its properties and conduct its business as
described in or incorporated by reference in the Final Prospectus, and is
duly qualified to do business as a foreign corporation or, as applicable,
limited liability company and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure to
be so qualified could not reasonably be expected to have a material adverse
effect on the Company and the Subsidiaries. Except for the Subsidiaries,
the Company has no subsidiaries which, considered in the aggregate as a
single subsidiary, would constitute a "significant subsidiary" as defined
in Rule 1-02(w) of Regulation S-X promulgated under the Act.
(h) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth or incorporated by
reference in the Final Prospectus, as amended or supplemented, all
outstanding shares of capital stock of the Subsidiaries are owned by the
Company, either directly or through wholly owned subsidiaries, free and
clear of any security interests, claims or liens.
(i) Except as disclosed or incorporated by reference in the Final
Prospectus,
<PAGE>
there is no pending or, to the Company's knowledge, threatened action, suit
or proceeding before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries which, if
finally determined adversely to the Company or any of its subsidiaries,
would have a material adverse effect on the condition (financial or other),
earnings, business, prospects or properties of the Company and its
subsidiaries; and the statements in or incorporated by reference in the
Final Prospectus, under the headings "Risk Factors - Our Dependence on
Regional Bell Operating Companies to Provide Most of Our Communications
Services Could Make it Harder for Us to Offer Our Services at a Profit,"
"Risk Factors - Actions by US WEST May Make It More Difficult for Us to
Offer Our Communications Services," and "Business - Legal Proceedings"
fairly summarize the actions, suits and proceedings therein described
except for such changes with respect to such actions, suits and proceedings
which could not have a material adverse effect on the Company and the
statements in or incorporated by reference in the Final Prospectus
concerning stockholders' agreements to which the Company is a party fairly
summarize the franchises, contracts or other documents therein described
except for such changes with respect to such franchises, contracts or other
documents which could not have a material adverse effect on the Company.
(j) This Agreement has been duly authorized, executed and delivered by
the Company.
(k) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated herein, except for the declaration of
effectiveness of the Registration Statement and except such as may be
required under all applicable state securities and blue sky laws of any
jurisdiction and such other approvals as have been obtained.
(l) Neither the issue and sale of the Securities, nor the consummation
of any other of the transactions herein contemplated, nor the fulfillment
of the terms hereof, in each case by the Company, will conflict with,
result in a breach or violation of, or constitute a default under the
charter or by-laws of the Company or the terms of any indenture or other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or bound or (assuming compliance with all applicable state
securities and blue sky laws and that the Registration Statement has been
declared effective and, if required, that the Final Prospectus has been
filed pursuant to Rule 424(b) any law, rule or regulation applicable to the
Company or any of the Subsidiaries or any judgement, order or decree
applicable to the Company or any of its Subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Company or any of its Subsidiaries.
(m) Except as set forth in or incorporated by reference in the Final
Prospectus, no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement that have
not been duly waived.
<PAGE>
(n) Arthur Andersen LLP, who have reported upon the audited financial
statements incorporated by reference in the Final Prospectus, are
independent public accountants within the meaning of the Act and the rules
and regulations of the Commission thereunder.
(o) The consolidated financial statements of the Company and of
certain Subsidiaries included or incorporated by reference in the Final
Prospectus, present fairly the financial position of the Company and its
subsidiaries and such Subsidiaries as of the dates indicated and the
consolidated results of the operations and cash flows of the Company and
its subsidiaries and such Subsidiaries for the periods specified. Such
financial statements (except as disclosed in the notes thereto or otherwise
stated therein) have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire
period involved. The financial statement schedules, if any, included or
incorporated by reference in the Final Prospectus, present fairly the
information stated therein. The selected financial data included or
incorporated by reference in the Final Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited consolidated financial statements included or
incorporated by reference in the Final Prospectus. The pro forma financial
statements and other pro forma financial information included or
incorporated by reference in the Final Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma bases described
therein, and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(p) Neither the Company nor any of the Subsidiaries is in violation of
its charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture or
other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any of the
Subsidiaries is subject, other than defaults (considered in the aggregate)
which could not reasonably be expected to have a material adverse effect on
the condition (financial or other), earnings, business, prospects or
properties of the Company and its subsidiaries.
(q) The Company and the Subsidiaries possess adequate certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them and are in compliance in all material respects with all
such certificates, authorities and permits. Neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit,
other than any such revocation or modification that could not reasonably be
expected to, singly or in the aggregate, have a material adverse effect on
the condition (financial or
<PAGE>
other), earnings, business, prospects or properties of the Company and its
subsidiaries.
(r) The Company and its subsidiaries have timely filed all United
States federal income tax returns and all other material tax returns which
are required to be filed by them and have paid all taxes due and payable
(other than taxes, the payment of which are being contested in good faith),
and no tax liens have been filed and no claims are being asserted with
respect to any such taxes, which could reasonably be expected to have a
material adverse effect on the condition (financial or other), earnings,
business, prospects or properties of the Company and its subsidiaries. The
provisions for taxes on the books of the Company are adequate in all
material respects for all open years and for its current fiscal period.
(s) The Company and the Subsidiaries (A) are in compliance with all
applicable federal, state, local and foreign and other laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (B) have received all permits, licenses and other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (C) are in compliance with all terms and
conditions of any such permit, license and approval, except, in each case,
where such noncompliance with Environmental Law, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals could not
reasonably be expected, singly or in the aggregate, to have a material
adverse effect on the condition (financial or other), earnings, business,
prospects or properties of the Company and its subsidiaries.
(t) The Company and the Subsidiaries have good and marketable title to
all real property and good and valid title to all personal property owned
by them, in each case free and clear of all liens, encumbrances and
defects, and any real property and buildings held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases, except, in each case, for such exceptions as are set
forth or incorporated by reference in the Final Prospectus or which could
not reasonably be expected to have a material adverse effect on the
condition (financial or other), earnings, business, prospects or properties
of the Company and its subsidiaries.
(u) The Company and its subsidiaries own and possess all right, title
and interest in and to, or have duly licensed from third parties a valid,
enforceable right to use, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed
by the Company and its subsidiaries in connection with the business
conducted by them (collectively, "Patent and Proprietary Rights") and
neither the Company nor any of its subsidiaries has received notice of
infringement or misappropriation of or conflict with asserted rights of
others with respect to any Patent and Proprietary Rights, or of any facts
which would render any Patent and Proprietary Rights invalid or inadequate
to protect the
<PAGE>
interest of the Company or of its subsidiaries therein, and which
infringement, misappropriation or conflict or invalidity or inadequacy,
individually or in the aggregate, could reasonably be expected to result in
a material adverse effect on the condition (financial or other), earnings,
business, prospects or properties of the Company and its subsidiaries.
(v) The Company has complied with all provisions of Section 1 of Laws
of Florida, Chapter 92-198 Securities-Business with Cuba.
Any certificate signed by any officer of the Company and delivered to the
Representatives or counsel for the Underwriters in connection with the offering
of the Securities shall be deemed a representation and warranty by the Company,
as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth: the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $______ per
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule II hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
60,000 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after the
date of the Final Prospectus upon written or telegraphic notice by the
Representatives to the Company setting forth the aggregate number of shares of
the Option Securities as to which the several Underwriters are exercising the
option and the settlement date. The number of shares of the Option Securities to
be purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Securities to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Securities,
subject to such adjustments as the Representatives in their absolute discretion
shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
--------------------
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third business day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on August __,
1999, which date and time may be postponed by agreement among the
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of such Securities shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire
<PAGE>
transfer payable in same day funds to an account or accounts specified by the
Company at least one business day prior to of the Closing Date. Delivery of such
Securities shall be made at such location in New York, New York as Salomon Smith
Barney Inc. shall reasonably designate at least one Business Day in advance of
the Closing Date and payment for such Securities shall be made at the offices of
Hogan & Hartson L.L.P., 555 Thirteenth Street, N.W., Washington, D.C. 20004.
Certificates for the Securities shall be registered in such names and in such
denominations as Salomon Smith Barney Inc. may request not less than two
Business Days in advance of the Closing Date.
The Company agrees to have the certificates for the Securities available
for inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 PM on the Business Day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after the
third business day prior to the Closing Date, the Company will deliver to the
Representatives, at 388 Greenwich Street, New York, New York, on the date
specified by the Representatives (which shall be within three business days
after exercise of said option), the Option Securities in such names and
denominations as the Representatives shall have requested at least two business
days in advance of the settlement date against payment of the purchase price
thereof to or upon the order of the Company by wire transfer payable in same day
funds to an account specified by the Company at least one business day in
advance of the settlement date. The Company agrees to have the certificates for
the Option Securities available for inspection, checking and packaging by the
Representatives in New York, New York, not later than 1:00 p.m. on the business
day prior to the settlement date. If settlement for the Option Securities
occurs after the Closing Date, the Company will deliver to the Representatives
on the settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon receipt
of, supplemental opinions, certificates and letters confirming as of such date
the opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
------------------------
Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Prospectus.
5. Agreements.
----------
The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement (including the Final Prospectus or any Preliminary
Final Prospectus) to the Base Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, if the
Registration Statement has
<PAGE>
become or becomes effective pursuant to Rule 430A, or filing of the Final
Prospectus is otherwise required under Rule 424(b), the Company will cause
the Final Prospectus, properly completed, and any supplement thereto to be
filed with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company will
promptly advise the Representatives (A) when the Registration Statement, if
not effective at the Execution Time, shall have become effective, (B) when
the Final Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(C) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (D) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement or for any supplement to the Final Prospectus or for any
additional information with respect to the Registration Statement or the
Final Prospectus, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend the
Registration Statement or supplement the Final Prospectus to comply with
the Act or the Exchange Act or the respective rules thereunder, the Company
promptly will (1) notify the Representatives of such event, (2) prepare and
file with the Commission, subject to the second sentence of paragraph (a)
of this Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance and (3) supply any
supplemented Final Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as reasonably practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Registration Statement
<PAGE>
(without exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of each
Preliminary Final Prospectus and the Final Prospectus and any supplement
thereto as the Representatives may reasonably request. The Company will pay
the expenses of printing or other production of all documents relating to
the offering.
(e) The Company will cooperate with the Representatives and counsel
for the Underwriters for the qualification of the Securities for sale under
the laws of such jurisdictions as the Representatives may designate, will
maintain such qualifications in effect so long as required for the
distribution of the Securities and will pay any fee of the National
Association of Securities Dealers, Inc. in connection with its review of
the offering; provided, however, that in no event shall the Company be
-------- -------
obligated to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Securities, in any jurisdiction where it is not now so subject.
(f) Unless this Agreement shall be terminated prior to the Closing
Date, the Company will not, without the prior written consent of Salomon
Smith Barney Inc., offer, sell, contract to sell, pledge, or otherwise
dispose of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any shares of Class A common stock or any securities convertible into,
or exercisable, or exchangeable for, shares of Class A common stock;
or publicly announce an intention to effect any such transaction, for a
period of 90 days after the date of this Agreement, provided, however, that
-------- -------
the Company may (A) issue and sell Class A common stock or securities
convertible into or exchangeable or exercisable for or repayable with Class
A common stock in connection with acquisitions or any employee or director
benefit or stock purchase or stock option plans, (B) grant or award Class A
common stock, options to purchase Class A common stock, or other securities
convertible into or exchangeable for or repayable with Class A common stock
in connection with acquisitions or under such plans, as such plans are in
effect at the Execution Time, (C) issue Class A common stock issuable upon
the conversion of securities or the exercise of warrants outstanding at the
Execution Time or issued, sold, granted or awarded pursuant to this proviso
and (D) take any other actions necessary in connection with any of the
foregoing in order to register such securities or Class A common stock
with the Commission under the Act.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any
<PAGE>
security of the Company to facilitate the sale or resale of the Securities.
6. Conditions to the Obligations of the Underwriters. The obligations of
-------------------------------------------------
the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
will be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have furnished to the Representatives the
opinion of counsel for the Company, dated the Closing Date, substantially
in the form of Exhibit A.
(c) The Company shall have furnished to the Representatives the
opinion of Swidler Berlin Shereff Friedman, LLP, special counsel to the
Company on regulatory matters, dated the Closing Date, to the effect that:
(i) the statements in or incorporated by reference in the Final
Prospectus under the headings "Risk Factors - Competition in the
Communications Services Industry Could Cause Us to Lose Customers and
Revenue and Could Make it More Difficult for Us to Enter New Markets,"
"Risk Factors - We May Not Succeed in Developing or Making a Profit
from Wireless Services," "Risk Factors - Competition in the Wireless
Telecommunications Industry Could Make it Harder for Us to
Successfully Offer Wireless Services," "Risk Factors - Government
Regulation May Increase Our Cost of Providing Services, Slow Our
Expansion into New Markets and Subject Our Services to Additional
Competitive Pressures," "Business - Market Potential," "Business -
Expansion of Services Using Our Own Communications Network
Facilities," "Business - Proposed Wireless Services," "Business -
Competition" and "Business - Regulation" fairly and accurately
summarize the laws, case law, rules, regulations and orders of the
Federal Communications Commission ("FCC") and
<PAGE>
the comparable state regulatory agencies or bodies with direct
regulatory jurisdiction over telecommunications matters in the states
in which the Company and any of the Subsidiaries provide intrastate
services (the "State Regulatory Agencies") except for such changes
with respect to such laws, case law, rules, regulations and orders
which could not have a material adverse effect on the Company and, to
the best knowledge of such counsel, the statements in or incorporated
by reference in the Final Prospectus under the headings "Risk
Factors - Our Dependence on Regional Bell Operating Companies to
Provide Most of Our Communications Services Could Make it Harder for
Us to Offer Our Services at a Profit," "Risk Factors - Actions by US
WEST May Make it More Difficult for Us to Offer Our Communications
Services" and "Legal Proceedings" fairly and accurately summarize the
legal proceedings set forth therein with respect to US WEST
Communications, Inc. except for such changes with respect to such
legal proceedings and action which could not have a material adverse
effect on the Company;
(ii) the Company and the Subsidiaries possess all material
certificates, authorities and permits required by the FCC and State
Regulatory Agencies for the provision of the telecommunications
services currently provided by the Company and the Subsidiaries,
except where the failure to possess such certificates, authorities or
permits could not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries; and the Company and the
Subsidiaries are in compliance in all material respects with such
certificates, authorities and permits;
(iii) to the best knowledge of such counsel, neither the Company
nor any of the Subsidiaries is subject to any pending or threatened
action, suit or proceeding before the FCC or any State Regulatory
Agency or (with respect to federal or state telecommunications laws)
any court which could reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, except as
disclosed in or incorporated by reference in the Final Prospectus;
(iv) no consent, approval, authorization or order of the FCC or
any State Regulatory Agency is required for the sale of the Securities
or the consummation of the transactions contemplated hereby; and
(v) neither the sale of the Securities nor the consummation of
the transactions contemplated hereby will result in a breach or
violation of any law, rule, regulation, judgment, order or decree of
the FCC or any State Regulatory Agency applicable to the Company or
any of the Subsidiaries.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper and reasonable, on certificates of public
officials and responsible officers of the Company, including certificates
that define the scope of the telecommunications services provided by the
Company and the Subsidiaries.
<PAGE>
(d) The Representatives shall have received from Mayer, Brown & Platt,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the
Registration Statement, the Final Prospectus (together with any amendment
or supplement thereof or thereto) and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Final Prospectus,
any amendment or supplement to the Final Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) the Registration Statement has become effective under the
Act; any required filing of the Final Prospectus, and any supplement
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or, to
the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus
(exclusive of any supplement thereto), there has been no material
adverse change in the condition (financial or other), earnings,
business, prospects or properties of the Company and its subsidiaries,
whether or not arising from transactions in the ordinary course of
business, except as set forth, incorporated by reference or
contemplated in the Final Prospectus (exclusive of any supplement
thereto).
(f) At the Execution Time and at the Closing Date, Arthur Andersen LLP
shall have furnished to the Representatives a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act
and the respective applicable published rules and regulations thereunder
and stating in effect that:
<PAGE>
(i) in their opinion the audited financial statements and
financial statement schedules, if any, included or incorporated by
reference in the Registration Statement or the Final Prospectus and
reported on by them, as applicable, comply in form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and the Audit and Compensation
Committee of the Company and the Subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1998, nothing came
to their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated by reference in the Registration Statement or the Final
Prospectus do not comply in form in all material respects with
applicable accounting requirements of the Act and with the published
rules and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form 10-Q
under the Exchange Act; and said unaudited financial statements are
not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in the
Registration Statement or the Final Prospectus; or
(2) with respect to the period subsequent to March 31, 1999,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the long-term debt
of the Company and its subsidiaries or capital stock of the Company
(except in connection with the issuance of $400 million aggregate
principal amount of the Company's __% senior notes due 2009 being
offered concurrently with the Underwritten Securities, and the
Company's acquisition of Millenium L.L.C. and Noverr Publishing,
Inc.) or decreases in the stockholders' equity of the Company and its
subsidiaries as compared with the amounts shown on the March 31, 1999
consolidated balance sheet included or incorporated by reference in
the Registration Statement and the Final Prospectus, or for the period
from April 1, 1999 to such specified date as compared with the
corresponding period in the preceding year, there were any decreases
in
<PAGE>
revenue or increases in operating loss or net loss of the Company and
its subsidiaries, except in all instances for such changes, decreases
or increases set forth in such letter, in which case the letter shall
be accompanied by an explanation by the Company as to the significance
thereof unless said explanation is not deemed necessary by the
Representatives;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in or incorporated by reference in the Registration Statement or
the Final Prospectus, including the information set forth under the
captions "Selected Consolidated Financial Data", "Pro Forma Financial
Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in or incorporated by reference in the
Registration Statement or the Final Prospectus, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation; and
(iv) on the basis of a reading of the unaudited pro forma
financial statements included or incorporated by reference in the
Registration Statement or the Final Prospectus (the "pro forma
financial statements"); carrying out certain specified procedures;
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters; and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial statements, nothing came
to their attention which caused them to believe that the pro forma
financial statements do not comply in form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
References to the Final Prospectus in this paragraph (f) include any
amendment or supplement thereof or thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any amendment or
supplement thereof or thereto), there shall not have been (i) any change,
decrease or increase specified in the letter or letters referred to in
paragraph (f) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the condition (financial or
otherwise), earnings, business, prospects or properties of the Company and
its subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated
in the Final Prospectus (exclusive of any supplement thereto) the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
<PAGE>
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto).
(h) The Securities shall have been authorized for listing and trading,
subject to official notice of issuance, on the Nasdaq Stock Market's
National Market System, and satisfactory evidence of such actions shall
have been provided to the Representatives.
(i) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from
each officer and director of the Company addressed to the Representatives.
(j) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of Hogan & Hartson L.L.P., Columbia Square, 555 Thirteenth Street,
N.W., Washington, DC 20004, counsel for the Company, at 9:00 a.m., on the
Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
---------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Salomon Smith Barney Inc. upon demand for all reasonable out-
of-pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the proposed purchase and
sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or 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 Act, the Exchange Act or other Federal
<PAGE>
or state statutory law or 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 or incorporated by reference in the Registration
Statement as originally filed or in any amendment thereof, or in the Base
Prospectus, any Preliminary Final Prospectus or the Final 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 such 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 information
furnished in writing to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein; and provided, further,
-------- -------
that the foregoing indemnity agreement with respect to any Preliminary Final
Prospectus or Final Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting or causing any such losses, claims, damages or
liabilities purchased Securities (or to the benefit of any person controlling
such Underwriter or any directors, officers, employees and agents of
such Underwriter), if a copy of the Preliminary Final Prospectus (or the Final
Prospectus as amended or supplemented), if the Company shall have timely
furnished the Underwriters with sufficient copies thereof, was not sent or given
by or on behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale of the
Securities to such person and if the Preliminary Final Prospectus (or the Final
Prospectus as amended or supplemented) would have cured the defect giving rise
to such loss, claim, damage or liability. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished in writing to
the Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the
statements regarding delivery set forth in the last paragraph of the cover page
and under the heading "Underwriting," the list of Underwriters and their
respective participation in the sale of the Securities, the sentences related to
concessions and reallowances and the paragraph related to stabilization,
syndicate covering transactions and penalty bids in any Preliminary Final
Prospectus and the Final Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Final Prospectus or the Final Prospectus, and you, as the
Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of
<PAGE>
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
8, 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
-------- -------
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 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 satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the 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.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason in respect of any and all losses, claims, damages or
liabilities (or actions in respect thereof), the indemnifying party agrees 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 indemnifyied party may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company, on the one hand and by the Underwriters, on the other,
from the offering of the Securities; provided, however, that in no case shall
-------- -------
any Underwriter (except as may be provided in any agreement among Underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the
<PAGE>
Company, and the Underwriters severally shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and of the Underwriters 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 total net proceeds from the offering
(before deducting expenses) received by it and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Final
Prospectus. Relative fault shall be determined by reference to whether any
alleged untrue statement of a material fact or the omission or alleged omission
of a material fact relates to information provided by the Company on the one
hand, or the Underwriters on the other. The Company and the Underwriters 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 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each director of the Company and each
officer who shall have signed the Registration Statement shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall fail
-------------------------
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Underwritten
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Underwritten Securities set forth opposite the names of all
the remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
-------- -------
that the aggregate amount of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Underwritten Securities set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of such Securities, and if such nondefaulting
Underwriters do not purchase all such Securities, this Agreement will terminate
without liability to any nondefaulting Underwriter or the Company. In the event
of a default by any Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
<PAGE>
10. Termination. This Agreement shall be subject to termination in the
-----------
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's Class A common stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or Market, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Final Prospectus (exclusive of
any supplement thereto).
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or sent by facsimile transmission and confirmed to Salomon Smith
Barney Inc., General Counsel (fax no.: (212) 816-7912) and confirmed to the
General Counsel, Salomon Smith Barney Inc., at 388 Greenwich Street, New York,
New York, 10013; or, if sent to the Company, will be mailed, delivered or sent
by facsimile transmission and confirmed to it at McLeodUSA Incorporated,
McLeodUSA Technology Park, 6400 C Street SW, P.O. Box 3177, Cedar Rapids, Iowa
52406, attention of the legal department.
13. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only
--------
and shall not affect the construction hereof.
<PAGE>
17. Definitions. The terms which follow, when used in this Agreement,
-----------
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Base Prospectus" shall mean the base prospectus referred to in the
first sentence of Section 1(a) above contained in the Registration Statement at
the Effective Date.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to
the Securities that was first filed pursuant to Rule 424(b) after the
Execution Time, together with the Base Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Base Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus,
together with the Base Prospectus.
"Registration Statement" shall mean the registration statement
referred to in Section 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
<PAGE>
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and the several Underwriters.
Very truly yours,
MCLEODUSA INCORPORATED
By:
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
By: Salomon Smith Barney Inc.
By:
Name:
Title:
For themselves and the other
several Underwriters, if any,
named in Schedule I.
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares of Number of Shares
Underwritten Securities of Option Securities
Underwriters To Be Purchased To Be Purchased
- ----------------------------------- ----------------------- --------------------
<S> <C> <C>
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Total 400,000 60,000
</TABLE>
<PAGE>
Exhibit A
---------
[Letterhead of officer or director of
McLeodUSA Incorporated]
McLeodUSA Incorporated
Public Offering of Series A Preferred Stock
-------------------------------------------
__________________, 1999
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
As Representative of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between McLeodUSA
Incorporated, a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Series A Preferred Stock, $.01 par value, of the
Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Salomon Smith Barney Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder with respect to, any shares of Class
A common stock of the Company or any securities convertible into or exercisable
or exchangeable for such Class A common stock, or publicly announce an intention
to effect any such transaction, for a period of 90 days after the Agreement is
executed, other than shares of Class A common stock disposed of as bona fide
gifts or pledges where the recipient of such gift or the pledgee, as the case
may be, agrees in writing with the Underwriters to be bound by the terms of this
letter.
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
<PAGE>
Yours very truly,
<PAGE>
EXHIBIT 4.21
================================================================================
MCLEODUSA INCORPORATED
and
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
______________________
Indenture
Dated as of August __, 1999
______________________
Senior Debt Securities
================================================================================
<PAGE>
TABLE OF CONTENTS
=================
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions............................................... 1
Act................................................................. 2
Additional Amounts.................................................. 2
Affiliate........................................................... 2
Authenticating Agent................................................ 2
Authorized Newspaper................................................ 2
Bearer Security..................................................... 2
Board of Directors.................................................. 2
Board Resolution.................................................... 2
Business Day........................................................ 3
Capital Stock....................................................... 3
CEDEL............................................................... 3
Class A Common Stock................................................ 3
Commission.......................................................... 3
Common Depositary................................................... 3
Company............................................................. 3
Company Certificate................................................. 3
Company Request" and "Company Order................................. 3
Conversion Event.................................................... 4
Corporate Trust Office.............................................. 4
corporation......................................................... 4
coupon.............................................................. 4
covenant defeasance................................................. 4
Default............................................................. 4
Defaulted Interest.................................................. 4
defeasance.......................................................... 4
Dollar" or " $...................................................... 4
DTC................................................................. 4
ECU................................................................. 4
Euroclear........................................................... 4
European Communities................................................ 4
European Monetary System............................................ 5
Event of Default.................................................... 5
Exchange Act........................................................ 5
Exchange Date....................................................... 5
Foreign Currency.................................................... 5
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
GAAP................................................................ 5
Government Obligations.............................................. 5
Holder.............................................................. 6
Indenture........................................................... 6
Indexed Security.................................................... 6
interest............................................................ 6
Interest Payment Date............................................... 6
mandatory sinking fund payment...................................... 6
Maturity............................................................ 6
Notice of Default................................................... 6
Opinion of Counsel.................................................. 6
optional sinking fund payment....................................... 7
Original Issue Discount Security.................................... 7
Outstanding......................................................... 7
Paying Agent........................................................ 8
Payment Default..................................................... 8
Person.............................................................. 8
Place of Payment.................................................... 8
Predecessor Security................................................ 8
Property............................................................ 9
Redemption Date..................................................... 9
Redemption Price.................................................... 9
Registered Security................................................. 9
Regular Record Date................................................. 9
Repayment Date...................................................... 9
Repayment Price..................................................... 9
Responsible Officer................................................. 9
Restricted Subsidiary............................................... 9
Securities Act...................................................... 9
Security............................................................ 9
Security Register" and "Security Registrar.......................... 10
Special Record Date................................................. 10
Stated Maturity..................................................... 10
Subsidiary.......................................................... 10
Trust Indenture Act................................................. 10
Trustee............................................................. 10
Trustee Permitted Investments....................................... 10
United States....................................................... 12
United States person................................................ 12
Unrestricted Subsidiary............................................. 12
Voting Stock........................................................ 12
Yield to Maturity................................................... 12
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 102. Compliance Certificates and Opinions.................. 12
SECTION 103. Form of Documents Delivered to Trustee................ 13
SECTION 104. Acts of Holders....................................... 14
SECTION 105. Notices to Trustee and Company........................ 15
SECTION 106. Notice to Holders; Waiver............................. 16
SECTION 107. Effect of Headings and Table of Contents.............. 17
SECTION 108. Successors and Assigns................................ 17
SECTION 109. Separability Clause................................... 17
SECTION 110. Benefits of Indenture................................. 17
SECTION 111. No Personal Liability................................. 17
SECTION 112. Governing Law......................................... 17
SECTION 113. Legal Holidays........................................ 18
SECTION 114. Counterparts.......................................... 18
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities................................... 18
SECTION 202. Form of Trustee's Certificate of Authentication....... 19
SECTION 203. Securities Issuable in Global Form.................... 19
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.................. 20
SECTION 302. Denominations......................................... 24
SECTION 303. Execution, Authentication, Delivery and Dating........ 24
SECTION 304. Temporary Securities.................................. 26
SECTION 305. Registration, Registration of Transfer and Exchange... 29
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...... 32
SECTION 307. Payment of Interest; Interest Rights Preserved........ 34
SECTION 308. Persons Deemed Owners................................. 36
SECTION 309. Cancellation.......................................... 36
SECTION 310. Computation of Interest............................... 37
SECTION 311. CUSIP Numbers......................................... 37
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture............... 37
SECTION 402. Application of Trust Funds............................ 39
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default................................................ 39
SECTION 502. Acceleration of Maturity; Rescission and Annulment............... 41
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.. 42
SECTION 504. Trustee May File Proofs of Claim................................. 43
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities or Coupons............................................ 43
SECTION 506. Application of Money Collected................................... 44
SECTION 507. Limitation on Suits.............................................. 44
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium, Interest and Additional Amounts......................... 45
SECTION 509. Restoration of Rights and Remedies............................... 45
SECTION 510. Rights and Remedies Cumulative................................... 45
SECTION 511. Delay or Omission Not Waiver..................................... 46
SECTION 512. Control by Holders of Securities................................. 46
SECTION 513. Waiver of Past Defaults.......................................... 46
SECTION 514. Waiver of Usury, Stay or Extension Laws.......................... 46
SECTION 515. Undertaking for Costs............................................ 47
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults............................................... 47
SECTION 602. Certain Rights of Trustee........................................ 47
SECTION 603. Not Responsible for Recitals or Issuance of Securities........... 49
SECTION 604. May Hold Securities.............................................. 49
SECTION 605. Money Held in Trust; Trustee Permitted Investments............... 49
SECTION 606. Compensation and Reimbursement................................... 50
SECTION 607. Trustee Eligibility; Conflicting Interests....................... 51
SECTION 608. Resignation and Removal; Appointment of Successor................ 51
SECTION 609. Acceptance of Appointment by Successor........................... 53
SECTION 610. Merger, Conversion, Consolidation or Succession to Business...... 54
SECTION 611. Appointment of Authenticating Agent.............................. 54
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders..................... 56
SECTION 702. Reports by Trustee............................................... 56
SECTION 703. Reports by Company............................................... 56
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders...... 58
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales,
Leases and Conveyances......................................... 58
SECTION 802. Rights and Duties of Successor Entity.......................... 59
SECTION 803. Company Certificate and Opinion of Counsel..................... 59
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders............. 59
SECTION 902. Supplemental Indentures with Consent of Holders................ 61
SECTION 903. Execution of Supplemental Indentures........................... 62
SECTION 904. Effect of Supplemental Indentures.............................. 62
SECTION 905. Conformity with Trust Indenture Act............................ 63
SECTION 906. Reference in Securities to Supplemental Indentures............. 63
SECTION 907. Notice of Supplemental Indentures.............................. 63
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, Interest and
Additional Amounts............................................. 63
SECTION 1002. Maintenance of Office or Agency................................ 63
SECTION 1003. Money for Securities Payments to Be Held in Trust.............. 65
SECTION 1004. Existence...................................................... 66
SECTION 1005. Maintenance of Property........................................ 67
SECTION 1006. [intentionally omitted]........................................ 67
SECTION 1007. Payment of Taxes and Other Claims.............................. 67
SECTION 1008. Statement as to Compliance..................................... 67
SECTION 1009. Additional Amounts............................................. 68
SECTION 1010. Waiver of Certain Covenants.................................... 69
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article....................................... 69
SECTION 1102. Election to Redeem; Notice to Trustee.......................... 69
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.............. 69
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1104. Notice of Redemption......................................... 70
SECTION 1105. Deposit of Redemption Price.................................. 71
SECTION 1106. Securities Payable on Redemption Date........................ 71
SECTION 1107. Securities Redeemed in Part.................................. 72
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article..................................... 72
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities........ 73
SECTION 1203. Redemption of Securities for Sinking Fund.................... 73
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article..................................... 74
SECTION 1302. Repayment of Securities...................................... 74
SECTION 1303. Exercise of Option........................................... 74
SECTION 1304. When Securities Presented for Repayment Become
Due and Payable.............................................. 75
SECTION 1305. Securities Repaid in Part.................................... 76
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance............................ 76
SECTION 1402. Defeasance and Discharge..................................... 76
SECTION 1403. Covenant Defeasance.......................................... 77
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.............. 77
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions................ 79
SECTION 1406. Reinstatement................................................ 80
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.................... 81
SECTION 1502. Call, Notice and Place of Meetings........................... 81
SECTION 1503. Persons Entitled to Vote at Meetings......................... 81
SECTION 1504. Quorum; Action............................................... 82
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings............................ 83
SECTION 1506. Counting Votes and Recording Action of Meetings.... 84
SECTION 1507. Evidence of Action Taken by Holders................ 84
SECTION 1508. Proof of Execution of Instruments.................. 84
</TABLE>
TESTIMONIUM
SIGNATURES
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION
vii
<PAGE>
Reconciliation and tie between
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and Indenture
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
310(a)(1), (2) and (5) 607(a)
310(a)(3) and (4) Not applicable
310(b) 608(d)
310(c) Not applicable
311 Not applicable
312(a) 704
312(b) Not applicable
312(c) 701
313(a) and (c) 702
313(b) Not applicable
314(a)(1), (2) and (3) 703
314(a)(4) 1008
314(b) Not applicable
314(c) and (e) 102
314(d) Not applicable
315(a), (c), (d) and (e) Not applicable
315(b) 601
316(a) (last sentence) 101 ("Outstanding")
316(a)(1)(A) 512
316(a)(1)(B) 513
316(a)(2) and (c) Not applicable
316(b) 508
317(a)(1) 503
317(a)(2) 504
317(b) Not applicable
318(a) 112
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 of the Trust Indenture Act are a part of and govern
every qualified indenture, whether or not physically contained
therein.
viii
<PAGE>
INDENTURE, dated as of August __, 1999, by and between MCLEODUSA
INCORPORATED, a Delaware corporation (hereinafter called the "Company"), having
-------
its principal office at 6400 C Street, S.W., Cedar Rapids, Iowa 52406 and UNITED
STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized under the
New York banking law, as trustee hereunder (hereinafter called the "Trustee"),
-------
currently having its Corporate Trust Office at 114 West 47th Street, New York,
New York 10036.
RECITALS
The Company deems it necessary to issue from time to time for its lawful
purposes senior debt securities (hereinafter called the "Securities") evidencing
----------
its unsecured and unsubordinated indebtedness, and has duly authorized the
execution and delivery of this Indenture to provide for the issuance from time
to time of the Securities, unlimited as to aggregate principal amount, to bear
interest at the rates or formulas, to mature at such times and to have such
other provisions as shall be fixed therefor as hereinafter provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act (as
herein defined) and the rules and regulations of the Commission (as herein
defined) promulgated thereunder which are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders (as herein defined) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions. For all purposes of this Indenture, except as
-----------
otherwise expressly provided or the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and "self-
---------------- ----
liquidating paper," as used in Section 311 of the Trust Indenture Act,
-----------------
shall have the meanings assigned to them in the rules of the Commission
adopted under the Trust Indenture Act;
1
<PAGE>
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP (as herein defined); and
(4) the words "herein," "hereof" and "hereunder" and other words of
------ ------ ---------
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in Section 104(a).
---
"Additional Amounts" means any additional amounts which are required by a
------------------
Security, under circumstances specified therein, to be paid by the Company in
respect of certain taxes imposed on certain Holders and which are owing to such
Holders.
"Affiliate" means, as to any Person, any other Person which directly or
---------
indirectly controls, or is under common control with, or is controlled by, such
Person; provided that each Unrestricted Subsidiary shall be deemed to be an
Affiliate of the Company and of each other Subsidiary of the Company; provided,
further, that, except for the purposes of the definition of "Outstanding" and
Section 607, neither the Company nor any of its Restricted Subsidiaries shall
be deemed to be Affiliates of each other. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling," "under
common control with" and "controlled by"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.
"Authenticating Agent" means any authenticating agent appointed by the
--------------------
Trustee pursuant to Section 611.
"Authorized Newspaper" means a newspaper, printed in the English language
--------------------
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in each place in connection with which the
term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
"Bearer Security" means a Security which is payable to bearer.
---------------
"Board of Directors" means the board of directors of the Company, the
------------------
executive committee or any other committee of such board duly authorized to act
for it in respect hereof.
"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.
2
<PAGE>
"Business Day" when used with respect to any Place of Payment or any other
------------
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
301, any day, other than a Saturday or Sunday, which is neither a legal holiday
nor a day on which banking institutions in such Place of Payment or particular
location are authorized or required by law, regulation or executive order to
close.
"Capital Stock" in any Person means any and all shares, interests,
-------------
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than indebtedness convertible into an
equity interest), warrants or options to subscribe for or acquire an equity
interest in such Person.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or its
-----
successor.
"Class A Common Stock" means the Class A Common Stock, par value $0.01 per
--------------------
share, of the Company.
"clearing agency" has the meaning set forth in Section 3(a)(23) of the
---------------
Exchange Act.
"Commission" means the United States Securities and Exchange Commission,
----------
as from time to time constituted, created under the Exchange Act, or, if at any
time after execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Depositary" has the meaning specified in Section 304(b).
-----------------
"Company" means the Person named as the "Company" in the first paragraph
-------
of this Indenture until a successor corporation has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation, and any other obligor on the Securities.
"Company Certificate" means a certificate signed in the name of the
-------------------
Company by (i) the Chairman of the Board of Directors, a Vice Chairman of the
Board of Directors, the President, the Chief Executive Officer or a Vice
President, and (ii) the Chief Financial Officer, the Chief Accounting Officer,
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
and delivered to the Trustee, which certificate shall comply with the provisions
of Section 102 hereof.
"Company Request" and "Company Order" mean, respectively, a written
--------------- -------------
request or order signed in the name of the Company by (i) the Chairman of the
Board of Directors, a Vice Chairman of the Board of Directors, the President,
the Chief Executive Officer or a Vice President, and (ii) the Chief Financial
Officer, the Chief Accounting Officer, the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary, and delivered to the Trustee.
3
<PAGE>
"Conversion Event" means the cessation of use of (i) a Foreign Currency
----------------
(other than the ECU or other currency unit) both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit (or composite currency) other than the
ECU for the purposes for which it was established.
"Corporate Trust Office" means the principal office of the Trustee in the
----------------------
Borough of Manhattan, The City of New York, New York which at any particular
time its corporate trust business shall be principally administered, which at
the date hereof is located at 114 West 47th Street, New York, New York 10036.
"corporation" includes corporations, associations, companies, real estate
-----------
investment trusts and business trusts.
"coupon" means any interest coupon appertaining to a Bearer Security.
------
"covenant defeasance" has the meaning specified in Section 1403.
-------------------
"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.
------------------
"defeasance" has the meaning specified in Section 1402.
----------
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
------ -
currency of the United States of America as at the time is legal tender for the
payment of public and private debts.
"DTC" means The Depository Trust Company.
---
"ECU" means the European Currency Unit as defined and revised from time to
---
time by the Council of the European Communities.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the European
--------------------
Coal and Steel Community and the European Atomic Energy Community.
4
<PAGE>
"European Monetary System" means the European Monetary System established
------------------------
by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder by the Commission.
"Exchange Date" has the meaning specified in Section 304(b).
-------------
"Foreign Currency" means any currency, currency unit or composite
----------------
currency, including, without limitation, the ECU issued by the government of one
or more countries other than the United States of America or by any recognized
confederation or association of such governments.
"GAAP" means United States generally accepted accounting principles,
----
consistently applied, as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination; provided that, except as otherwise specifically provided herein,
--------
all calculations made for purposes of determining compliance with Section 801
and Article Ten hereof with respect to a series of Securities shall utilize GAAP
as in effect on the date of the original issuance and authentication of the
Securities of such series pursuant to this Indenture.
"Government Obligations" means securities which are (i) direct obligations
----------------------
of the United States of America or the government which issued the Foreign
Currency in which the Securities of a particular series are payable, for the
payment of which its full faith and credit is pledged, or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America or such government which issued the Foreign
Currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of interest
on or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
--------
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
5
<PAGE>
"Holder" when used with respect to a Registered Security, means the Person
------
in whose name such Registered Security is registered in the Security Register
and, when used with respect to a Bearer Security or any coupon, means the bearer
thereof.
"Indenture" means this instrument as originally executed or as it may from
---------
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, and includes
the terms of particular series of Securities established as contemplated by
Section 301; provided, however, that, if at any time more than one Person is
-------- -------
acting as Trustee under this instrument, "Indenture" when used with respect to
any one or more series of Securities with respect to which such Person is acting
as Trustee, shall mean this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of those particular series of Securities with respect to which
such Person is acting as Trustee established as contemplated by Section 301,
exclusive, however, of any provisions or terms which relate solely to other
series of Securities with respect to which such Person is not acting as Trustee,
regardless of when such terms or provisions were adopted, and exclusive of any
provisions or terms adopted by means of one or more indentures supplemental
hereto executed and delivered after such Person had become such Trustee but to
which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that the
----------------
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"interest" when used with respect to an Original Issue Discount Security
--------
which by its terms bears interest only after Maturity, means interest payable
after Maturity, and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1009, includes such Additional
Amounts.
"Interest Payment Date" when used with respect to any Security, means the
---------------------
Stated Maturity of an installment of interest on such Security.
"mandatory sinking fund payment" has the meaning specified in Section
------------------------------
1201.
"Maturity" when used with respect to any Security, means the date on which
--------
the principal of such Security or an installment of principal become due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment, repurchase or otherwise.
"Notice of Default" has the meaning specified in Section 501.
-----------------
"Opinion of Counsel" means a written opinion of counsel, who may be an
------------------
employee of or counsel for the Company or other counsel satisfactory to the
Trustee.
6
<PAGE>
"optional sinking fund payment" has the meaning specified in Section 1201.
-----------------------------
"Original Issue Discount Security" means any Security which provides for
--------------------------------
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding" when used with respect to Securities, means, as of the date
-----------
of determination, all Securities theretofore authenticated and delivered under
this Indenture, exclusive of:
(1) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities, or portions thereof, for whose payment or redemption
or repayment at the option of the Holder 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 is acting as its own Paying Agent) for the holders of such
Securities and any coupons appertaining thereto, provided that, if such
--------
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or other provision therefor satisfactory
to the Trustee has been made;
(3) Securities, except solely to the extent provided in Section 401,
1402 or 1403, as applicable, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Four or
Fourteen; and
(4) 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 has been presented to the Trustee proof satisfactory
to it that such Securities are held by a bona fide purchaser in whose hands
such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the required
- -------- -------
principal amount of the Outstanding Securities have concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder or are
present at a meeting of Holders for quorum purposes, and for the purpose of
making the calculations required by Section 313 of the Trust Indenture Act, (i)
the principal amount of an Original Issue Discount Security which may be counted
in making such determination or calculation and which shall be deemed
Outstanding for such purpose shall be equal to the amount of principal thereof
which would be (or has been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency which may be counted in making such determination or
calculation and which shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined pursuant to Section 301 as of the
date such Security is originally issued
7
<PAGE>
by the Company, of the principal amount (or, in the case of an Original Issue
Discount Security, the Dollar equivalent as of such date of original issuance of
the amount determined as provided in clause (i) above) of such Security, (iii)
the principal amount of any Indexed Security which may be counted in making such
determination or calculation and which shall be deemed Outstanding for such
purpose shall be equal to the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to Section 301, and (iv) Securities owned by the Company or
any other obligor on the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not Outstanding, except that, for
the purposes of determining whether the Trustee is protected in making such
calculation or in relying on any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which the Trustee knows are so owned
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 on the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
------------
principal of (and premium, if any, on) and interest and Additional Amounts, if
any, on any Securities or coupons on behalf of the Company, or if no such Person
is authorized, the Company.
"Payment Default" means any failure to pay any scheduled installment of
---------------
principal of, premium, if any, or interest on any indebtedness within the grace
period provided for such payment in the documentation governing such
indebtedness.
"Person" means any individual, corporation, partnership, limited liability
------
company, limited liability partnership, joint venture, association, joint-stock
company, real estate investment trust, business trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" when used with respect to the Securities of or within
----------------
any series, means the Corporate Trust Office of the Trustee and any place or
places which the Company may from time to time designate as the place or places
where the principal of (and premium, if any, on) and interest and Additional
Amounts, if any, on such Securities are payable as specified as contemplated by
Sections 301 and 1002 and presentations, surrenders, notices and demands with
respect to such Securities and this Indenture may be made.
"Predecessor Security" when used with respect to any particular Security,
--------------------
means every previous Security evidencing all or a portion of the same debt as
evidenced by such Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.
8
<PAGE>
"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, excluding Capital Stock in any other Person.
"Redemption Date" when used with respect to any Security to be redeemed,
---------------
means the date fixed for such redemption by or pursuant to this Indenture or the
terms of such Security.
"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 or the
terms of such Security.
"Registered Security" means any Security which is registered in the
-------------------
Security Register.
"Regular Record Date" when used with respect to an installment of interest
-------------------
payable on any Interest Payment Date on the Registered Securities of or within
any series, means the date specified for that purpose as contemplated by Section
301, whether or not a Business Day.
"Repayment Date" when used with respect to any Security to be repaid or
--------------
repurchased at the option of the Holder, means the date fixed for such repayment
or repurchase by or pursuant to this Indenture or the terms of such Security.
"Repayment Price" when used with respect to any Security to be repaid or
---------------
repurchased at the option of the Holder, means the price at which it is to be
repaid or repurchased by or pursuant to this Indenture or the terms of such
Security.
"Responsible Officer" when used with respect to the Trustee, means any
-------------------
vice president (whether or not designated by numbers or words added before or
after said title), any assistant vice president, any assistant secretary or any
other officer or assistant officer of the Trustee in the corporate trust
department or similar group of the Trustee or, with respect to any particular
matter arising hereunder, any officer of the Trustee to whom such matter has
been assigned.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
---------------------
been designated as an Unrestricted Subsidiary pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder by the Commission.
"Security" has the meaning specified in the first recital of this
--------
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; provided, however, that, if at any time
-------- -------
there is more than one Person acting as Trustee under this Indenture,
"Securities" when used with respect to the Indenture with respect to which such
Person is acting as Trustee, shall have the meaning stated in the first recital
of this Indenture and shall more particularly mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities of or within
any series with respect to which such Person is not acting as Trustee.
9
<PAGE>
"Security Register" and "Security Registrar" have the respective meanings
----------------- ------------------
specified in Section 305.
"Special Record Date" when used with respect to the payment of any
-------------------
Defaulted Interest on the Registered Securities of or within any series, means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity" when used with respect to any Security or any
---------------
installment of principal thereof or interest thereon or any Additional Amounts
with respect thereto, means the date specified in such Security or a coupon
representing such installment of interest as the fixed date on which the
principal of such Security or such installment of principal or interest is, or
such Additional Amounts are, 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 unless such contingency has occurred).
"Subsidiary" means, with respect to any Person, (i) any corporation more
----------
than 50 percent of the outstanding shares of Voting Stock of which is owned,
directly or indirectly, by such Person, or by one of more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries of such
Person, (ii) any general partnership, limited liability company, joint venture
or similar entity, more than 50 percent of the outstanding partnership,
membership or similar interests of which are 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 other Subsidiaries of such Person and (iii) any limited
partnership of which such Person or any Subsidiary of such Person is a general
partner.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
-------------------
and 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 has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then acting as a Trustee hereunder; provided,
--------
however, that, if at any time there is more than one such Person, "Trustee" when
- -------
used with respect to the Securities of or within any series, shall mean only the
Trustee with respect to the Securities of such series, and no Trustee of
Securities for any series shall be responsible for the acts or omissions of a
Trustee for any other series of Securities.
"Trustee Permitted Investments" means:
-----------------------------
(1) Government Obligations;
(2) Direct obligations and fully guaranteed certificates of beneficial
interest of the Export-Import Bank of the United States; consolidated debt
obligations and letter of credit-backed issues of the Federal Home Loan
Banks; participation certificates and
10
<PAGE>
senior debt obligations of the Federal Home Loan Mortgage Corporation;
debentures of the Federal Housing Administration; mortgage-backed
securities (except stripped mortgage securities which are valued greater
than par on the portion of unpaid principal) and senior debt obligations of
the Federal National Mortgage Association; participation certificates of
the General Services Administration; guaranteed mortgage-backed securities
and guaranteed participation certificates and guaranteed pool certificates
of the Small Business Administration; debt obligations and letter of
credit-backed issues of the Student Loan Marketing Association; local
authority bonds of the U.S. Department of Housing and Urban Development;
guaranteed Title XI financing of the U.S. Maritime Administration;
guaranteed transit bonds of the Washington Metropolitan Area Transit
Authority; or Resolution Funding Corporation securities;
(3) Direct obligations of any state of the United States of America or
any subdivision or agency thereof whose unsecured, uninsured and
unguaranteed general obligation debt is rated, at the time of purchase, at
least as high as the rating then in effect on the Securities by Standard &
Poor's Rating Services, or any obligation fully and unconditionally
guaranteed by any state, subdivision or agency whose unsecured, uninsured
and unguaranteed general obligation debt is rated, at the time of purchase,
at least as high as the rating then in effect on the Securities by Standard
& Poor's Rating Services;
(4) Commercial paper (having original maturities of not more than 270
days) rated, at the time of purchase, "A-1+" by Standard & Poor's Rating
Services or "P-1" by Moody's Investors Services, Inc.;
(5) Federal funds, unsecured certificates of deposit, time deposits or
bankers acceptances (in each case having maturities of not more than 365
days) of any domestic bank (including the Trustee in its commercial
capacity), including a branch office of a foreign bank which branch office
is located in the United States, provided that written legal opinions in
--------
form acceptable to the Trustee are received to the effect that full and
timely payment of such deposit or similar obligation is enforceable against
the principal office or any branch of such bank, which, at the time of
purchase, has a rating of "A-1+" by Standard & Poor's Rating Services or
"P-1" by Moody's Investors Services, Inc.;
(6) Deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of not less than
$3,000,000, provided that such deposits are continuously and fully insured
--------
by the Federal Deposit Insurance Corporation, including, without
limitation, an insured money market account of the Trustee;
(7) Investments in money-market funds rated in the highest rating
category by Standard & Poor's Rating Services or Moody's Investors
Services, Inc.; such funds may include those for which the Trustee or an
affiliate of the Trustee provides services for
11
<PAGE>
a fee, whether as investment advisor, custodian, transfer agent, sponsor,
distributor or otherwise; and
(8) Shares of an open-end, diversified investment company which is
registered under the Investment Company Act of 1940, as amended, and which
(i) invests exclusively in permitted investments of the type set forth in
clauses (1) through (7) above; (ii) seeks to maintain a constant net asset
value per share in accordance with regulations of the Commission; and (iii)
has aggregate net assets of at least $50,000,000 on the date of purchase.
Any investment made in accordance with this Indenture may (i) be executed by the
Trustee or the Company with or through the Trustee or its affiliates and (ii) be
made in securities of any entity for which the Trustee or any of its affiliates
serves as offeror, distributor, advisor or other service provider.
"United States" means, unless otherwise specified with respect to any
-------------
Securities pursuant to Section 301, the United States of America (including the
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with respect to
--------------------
any Securities pursuant to Section 301, an individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
"Unrestricted Subsidiary" means any Subsidiary of the Company that the
-----------------------
Company has classified as an Unrestricted Subsidiary and that has not been
reclassified as a Restricted Subsidiary pursuant to this Indenture.
"Voting Stock" means with respect to any Person, securities of any class
------------
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.
"Yield to Maturity" means the yield to maturity, computed at the time of
-----------------
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.
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 a Company Certificate
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenants, compliance with which constitute
12
<PAGE>
conditions 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 (other than certificates provided
pursuant to Section 1008) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation on 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 or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(4) a statement as to whether or not, 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 in which
--------------------------------------
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion as 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, on an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters on which his or her certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, on a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
13
<PAGE>
If any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities of all series or one or more series,
as the case may be, 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. If Securities of a series are
issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of the Outstanding Securities of
such series may, alternatively, be embodied in and evidenced by the record
of such Holders voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of such Holders duly called and
held in accordance with the provisions of Article Fifteen, or a combination
of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments or record or both are delivered to the Trustee and, if
expressly required herein, to the Company. Such instrument or instrument
and any such record (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the "Act" of the Holders signing such
---
instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent,
or of the holding by any Person of a Security, shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the
Company and any agent of the Trustee or the Company, if made in the manner
provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved 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 or her the execution thereof or by any other means
acceptable to the Trustee. If such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the
Security Register.
(d) The ownership of Bearer Securities may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company,
14
<PAGE>
bank, banker or other depositary, wherever situated, if such certificate is
deemed by the Trustee to be satisfactory, showing that at the date therein
mentioned such Person had on deposit with such depositary, or exhibited to
it, the Bearer Securities therein described; or such facts may be proved by
the certificate or affidavit of the Person holding such Bearer Securities,
if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of
any Bearer Security continues until (i) another certificate or affidavit
bearing a later date issued in respect of the same Bearer Security is
produced, (ii) such Bearer Security is produced to the Trustee by some
other Person, (iii) such Bearer Security is surrendered in exchange for a
Registered Security or (iv) such Bearer Security is no longer Outstanding.
The ownership of Bearer Securities may also be proved in any other manner
which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, in 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 not be
obligated to do so. Notwithstanding Section 316(c) of the Trust Indenture
Act, 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 purpose
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 eleven months after the record date.
(f) 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, any Security Registrar, any Paying Agent, any Authenticating Agent
or the Company in reliance thereon, whether or not notation of such action
is made on such Security.
SECTION 105. Notices to Trustee and Company. Any request, demand,
------------------------------
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made on, given or
furnished to, or filed with:
15
<PAGE>
(1) the Trustee by any Holder or the Company shall be sufficient for
every purpose hereunder if in writing and mailed, first class postage
prepaid, to the Trustee addressed to it at the address of its Corporate
Trust Office specified in the first paragraph of this Indenture, Attention:
Corporate Trust Administration; or
(2) the Company by the Trustee or any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first class postage prepaid, to the Company addressed
to it at the address of its 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. When this Indenture provides for
-------------------------
notice of any event to Holders of Registered Securities by the Company or the
Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at such Holder's address as it appears
in the Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case in
which notice to Holders of Registered Securities 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 of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice.
If, by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it is impracticable to give such notice
by mail, then such notification to Holders of Registered Securities as is made
with the approval of the Trustee shall constitute a sufficient notification to
such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with
respect to any Securities pursuant to Section 301, when this Indenture provides
for notice to Holders of Bearer Securities of any event, such notices shall be
sufficiently given if published in an Authorized Newspaper in The City of New
York and in such other city or cities as may be specified in such Securities
and, if the Securities of such series are listed on any securities exchange
outside the United States, in any place at which such Securities are listed on a
securities exchange to the extent that such securities exchange so requires, on
a Business Day, such publication to be not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.
If, by reason of the suspension of publication of any Authorized Newspaper
or Authorized Newspapers or by reason of any other cause, it is impracticable to
publish any notice to Holders of Bearer Securities as provided above, then such
notification to Holders of Bearer Securities as is given with the approval of
the Trustee shall constitute sufficient notice to such
16
<PAGE>
Holders for every purpose hereunder. Neither the failure to give notice by
publication to any particular Holder of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of such
notice with respect to other Holders of Bearer Securities or the sufficiency of
any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
When 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 on such waiver.
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.
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 any Security or any coupon 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 any
---------------------
Security or any coupon, express or implied, shall give to any Person, other than
the parties hereto, any Security Registrar, any Paying Agent, any Authenticating
Agent and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. No Personal Liability. No recourse under or on any obligation,
---------------------
covenant or agreement contained in this Indenture or in any Security or any
coupon, or because of any indebtedness evidenced thereby, shall be had against
any promoter, as such or, against any past, present or future director, officer,
employee or shareholder, as such, of the Company or of any successor, either
directly or through the Company or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities by the Holders thereof
and as part of the consideration for the issue of the Securities.
SECTION 112. Governing Law. This Indenture and the Securities and any
-------------
coupons shall be governed by and construed in accordance with the laws of the
State of New York
17
<PAGE>
applicable to agreements made and to be performed in such State. This Indenture
is subject to the provisions of the Trust Indenture act which, by the provisions
thereof, are deemed or required to be part of this Indenture and shall, to the
extent applicable, be governed by such provisions. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by operation of
Section 318(c) of the Trust Indenture Act, the imposed duties shall control.
SECTION 113. Legal Holidays. In any case in which any Interest Payment
--------------
Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security is not a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or any coupon other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu hereof),
payment of the principal of (and premium, if any, on) or interest or Additional
Amounts, if any, on such Security need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date,
Redemption Date, Repayment Date or sinking fund payment date, or at the Stated
Maturity or Maturity; provided, however, that no interest shall accrue on the
-------- -------
amount so payable for the period from and after such Interest Payment Date,
Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity or
Maturity, as the case may be.
SECTION 114. Counterparts. This Indenture may be executed in several
------------
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities. The Registered Securities, if any, of
-------------------
each series and the Bearer Securities, if any, and any coupons of each series,
shall be in substantially the forms as are established in or pursuant to one or
more indentures supplemental hereto and/or Board Resolutions, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301, Bearer
Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or
engraved or produced by any combination of these methods on a steel engraved
border or steel engraved
18
<PAGE>
borders or may be produced in any other manner, all as determined by the
officers executing such Securities or coupons, as evidenced by their execution
of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication. Subject to
-----------------------------------------------
Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
_____________________,
as Trustee
By:___________________________________________
Authorized Officer
SECTION 203. Securities Issuable in Global Form. If Securities of or within
----------------------------------
a series are issuable in global form, as specified as contemplated by Section
301, then, notwithstanding clause (8) of Section 301 and the provisions of
Section 302, any such Security shall represent such of the Outstanding
Securities of such series as are specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from
time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in the manner and in
accordance with instructions given by such Person or Persons specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or 304. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and in accordance with instructions given by the Person or
Persons specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
19
<PAGE>
Notwithstanding the provisions of Section 307, unless otherwise specified
as contemplated by Section 301, payment of principal of (and premium, if any,
on) and interest and Additional Amounts, if any, on any Security in permanent
global form shall be made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided in the
preceding paragraph, the Company, the Trustee and any agent of the Company or
the Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent
global Security in registered form, or (ii) in the case of a permanent global
Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal
------------------------------------
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to one or more Board Resolutions, and/or indentures
supplemental hereto, prior to the issuance of Securities of any series, any or
all of the following, as applicable (each of which (except for the matters set
forth in clauses (1), (2) and (15) below), if so provided, may be determined
from time to time by the Company with respect to unissued Securities of or
within the series when issued from time to time):
(1) the title of the Securities of or within the series (which shall
distinguish the Securities of such series from all other series of
Securities);
(2) any limit on the aggregate principal amount of the Securities of
or within the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of or within the series pursuant to Section 304, 305, 306, 906,
1107 or 1305);
(3) the date or dates, or the method by which such date or dates will
be determined, on which the principal of the Securities of or within the
series shall be payable and the amount of principal payable thereon;
(4) the rate or rates at which the Securities of or within the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue or the method by which such date or dates shall be determined, the
Interest Payment Dates on which such interest will be payable and the
Regular Record Date, if any, for the interest payable on any Registered
Security on any Interest Payment Date, or the method by which such date
shall be determined,
20
<PAGE>
and the basis on which interest shall be calculated if other than a 360-day
year comprised of twelve 30-day months;
(5) the place or places, if any, other than or in addition to the
Corporate Trust Office where the principal of (and premium, if any, on) and
interest and Additional Amounts, if any, on Securities of or within the
series shall be payable, any Registered Securities of or within the series
may be surrendered for registration of transfer, exchange or conversion and
notices or demands to or on the Company in respect of the Securities of or
within the series and this Indenture may be served;
(6) the period or periods within which, the price or prices
(including the premium, if any) at which, the currency or currencies,
currency unit or units or composite currency or currencies in which, and
other terms and conditions upon which Securities of or within the series
may be redeemed, in whole or in part, at the option of the Company, if the
Company is to have the option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of or within the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the period or
periods within which or the date or dates on which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon which
Securities of or within the series shall be redeemed, repaid or purchased,
in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of or within
the series shall be issuable and, if other than the denomination of $5,000,
the denomination or denominations in which any Bearer Securities of or
within the series shall be issuable;
(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) the percentage of the principal amount at which Securities will
be issued and, if other than the principal amount thereof, the portion of
the principal amount of Securities of or within the series which shall be
payable upon declaration of acceleration of the Maturity thereof pursuant
to Section 502, or, if applicable, the portion of the principal amount of
Securities which is convertible in accordance with the provisions of this
Indenture, or the method by which such portion shall be determined;
(11) if other than Dollars, the Foreign Currency or Currencies in
which payment of the principal of (and premium, if any, on) or interest or
Additional Amounts, if any, on the Securities of or within the series shall
be payable or in which the Securities of or within the series shall be
denominated;
21
<PAGE>
(12) whether the amount of payments of the principal of (and premium,
if any, on) or interest or Additional Amounts, if any, on the Securities of
or within the series may be determined with reference to an index, formula
or other method (which index, formula or method may be based, without
limitation, on one or more currencies, currency units, composite
currencies, commodities, equity indices or other indices), and the manner
in which such amounts shall be determined;
(13) whether the principal of (and premium, if any, on) or interest or
Additional Amounts, if any, on the Securities of or within the series are
to be payable, at the election of the Company or a Holder thereof, in a
currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Securities are denominated or
stated to be payable, the period or periods within which (including the
Election Date), and the terms and conditions upon which, such election may
be made, and the time and manner of, and identity of the exchange rate
agent with responsibility for, determining the exchange rate between the
currency or currencies, currency unit or units or composite currency or
currencies in which such Securities are denominated or stated to be payable
and the currency or currencies, currency unit or units or composite
currency or currencies in which such Securities are to be so payable;
(14) provisions, if any, granting special rights to the Holders of
Securities of or within the series on the occurrence of such events as may
be specified;
(15) any deletions from, modifications of or additions to the Events
of Default or covenants of the Company with respect to Securities of or
within the series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(16) whether Securities of or within the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or both,
any restrictions applicable to the offer, sale or delivery of Bearer
Securities and the terms upon which Bearer Securities of or within the
series may be exchanged for Registered Securities of or within the series
and vice versa (if permitted by applicable laws and regulations), whether
any Securities of or within the series are to be issuable initially in
temporary global form and whether any Securities of or within the series
are to be issuable in permanent global form (with or without coupons) and,
if so, whether beneficial owners of interests in any such permanent global
Security may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination and the circumstances
under which any such exchanges may occur, if other than in the manner
provided in Section 305, and, if Registered Securities of or within the
series are to be issuable as a global Security, the identity of the
depositary for such series, and the date as of which any Bearer Securities
of or within the series and any temporary global Security representing
Outstanding Securities of or within the series shall be dated if other than
the date of original issuance of the first Security of the series to be
issued;
22
<PAGE>
(17) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than 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, the manner in
which, or the Person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary global Security on an Interest Payment Date will be paid if other
than in the manner provided in Section 304;
(18) the applicability, if any, of Sections 1402 and/or 1403 to the
Securities of or within the series and any provisions in modification of,
in addition to or in lieu of any of the provisions of Article Fourteen;
(19) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or terms
of such certificates, documents or conditions;
(20) if the Securities of or within the series are to be issued upon
the exercise of debt warrants, the time, manner and place for such
Securities to be authenticated and delivered;
(21) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1009 on the Securities of or
within the series to any Holder who is not a United States person
(including any modification to the definition of such term) in respect of
any tax, assessment or governmental charge and, if so, whether the Company
will have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option);
(22) the obligation, if any, of the Company to permit the conversion
of the Securities of such series into Class A Common Stock, preferred stock
of the Company or other debt securities of the Company, and the terms and
conditions on which such conversion shall be effected (including, without
limitation, the initial conversion price or rate, the conversion period,
any adjustment of the applicable conversion price and any requirements
relative to the reservation of such shares for purposes of conversion;
(23) whether and to what extent the Securities of the series are to be
guaranteed by one or more of the Subsidiaries of the Company or by other
Persons; and
(24) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
23
<PAGE>
All Securities of any one series and the coupons appertaining to any Bearer
Securities of such series, if any, shall be substantially identical except, in
the case of Registered or Bearer Securities issued in global form, as to
denomination and except as may otherwise be provided in or pursuant to such
Board Resolution or in any such indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened, without the consent of the Holders, for
issuances of additional Securities of such series.
If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions or supplemental
indentures, a copy of an appropriate record of such action(s) shall be certified
by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order for authentication and
delivery of such Securities.
SECTION 302. Denominations. The Securities of each series shall be issuable
-------------
as Bearer Securities, as Registered Securities or in any combination thereof,
and in such denominations and amounts as are specified as contemplated by
Section 301. With respect to any series denominated in Dollars, in the absence
of any such provisions with respect to the Securities of any series, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of
$5,000.
SECTION 303. Execution, Authentication, Delivery and Dating. The Securities
----------------------------------------------
and any coupons shall be executed on behalf of the Company by its Chief
Executive Officer, its President or any Executive Vice President and shall be
attested by the Company's Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities and any coupons 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 and such
coupons.
Any Securities or any coupons 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 or any coupons.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with any
coupons, 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 shall authenticate and deliver such Securities in accordance with
the Company Order; provided, however, that, in connection with its original
-------- -------
issuance, no Bearer Security shall be mailed or otherwise delivered to any
location in the United States; and provided, further, that, unless otherwise
-------- -------
specified with respect to any
24
<PAGE>
series of Securities pursuant to Section 301, a Bearer Security may be delivered
in connection with its original issuance only if the Person entitled to receive
such Bearer Security has furnished a certificate to Euroclear or CEDEL, as the
case may be, in the form set forth in Exhibit A-1 to this Indenture or such
other certificate as may be specified with respect to any series of Securities
pursuant to Section 301, dated no earlier than 15 days prior to the earlier of
the date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture.
Except as permitted by Section 306, the Trustee shall not authenticate and
deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled. If all of the Securities of any series
are not to be issued at one time and if the Board Resolution or supplemental
indenture establishing such series so permits, such Company Order may set forth
procedures acceptable to the Trustee for the issuance of such Securities and
determining the terms of particular Securities of such series, such as the
interest rate or formula, maturity date, date of issuance and date from which
interest shall accrue.
In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities and any
coupons appertaining thereto, the Trustee shall be entitled to receive, and
(subject to Section 315(a) through 315(d) of the Trust Indenture Act) shall be
fully protected in relying on:
(1) an Opinion of Counsel complying with Section 102 and stating
that:
(A) the form or forms of such Securities and any coupons
appertaining thereto have been, or will have been upon compliance with
such procedures as may be specified therein, established in conformity
with the provisions of this Indenture;
(B) the terms of such Securities and any coupons appertaining
thereto have been, or will have been upon compliance with such
procedures as may be specified therein, established in conformity with
the provisions of this Indenture; and
(C) such Securities, together with any coupons appertaining
thereto, when executed by the Company, completed pursuant to such
procedures as may be specified therein and delivered by the Company to
the Trustee for authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance with this
Indenture and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute
legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or
25
<PAGE>
affecting the enforcement of creditors' rights generally and to
general equitable principles and to such other matters as may be
specified therein; and
(2) a Company Certificate complying with Section 102 and stating that
all conditions precedent provided for in this Indenture relating to the
issuance of such Securities have been, or will have been upon compliance
with such procedures as may be specified therein, complied with and that,
to the best of the knowledge of the signers of such certificate, no Event
of Default with respect to such Securities has occurred and is continuing.
The Trustee shall not be required to authenticate such Securities if the issue
of such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties, obligations or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver a Company Order, an Opinion of Counsel or a
Company Certificate otherwise required pursuant to the preceding paragraph at
the time of issuance of each Security of such series, but such order, opinion
and certificate with appropriate modifications to cover such future issuances,
shall be delivered at or before the time of issuance of the first Security of
such series.
Each Registered Security shall be dated the date of its authentication and
each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
No Security or coupon shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
or the Security to which such coupon appertains a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized officer, and such certificate on any Security
shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and is entitled to the benefits of
this Indenture. Notwithstanding the foregoing, if any Security has been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company delivers such Security to the Trustee for cancellation as
provided in Section 309 together with a written statement (which need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel) stating
that such Security has never been issued or sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. Temporary Securities.
--------------------
(a) Pending the preparation of definitive Securities of any series,
the Company may execute, and upon a Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or
26
<PAGE>
otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, in
registered form, or, if authorized, in bearer form (with or without
coupons), 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.
In the case of Securities of any series, such temporary Securities may be
in global form.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with Section 304(b) or as otherwise provided in
or pursuant to a Board Resolution), if temporary Securities of any series
are issued, the Company shall cause definitive Securities of such series to
be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company
in a Place of Payment for such series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any
series, together with any non-matured coupons appertaining thereto, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of the
same series of authorized denominations; provided, however, that no
-------- -------
definitive Bearer Security shall be delivered in exchange for a temporary
Registered Security; and provided, further, that a definitive Bearer
-------- -------
Security shall be delivered in exchange for a temporary Bearer Security
only in compliance with the conditions set forth in Section 303. Until so
exchanged, the temporary Securities or coupons appertaining thereto of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities or coupons appertaining thereto of such
series.
(b) Unless otherwise provided as contemplated in Section 301, this
Section 304(b) shall govern the exchange of temporary Securities issued in
global form other than through the facilities of DTC. If any such temporary
Security is issued in global form, then such temporary global Security
shall, unless otherwise provided therein, be delivered to the London office
of a depositary or common depositary (the "Common Depositary"), for the
-----------------
benefit of Euroclear and CEDEL.
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the
-------------
Trustee definitive Securities, in an aggregate principal amount equal to
the principal amount of such temporary global Security, executed by the
Company. On or after the Exchange Date, such temporary global Security
shall be surrendered by the Common Depositary to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or from time to
time in part, for definitive Securities without charge, and the Trustee
shall authenticate and deliver, in the name of Euroclear or CEDEL, as the
case may be, in exchange for each
27
<PAGE>
portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of or within the same series of authorized
denominations and of like tenor as the portion of such temporary global
Security to be exchanged. The definitive Securities to be delivered in
exchange for any such temporary global Security shall be in bearer form,
registered form, permanent global bearer form or permanent global
registered form, or any combination thereof, as specified as contemplated
by Section 301, and, if any combination thereof is so specified, as
requested by the Common Depositary; provided, however, that, unless
-------- -------
otherwise specified in such temporary global Security, upon such
presentation by the Common Depositary, such temporary global Security shall
be accompanied by a certificate dated the Exchange Date or a subsequent
date and signed by Euroclear as to the portion of such temporary global
Security held for its account then to be exchanged and a certificate dated
the Exchange Date or a subsequent date and signed by CEDEL as to the
portion of such temporary global Security held for its account then to be
exchanged, each in the form set forth in Exhibit A-2 to this Indenture or
in such other form as may be established pursuant to Section 301; and
provided, further, that definitive Bearer Securities shall be delivered in
-------- -------
exchange for a portion of a temporary global Security only in compliance
with the requirements of Section 303.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same
series and of like tenor following the Exchange Date when the account
holder instructs Euroclear or CEDEL, as the case may be, to request such
exchange on his behalf and delivers to Euroclear or CEDEL, as the case may
be, a certificate in the form set forth in Exhibit A-1 to this Indenture
(or in such other form as may be established pursuant to Section 301),
dated no earlier than 15 days prior to the Exchange Date, copies of which
certificate shall be available from the offices of Euroclear and CEDEL, the
Trustee, any Authenticating Agent appointed for such series of Securities
and each Paying Agent. Unless otherwise specified in such temporary global
Security, any such exchange shall be made free of charge to the beneficial
owners of such temporary global Security, except that a Person receiving
definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such
definitive Securities in person at the offices of Euroclear or CEDEL.
Definitive Securities in bearer form to be delivered in exchange for any
portion of a temporary global Security shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of the same series
and of like tenor authenticated and delivered hereunder, except that,
unless otherwise specified as contemplated by Section 301, interest payable
on a temporary global Security on an Interest Payment Date for Securities
of such series occurring prior to the applicable Exchange Date shall be
payable to Euroclear and CEDEL on such Interest Payment Date upon delivery
by Euroclear and
28
<PAGE>
CEDEL to the Trustee of a certificate or certificates in the form set forth
in Exhibit A-2 to this Indenture (or in such other forms as may be
established pursuant to Section 301), for credit without further interest
on or after such Interest Payment Date to the respective accounts of
Persons who are the beneficial owners of such temporary global Security on
such Interest Payment Date and who have each delivered to Euroclear or
CEDEL, as the case may be, a certificate dated no earlier than 15 days
prior to the Interest Payment Date occurring prior to such Exchange Date in
the form set forth in Exhibit A-1 to this Indenture (or in such other forms
as may be established pursuant to Section 301). Notwithstanding anything to
the contrary herein contained, the certifications made pursuant to this
paragraph shall satisfy the certification requirements of the preceding two
paragraphs of this Section 304(b) and of the third paragraph of Section 303
of this Indenture and the interests of the Persons who are the beneficial
owners of the temporary global Security with respect to which such
certification was made will be exchanged for definitive Securities of the
same series and of like tenor on the Exchange Date or the date of
certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and
until such interest in such temporary global Security has been exchanged
for an interest in a definitive Security. Any interest so received by
Euroclear and CEDEL and not paid as herein provided shall be returned to
the Trustee prior to the expiration of two years after such Interest
Payment Date in order to be repaid to the Company.
SECTION 305. Registration, Registration of Transfer and Exchange. The
---------------------------------------------------
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for each
series of Securities (the registers maintained in such office or in any such
office or agency of the Company in a Place of Payment being herein sometimes
referred to collectively as the "Security Register") in which, subject to such
-----------------
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby initially appointed "Security Registrar" for
------------------
the purpose of registering Registered Securities and transfers of Registered
Securities on such Security Register as herein provided. In the event that the
Trustee ceases to be Security Registrar, it shall have the right to examine the
Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Security of any series at any office
or agency of the Company in a Place of Payment for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount, being a number not contemporaneously outstanding, and
containing identical terms and provisions.
29
<PAGE>
Subject to the provisions of this Section 305, at the option of the Holder,
Registered Securities of any series may be exchanged for other Registered
Securities of the same series, of any authorized denomination or denominations
and of a like aggregate principal amount, containing identical terms and
provisions, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any such Registered Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered Securities which the Holder making the
exchange is entitled to receive. Unless otherwise specified with respect to any
series of Securities as contemplated by Section 301, Bearer Securities may not
be issued in exchange for Registered Securities.
If (but only if) permitted as contemplated by Section 301, at the option of
the Holder, Bearer Securities of any series may be exchanged for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the Bearer Securities to
be exchanged at any such office or agency, with all unmatured coupons and all
matured coupons in default appertaining thereto. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
in an amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Bearer Security surrenders to any Paying Agent any such missing
coupon in respect of which such a payment has been made, such Holder shall be
entitled to receive the amount of payment; provided, however, that, except as
-------- -------
otherwise provided in Section 1002, interest represented by a coupon shall be
payable only upon presentation and surrender of such coupons at an office or
agency located outside the United States. Notwithstanding the foregoing, in case
a Bearer Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the relevant
Interest Payment Date or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date for payment, as the case
may be, and interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture. 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.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the depositary for any permanent global
Security is DTC, then, unless the terms of such global Security expressly permit
such global Security to be exchanged in whole or in part for
30
<PAGE>
definitive Securities, a global Security may be transferred, in whole but not in
part, only to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor
to DTC for such global Security selected and approved by the Company or to a
nominee of such successor to DTC. If at any time DTC notifies the Company that
it is unwilling or unable to continue as depositary for the applicable global
Security or Securities or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act if so required by applicable law or
regulation, the Company shall appoint a successor depositary with respect to
such global Security or Securities. If (i) a successor depositary for such
global Security or Securities is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such unwillingness,
inability or ineligibility, (ii) an Event of Default has occurred and is
continuing and the beneficial owners representing a majority in principal amount
of the applicable series of Securities represented by such global Security or
Securities advise DTC to cease acting as depositary for such global Security or
Securities or (iii) the Company, in its sole discretion, determines at any time
that all Outstanding Securities (but not less than all) Securities of any series
issued or issuable in the form of one or more global Securities shall no longer
be represented by such global Security or Securities (provided, however, that
-------- -------
the Company may not make such determination during the 40-day restricted period
provided by Regulation S under the Securities Act or during any other similar
period during which the Securities must be held in global form as may be
required by the Securities Act), then, upon surrender of the global Security or
Securities appropriately endorsed, the Company shall execute, and the Trustee
shall authenticate and deliver definitive Securities of like series, rank, tenor
and terms in definitive form in an aggregate principal amount equal to the
principal amount of such global Security or Securities. If any beneficial owner
of an interest in a permanent global Security is otherwise entitled to exchange
such interest for Securities of such series and of like tenor and principal
amount of another authorized form and denomination, as specified as contemplated
by Section 301 and provided that any applicable notice provided in the permanent
global Security has been given, then without unnecessary delay but in any event
not earlier than the earliest date on which such interest may be so exchanged,
upon surrender of the global Security or Securities appropriately endorsed, the
Company shall execute, and the Trustee shall authenticate and deliver definitive
Securities in aggregate principal amount equal to the principal amount of such
beneficial owner's interest in such permanent global Security. On or after the
earliest date on which such interests may be so exchanged, such permanent global
Security shall be surrendered for exchange by DTC or such other depositary as is
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose; provided, however, that no such exchanges may
-------- -------
occur during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those selected
for redemption; and provided, further, that no Bearer Security delivered in
-------- -------
exchange for a portion of a permanent global Security shall be mailed or
otherwise delivered to any location in the United States. If a Registered
Security is issued in exchange for any portion of a permanent global Security
after the close of business at the office or agency where such exchange occurs
on (i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date or (ii) any Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, interest or Defaulted
31
<PAGE>
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of such Registered
Security, but will be payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person to whom interest in respect of
such portion of such permanent global Security is payable in accordance with the
provisions of this Indenture.
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 Registered Security presented or surrendered for registration of
transfer or for exchange or redemption shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge which may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security may be
among those selected for redemption during a period beginning at the opening of
business 15 days before selection of the Securities to be redeemed under Section
1103 and ending at the close of business on (A) if such Securities are issuable
only as Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if such Securities are issuable as Bearer Securities, the day
of the first publication of the relevant notice of redemption or, if such
Securities are also issuable as Registered Securities and there is no
publication, the day of the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of such series
and like tenor, provided that such Registered Security is simultaneously
--------
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any
------------------------------------------------
mutilated Security or a Security with a mutilated coupon appertaining thereto is
surrendered to the Trustee or the Company, together with, in proper cases, such
security or indemnity as may be required by the Company or the Trustee to save
each of them or any of their agents harmless, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new
32
<PAGE>
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.
If there is delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security or coupon, and
(ii) such security or indemnity as may be required by them to save each of them
and any of their agents harmless, then, in the absence of notice to the Company
or the Trustee that such Security or coupon has been acquired by a bona fide
purchaser, the Company shall execute, and upon Company Request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security to which a destroyed, lost or stolen coupon
appertains (with all appurtenant coupons not destroyed, lost or stolen), a new
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case any
such mutilated, destroyed, lost or stolen Security or coupon has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; provided, however, that payment of principal of (and premium, if any,
-------- -------
on) and interest and Additional Amounts, if any, on any Bearer Securities shall,
except as otherwise provided in Section 1002, be payable only at an office or
agency located outside the United States and, unless otherwise specified as
contemplated by Section 301, any interest on Bearer Securities shall be payable
only upon presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge which may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series and any coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and any coupons appertaining thereto or the destroyed, lost or stolen coupon are
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
such series and any coupons appertaining thereto duly issued hereunder.
33
<PAGE>
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 or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved. Except as
----------------------------------------------
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, interest on any Registered 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 on any Registered Security may at the Company's option
be paid by (i) 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 on the Security Register or (ii) transfer to an
account maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301 with respect to
the Securities of any series, payment of interest may be made, in the case of a
Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.
Unless otherwise provided as contemplated by Section 301, every permanent
global Security will provide that interest, if any, payable on any Interest
Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case may be,
with respect to that portion of such permanent global Security held for its
account by Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.
In case a Bearer Security of any series is surrendered in exchange for a
Registered Security of such series after the close of business (at an office or
agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, any interest on any Registered
Security of any series which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date ("Defaulted Interest") shall
------------------
forthwith cease to be payable to the registered Holder thereof upon the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election, as provided in paragraph
(1) or (2) below:
34
<PAGE>
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Registered Security of such series and the date of the
proposed payment (which shall not be less than 20 days after such notice is
received by the Trustee), and at the same time the Company shall deposit
with the Trustee an amount of money in the currency or currencies, currency
unit or units or composite currency or currencies in which the Securities
of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) 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 on or 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 provided in this paragraph. 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 mailed, first-class
postage prepaid, to each Holder of Registered Securities of such series at
such Holder's address as it appears in the Security Register not less than
10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company cause a similar
notice to be published at least once in an Authorized Newspaper in each
place of payment, but such publications shall not be a condition precedent
to the establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to paragraph (2) below. In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series
in exchange for a Registered Security of such series after the close of
business at such office or agency on any Special Record Date and before the
opening of business at such office or agency on the related proposed date
for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such proposed date of payment
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the
35
<PAGE>
requirements of any securities exchange on which such Securities may be
listed, and on such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this paragraph, such manner of payment is deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners. Prior to due presentment of a
---------------------
Registered 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
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any, on) and (subject to
Sections 305 and 307) interest and Additional Amounts, if any, on such
Registered Security and for all other purposes whatsoever, whether or not such
Registered Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
Title to any Bearer Security and any coupons shall pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the
Holder of any Bearer Security and the Holder of any coupon as the absolute owner
of such Security or coupon for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever, whether or not such
Security or coupon be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.
SECTION 309. Cancellation. All Securities and coupons surrendered for
------------
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and coupons and any Securities and coupons surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities
36
<PAGE>
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 canceled by the Trustee. If
the Company so acquires 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 canceled as provided in this Section, except as expressly
permitted by this Indenture. Canceled Securities and coupons held by the Trustee
shall be destroyed by the Trustee and the Trustee shall deliver a certificate of
such destruction to the Company unless the Company delivers a Company Order
which directs their return to it.
SECTION 310. Computation of Interest. Except as otherwise specified as
-----------------------
contemplated by Section 301 with respect to Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.
SECTION 311. CUSIP Numbers. The Company in issuing the Securities may use
-------------
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall
---------------------------------------
upon Company Request cease to be of further effect with respect to any series of
Securities specified in such Company Request (except as to any surviving rights
of registration of transfer or exchange of Securities of such series herein
expressly provided for and any right to receive Additional Amounts, as provided
in Section 1009), and the Trustee, upon receipt of a Company Order and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when:
(1) either:
(A) all Securities of such series theretofore authenticated and
delivered and any coupons appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section
305, (ii) Securities of such series and coupons appertaining
37
<PAGE>
thereto which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306, (iii) coupons
appertaining to Securities called for redemption and maturing after
the relevant Redemption Date, whose surrender has been waived as
provided in Section 1106, and (iv) Securities of such series and
coupons appertaining thereto for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of clauses
(i) and (ii) below, any coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee funds
in trust for the purpose, in the currency or currencies, currency unit
or units or composite currency or currencies in which the Securities
of such series are payable, and in an amount sufficient to pay and
discharge the entire indebtedness on such Securities and such coupons
not theretofore delivered to the Trustee for cancellation, for the
principal (and premium, if any) and interest and Additional Amounts,
if any, to the date of such deposit (in the case of Securities which
have become due and payable) or the Stated Maturity or Redemption
Date, as the case may be;
(2) The Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) The Company has delivered to the Trustee a Company Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company
38
<PAGE>
to any Authenticating Agent under Section 611 and, if money has been deposited
with and held by the Trustee pursuant to subparagraph (B) of paragraph (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003, shall survive.
SECTION 402. Application of Trust Funds. 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, the coupons 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 principal (and premium, if any) and interest and Additional Amounts, if
any, for the payment of which such money has been deposited with or received by
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. Subject to any modifications, additions or
-----------------
deletions relating to any series of Securities as contemplated pursuant to
Section 301, "Event of Default," whenever used herein with respect to any
----------------
particular series of Securities, means any one of the following events (whatever
the reason for such Event of Default and whether or not it is voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest on or any Additional
Amounts payable in respect of any Security of or within such series or of
any coupon appertaining thereto, when such interest, Additional Amounts or
coupon becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of such series when the same becomes due and payable at
its Maturity, or the failure to make an offer to purchase any Security of
such series with respect to which a repurchase is required by the terms
thereof; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of any Security of such series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture with respect to any Security of such
series (other than a covenant or warranty a default in the performance of
which or the breach of which is elsewhere specifically provided for in this
Section), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of such series, a
written
39
<PAGE>
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
-----------------
(5) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Restricted
Subsidiary of the Company in an involuntary case or proceeding under United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency, or other
similar law or (ii) a decree or order adjudging the Company or any
Restricted Subsidiary of the Company a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of, or in respect of, the Company or any
Restricted Subsidiary of the Company under United States bankruptcy laws,
as now or hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency, or similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Restricted Subsidiary of the Company or of
any substantial part of the Property or assets of the Company or any
Restricted Subsidiary of the Company, or ordering the winding-up or
liquidation of the affairs of the Company or any Restricted Subsidiary of
the Company, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of 60
consecutive calendar days; or
(6) (i) the commencement by the Company or any Restricted Subsidiary
of the Company of a voluntary case or proceeding under United States
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or insolvent;
or (ii) the consent by the Company or any Restricted Subsidiary of the
Company to the entry of a decree or order for relief in respect of the
Company or any Restricted Subsidiary of the Company in an involuntary case
or proceeding under United States bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state, or foreign bankruptcy,
insolvency, or other similar law or to the commencement of any bankruptcy
or insolvency case or proceeding against the Company or any Restricted
Subsidiary of the Company; or (iii) the filing by the Company or any
Restricted Subsidiary of the Company of a petition or answer or consent
seeking reorganization or relief under United States bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law; or (iv) the consent by
the Company or any Restricted Subsidiary of the Company to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company or any Restricted Subsidiary of the Company or of any
substantial part of the Property or assets of the Company or any Restricted
Subsidiary of the Company, or the making by the Company or any Restricted
Subsidiary of the Company of an assignment for the benefit of creditors; or
(v) the admission by the Company or any Restricted Subsidiary of the
Company in writing of its inability to pay its debts generally
40
<PAGE>
as they become due; or (vi) the taking of corporate action by the Company
or any Restricted Subsidiary of the Company in furtherance of any such
action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment. (1) If an
--------------------------------------------------
Event of Default (other than an Event of Default set forth in Section 501(5) or
(6)) with respect to Securities of any series at the time Outstanding occurs and
is continuing, then and in every such case, unless the principal of all of the
Outstanding Securities of such series already has become due and payable, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series may declare the principal (or, if any
Securities are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Securities of such series and any accrued and unpaid interest thereon to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
or specified portion thereof and any accrued and unpaid interest thereon shall
become immediately due and payable. If an Event of Default set forth in Section
501(5) or (6) occurs with respect to the Securities of any series, then in each
such case, the principal of all the Securities of such series and any accrued
and unpaid interest thereon shall be due and payable immediately, without notice
to the Company and without any declaration or other act on the part of the
Trustee or any Holder of any Securities of such series.
(2) At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of a majority in principal amount of the
Outstanding Securities of such series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(A) The Company has paid or deposited with the Trustee a sum
sufficient to pay, in the currency, currency unit or composite currency in
which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series):
(i) all overdue installments of interest on and any Additional
Amounts payable in respect of all Outstanding Securities of such
series and any coupons appertaining thereto;
(ii) the principal of (and premium, if any, on) any Outstanding
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
borne by or provided for in such Securities;
(iii) to the extent that payment of such interest is lawful,
interest on overdue installments of interest and any Additional
Amounts at the rate or rates borne by or provided for in such
Securities; and
41
<PAGE>
(iv) 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
(B) all Events of Default with respect to Securities of such series,
other than the nonpayment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on Securities of such series which
have become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
resulting therefrom.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. The Company covenants that if:
- -------
(1) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Security of any series or any coupon
appertaining thereto when such interest or Additional Amount becomes due
and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security of any series at its Maturity,
then the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of the Securities of such series and any such coupons,
the whole amount then due and payable on such Securities and any such coupons
for principal (and premium, if any) and interest and Additional Amounts, if any,
with interest on any overdue principal (and premium, if any) and, to the extent
that payment of such interest is legally enforceable, on any overdue
installments of interest or Additional Amounts, if any, at the rate or rates
borne by or provided for in such Securities, and, in addition thereto, such
further amount as is sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor on the Securities of such series 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 on the Securities of
such series, wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
coupons appertaining thereto by such appropriate judicial proceedings as the
Trustee deems most effectual to protect and enforce any such rights,
42
<PAGE>
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of
--------------------------------
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor on the Securities of such series or the
property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities of any series is then
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee has made any demand on the Company for the
payment of overdue principal, premium, if any, or interest or Additional
Amounts, if any) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(1) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of
principal (and premium, if any) and interest and Additional Amounts, if
any, owing and unpaid in respect of the Securities of such series and to
file such other papers or documents and take such other action, including
participating as a member of any official creditors committee appointed in
the matter, as it may deem necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series and any coupons appertaining thereto to
make such payments to the Trustee, and in the event that the Trustee consents to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee or any predecessor Trustee under Section
606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or
--------------------------------------------------------------
Coupons. All rights of action and claims under this Indenture or any of the
- -------
Securities or any coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or coupons or the production thereof in
any proceeding relating thereto, and any such
43
<PAGE>
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities and coupons 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 shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest or Additional
Amounts, if any, on presentation of the Securities or coupons, or both, as the
case may be, and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
(1) to the payment of all amounts due the Trustee and any predecessor
Trustee under Section 606;
(2) to the payment of the amounts then due and unpaid on the
Securities and coupons for principal (and premium, if any) and interest and
Additional Amounts, if any, payable, 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 aggregate amounts due and payable on
such Securities and coupons for principal (and premium, if any) and
interest and Additional Amounts, if any, respectively; and
(3) to the payment of the remainder, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 506. At least 15 calendar days before such
record date, the Company shall mail to each Holder and the Trustee a notice that
states such record date, the payment date and amount to be paid. The Trustee
may mail such notice in the name and at the expense of the Company.
SECTION 507. Limitation on Suits. No Holder of any Security of any series
-------------------
or any coupon appertaining thereto shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
44
<PAGE>
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium,
-------------------------------------------------------------
Interest and Additional Amounts. Notwithstanding any other provision in this
- -------------------------------
Indenture, the Holder of any Security or coupon shall have the right which is
absolute and unconditional to receive payment of the principal of (and premium,
if any, on ) and (subject to Sections 305 and 307) interest and Additional
Amounts, if any, on such Security or payment of such coupon on or after the
respective due dates expressed in such Security or coupon (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 or affected without the
consent of such Holder.
SECTION 509. Restoration of Rights and Remedies. If the Trustee or any
----------------------------------
Holder of a Security or coupon 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 the Company, the Trustee and the
Holders of Securities and coupons shall, subject to any determination in such
proceeding, 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 or coupons in the last paragraph of Section 306, no right or
remedy herein conferred on or reserved to the Trustee or to the Holders of
Securities or coupons 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.
45
<PAGE>
SECTION 511. Delay or Omission Not Waiver. No delay or omission of the
----------------------------
Trustee or of any Holder of any Security or coupon to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities or coupons, as the
case may be.
SECTION 512. Control by Holders of Securities. The Holders of not less than
--------------------------------
a majority in principal amount of the Outstanding Securities of any series shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee with respect to the Securities of such series, provided
--------
that:
(1) such direction is not in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of Securities of
such series not joining therein (but the Trustee shall have no obligation
as to the determination of such undue prejudice).
SECTION 513. Waiver of Past Defaults. The Holders of at least a majority in
-----------------------
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series and any coupons appertaining
thereto waive any past default hereunder with respect to such series and its
consequences, except a default:
(1) in the payment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on any Security of such series or
any coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected thereby.
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 resulting therefrom.
SECTION 514. Waiver of Usury, Stay or Extension Laws. The Company covenants
---------------------------------------
(to the extent which it may lawfully do so) that it shall not at any time insist
on, or plead, or in any
46
<PAGE>
manner whatsoever claim or take the benefit or advantage of, any usury, stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent which 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.
SECTION 515. Undertaking for Costs. All parties to this Indenture agree,
---------------------
and each Holder of any Security by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults. Within 90 days after the occurrence of any
------------------
default hereunder known to a Responsible Officer with respect to the Securities
of any series, the Trustee shall give to the Holders of the Securities of such
series, in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, notice of such default hereunder known to the Trustee, unless
such default has been cured or waived; provided, however, that, except in the
-------- -------
case of a default in the payment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on any Security of such series, or in
the payment of any sinking fund installment with respect to the Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders of the Securities
and coupons of such series; and provided, further, that in the case of any
-------- -------
default or breach of the character specified in clause (4) of Section 501 with
respect to the Securities of such series and any coupons appertaining thereto,
no such notice to Holders shall be given until at least 60 days after the
occurrence thereof. For the purposes of this Section, the term "default" means
-------
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to the Securities of such series.
SECTION 602. Certain Rights of Trustee. Subject to the provisions of
-------------------------
Section 315(a) through 315(d) of the Trust Indenture Act:
47
<PAGE>
(1) the Trustee shall perform only such duties as are expressly
undertaken by it to perform under this Indenture;
(2) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(3) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security, together with any coupons appertaining thereto,
to the Trustee for authentication and delivery pursuant to Section 303,
which shall be sufficiently evidenced as provided therein) and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(4) whenever, in the administration of this Indenture, the Trustee
deems it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence is specifically prescribed herein) may, in the absence of bad
faith on its part, rely on a Company Certificate;
(5) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(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 of Securities of any series or any coupons
appertaining thereto pursuant to this Indenture, unless such Holders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(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, coupon or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee determines 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;
(8) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee
48
<PAGE>
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(9) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred on it by this
Indenture;
(10) The Trustee shall not be deemed to have knowledge of any event or
fact upon the occurrence of which it may be required to take action
hereunder unless a Responsible Officer of the Trustee has actual knowledge
of the occurrence of such event or fact; and
(11) The Trustee shall not be required 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
has reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
SECTION 603. Not Responsible for Recitals or Issuance of Securities. The
------------------------------------------------------
recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or any coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities. The Trustee, any Paying Agent, Security
-------------------
Registrar, Authenticating Agent or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and coupons and, subject to Sections 310(b) and 311 of the Trust Indenture Act,
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee, Paying Agent, Security Registrar,
Authenticating Agent or such other agent.
SECTION 605. Money Held in Trust; Trustee Permitted Investments. 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, or investment of, any money received by it hereunder except as
otherwise agreed with and for the sole benefit of the Company.
Pending their use under this Indenture, moneys held by the Trustee
hereunder may be invested in Trustee Permitted Investments maturing or
redeemable at the option of the holder at or before the time when such moneys
are expected to be needed by the Trustee and shall be
49
<PAGE>
so invested pursuant to a Company Order if no Event of Default known to the
Trustee then exists under this Indenture and otherwise at the discretion of the
Trustee. Any investment pursuant to this Section 605 shall be held by the
Trustee as a part of the moneys held by the Trustee hereunder, as applicable,
and shall be sold or redeemed to the extent necessary to make payments or
transfers or anticipated payments from such moneys.
The Trustee shall be entitled to rely on all written investment
instructions provided by the Company hereunder, and shall have no duty to
monitor the compliance thereof with the restrictions set forth herein. The
Trustee shall have no responsibility or liability for any depreciation in the
value of any investment or for any loss, direct or indirect, resulting from any
investment made in accordance with a Company Order. The Trustee shall be without
liability to the Company or any Holder or any other person in the event that any
investment made in accordance with a Company Order shall cause any person to
incur any liability or rebates or other monies payable pursuant to the Internal
Revenue Code of 1986, as amended.
Any interest realized on investments and any profit realized upon the sale
or other disposition thereof shall be credited to moneys held by the Trustee
hereunder and any loss shall be charged thereto.
SECTION 606. Compensation and Reimbursement. The Company agrees:
------------------------------
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse each
of the Trustee and any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by it in
connection with its administration of the trust hereunder (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except to the extent any such expense, disbursement or
advance may be attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense, arising
out of or in connection with the acceptance or administration of the trust
or trusts or the performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder except to the extent any such loss, liability or expense may be
attributable to its own negligence or bad faith.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities on all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (or premium, if any, on) or interest or
Additional Amounts, if any, on particular Securities or any coupons.
50
<PAGE>
The Company's payment obligations pursuant to this Section 606 shall
survive the resignation or removal of the Trustee and discharge of this
Indenture. Subject to any other rights available to the Trustee under
applicable bankruptcy law, when the Trustee incurs expenses after the occurrence
of a Default specified in Section 501(5) or Section 501(6) hereof, the expenses
are intended to constitute expenses of administration under bankruptcy law.
SECTION 607. Trustee Eligibility; Conflicting Interests. There shall at all
------------------------------------------
times be a Trustee hereunder which is eligible to act as Trustee under Section
310(a)(1) of the Trust Indenture Act and has a combined capital and surplus of
at least $50,000,000. If such Trustee publishes reports of condition at least
annually, pursuant to law or the requirements of Federal, State, Territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Trustee shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. No obligor on the Securities or Affiliate of
any such obligor shall serve as Trustee on such Securities. If at any time the
Trustee ceases to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
SECTION 608. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
an instrument of acceptance by a successor Trustee has not 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 with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series delivered to the
Trustee and the Company.
(d) If at any time:
(1) the Trustee fails to comply with the provisions of Section
310(b) of the Trust Indenture Act after written request therefor by
the Company or any Holder of a Security who has been a bona fide
Holder of a Security for at least six months, unless the Trustee's
duty to resign is stayed in accordance with the provisions of Section
310(b) of the Trust Indenture Act, or
51
<PAGE>
(2) the Trustee ceases to be eligible under Section 607 and fails
to resign after written request therefor by the Company or any Holder
of a Security 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 a decree or
order for relief by a court having jurisdiction in the premises shall
have been entered in respect of the Trustee in an involuntary case
under the United States bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy,
insolvency or similar law; or a decree or order by a court having
jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trustee or of its
Property and assets or affairs, or any public officer shall take
charge or control of the Trustee or of its Property and assets or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, or
(4) the Trustee shall commence a voluntary case under the United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or similar law or
shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Trustee or its Property and assets or
affairs, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as
they become due, or shall take corporate action in furtherance of any
such action,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove the Trustee and appoint a successor Trustee with
respect to all Securities, or (ii) subject to Section 315(e) of the Trust
Indenture Act, any Holder of a Security who has been a bona fide Holder of
a Security for at least six months may, on behalf of such Holder and all
others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee resigns, is removed or becomes incapable of
acting, or if a vacancy occurs in the office of Trustee for any cause with
respect to the Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee
or Trustees with respect to the Securities of such series (it being
understood that any such successor Trustee may be appointed with respect to
the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any
particular series). If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series is appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed
52
<PAGE>
shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series has been so
appointed by the Company or the Holders of Securities and accepted
appointment in the manner hereinafter provided, any Holder of a Security
who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of such Holder and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series in the manner provided for notices to the Holders of Securities in
Section 106. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Company and the retiring Trustee an
instrument accepting such appointment, and, thereupon, the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
but, on 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, subject nevertheless to its claim, if any,
provided for in Section 606.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine, wherein each successor
Trustee shall accept such appointment and which (i) shall contain such
provisions as are necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of such series to
which the appointment of such successor Trustee relates, (ii) if the
retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as are necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of such series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee and (iii)
shall add to or change any of the provisions of this Indenture
53
<PAGE>
as are necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees co-
trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and, upon the execution
and delivery of such supplemental indenture, the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of such
series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee
shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder with respect to
the Securities of such series to which the appointment of such successor
Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article and under the Trust Indenture Act.
SECTION 610. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
--------
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities or coupons have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities or coupons so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities or coupons. In case any Securities or coupons have not been
authenticated by such predecessor Trustee, any such successor Trustee may
authenticate and deliver such Securities or coupons, in either its own name or
that of its predecessor Trustee, with the full force and effect which this
Indenture provides for the certificate of authentication of the Trustee.
SECTION 611. Appointment of Authenticating Agent. At any time when any of
-----------------------------------
the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer
54
<PAGE>
or partial redemption or repayment thereof, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder. Any
such appointment shall be evidenced by an instrument in writing signed by a
Responsible Officer of the Trustee, a copy of which instrument shall be promptly
furnished to the Company. Whenever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and, except as may otherwise be provided pursuant to Section 301, shall
at all times be a bank or trust company or corporation organized and doing
business and in good standing under the laws of the United States of America or
of any State or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State or
District of Columbia authorities. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
ceases to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
is a party, or any corporation succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation is otherwise eligible under this
Section, without the execution or filing of any paper or further act on the part
of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time resign
by giving written notice of resignation to the Trustee for such series and the
Company. The Trustee for any series of Securities may at any time terminate the
agency of an Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent ceases to be eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment to all Holders of Securities of or within the series with respect to
which such Authenticating Agent will serve in the manner set forth in Section
106. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
55
<PAGE>
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation including reimbursement of its reasonable expenses for
its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By:____________________________________,
as Authenticating Agent
By:____________________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders. Every Holder of
--------------------------------------------
Securities or coupons, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of the
Trust Indenture Act, 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 Section 312(b) of the Trust
Indenture Act.
SECTION 702. Reports by Trustee. Within 60 days after August 1 of each year
------------------
commencing with the first August 1 after the first issuance of Securities
pursuant to this Indenture, the Trustee shall transmit by mail to all Holders of
Securities as provided in Section 313(c) of the Trust Indenture Act a brief
report dated as of such August 1 if required by Section 313(a) of the Trust
Indenture Act.
SECTION 703. Reports by Company. The Company will:
------------------
56
<PAGE>
(1) deliver to the Trustee and each Holder, within 15 days after the
same are filed with the Commission, copies of all reports and information
(or copies of such portions of any of the foregoing as the Commission may
by rules and regulations prescribe), if any, exclusive of exhibits, which
the Company and any guarantors are required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act or pursuant to the
immediately following sentence. So long as any Securities remain
outstanding, the Company and any Subsidiary guarantors shall file with the
Commission such reports as may be required pursuant to Section 13 of the
Exchange Act in respect of a security registered pursuant to Section 12 of
the Exchange Act. If the Company or any Subsidiary guarantors are not
subject to the requirements of Section 13 or 15(d) of the Exchange Act (or
otherwise required to file reports pursuant to the immediately preceding
sentence), the Company shall deliver to the Trustee and to each Holder,
within 15 days after the Company and any Subsidiary guarantors would have
been required to file such information with the Commission were they
required to do so, financial statements, including any notes thereto (and,
in the case of a fiscal year end, an auditors' report by an independent
certified public accounting firm of established national reputation), and a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," substantially equivalent to that which they would have been
required to include in such quarterly or annual reports, information,
documents or other reports if they had been subject to the requirements of
Section 13 or 15(d) of the Exchange Act. Notwithstanding the foregoing, to
the extent then permitted by federal securities laws or regulations or "no-
action" letters interpreting such laws or regulations, separate financial
statements and other information of any Subsidiary guarantors shall not be
required. The Company and any Subsidiary guarantors shall also comply with
the other provisions of Section 314(a) of the Trust Indenture Act;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to the Holders of Securities, within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, such summaries of
any information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission; and
(4) delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants
57
<PAGE>
hereunder (as to which the Trustee is entitled to rely exclusively on
Company Certificates).
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders. The
---------------------------------------------------------
Company shall furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular Record
Date for interest for each series of Securities, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders of Registered Securities of such series as of such Regular Record
Date, or if there is no Regular Record Date for interest for such series of
Securities, semi-annually, on such dates as are set forth in the Board
Resolution or indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that, so long as the Trustee is the Security Registrar, no
- -------- -------
such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and
-----------------------------------------------------------
Conveyances. Except as otherwise provided with respect to any series of
- -----------
Securities, the Company may consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person,
provided that in any such case (i) either the Company shall be the continuing
corporation or the surviving Person or the Person formed by or surviving such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized and validly existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) such
surviving Person assumes all the obligations, including the due and punctual
payment of the principal of (and premium, if any, on) and interest and
Additional Amounts, if any, on all Securities, according to their tenor, and the
due and punctual performance and observance of all covenants and conditions, of
the Company under the Securities and the Indenture pursuant to a supplemental
Indenture in form reasonably satisfactory to the Trustee; and (iii) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary as a result of such
transaction as having been incurred by the Company or such Subsidiary at the
time of the transaction, no Event of Default and no event which, after notice or
the lapse of time or both, would become an Event of Default shall have occurred
and be continuing.
58
<PAGE>
SECTION 802. Rights and Duties of Successor Entity. In case of any such
-------------------------------------
consolidation, merger, sale, lease or conveyance and upon any such assumption by
the successor entity, such successor entity shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
party of the first part, and the predecessor entity, except in the event of a
lease, shall be relieved of any further obligation under this Indenture and the
Securities. Such successor entity thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore have not been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
entity, instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any
Securities which such successor entity thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 803. Company Certificate and Opinion of Counsel. Any consolidation,
------------------------------------------
merger, sale, lease or conveyance permitted under Section 801 is also subject to
the condition that the Trustee receive a Company Certificate and an Opinion of
Counsel to the effect that any such consolidation, merger, sale, lease or
conveyance, and the assumption by any successor entity, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders. Without
--------------------------------------------------
the consent of any Holders of Securities or coupons, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for
59
<PAGE>
the benefit of such series) or to surrender any right or power herein
conferred on the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such Events of Default
are to be for the benefit of less than all series of Securities, stating
that such Events of Default are expressly being included solely for the
benefit of such series); provided, however, that, in respect of any such
-------- -------
additional Events of Default, such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default or may limit the right of the
Holders of a majority in aggregate principal amount of such series of
Securities to which such additional Events of Default apply to waive such
default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of the principal of (or
premium, if any, on) or interest or Additional Amounts, if any, on Bearer
Securities, to permit Bearer Securities to be issued in exchange for
Registered Securities, to permit Bearer Securities to be issued in exchange
for Bearer Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form, provided that
--------
any such action shall not adversely affect the interests of the Holders of
Securities of any series or any coupons appertaining thereto in any
material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
--------
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and any
coupons appertaining thereto as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as are necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision
hereof which may be defective or inconsistent with any other provision
hereof, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
the provisions of this Indenture or to make any other changes, provided
--------
that, in each case, such provisions shall not adversely affect the
60
<PAGE>
interests of the Holders of Securities of any series or any coupons
appertaining thereto in any material respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as are necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 401, 1402 and
1403; provided that, in each case, any such action shall not adversely
--------
affect the interests of the Holders of Securities of such series and any
coupons appertaining thereto or any other series of Securities in any
material respect; or
(11) to make any change that does not adversely affect the legal
rights under this Indenture of any Holder of Securities of any series; or
(12) to add a guarantor of the Securities of any series; or
(13) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders. With the
-----------------------------------------------
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities affected by such supplemental indenture, by Act of such
Holders delivered to the Company and the Trustee, the Company (when authorized
by or pursuant to a Board Resolution) and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and coupons under this Indenture; provided, however, that no such
-------- -------
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of principal of or interest on, any Security;
or reduce the principal amount thereof or the rate or amount of interest
thereon or any Additional Amounts payable in respect thereof, or any
premium payable upon the redemption thereof, or change any obligation of
the Company to pay Additional Amounts pursuant to Section 1009 (except as
contemplated by clause (1) of Section 801 and permitted by clause (1) of
Section 901), or reduce the amount of the principal of an Original Issue
Discount Security which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 or the amount
thereof provable in bankruptcy pursuant to Section 504; or adversely affect
any right of repayment at the option of the Holder of any Security, or
change any Place of Payment where, or the currency or currencies, currency
unit or units or composite currency or currencies in which, the principal
of any Security or any premium or any Additional Amounts payable in respect
thereof or the 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, in the case of redemption or repayment at the
option of the Holder, on or after the Redemption Date or the Repayment
Date, as the case may be); or
61
<PAGE>
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which
is required for any waiver with respect to such series (or compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting; or
(3) modify any of the provisions of this Section, Section 513 or
Section 1010, except to increase the required percentage to effect such
action or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; or
(4) release any guarantors from their guarantees of the Securities,
or, except as contemplated in any supplemental indenture, make any change
in a guarantee of a Security that would adversely affect the interests of
the Holders, or
(5) modify the ranking or priority of the Securities.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act approves the substance thereof.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included for the benefit of
one or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
SECTION 903. Execution of Supplemental Indentures. In executing, or
------------------------------------
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying on, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures. Upon the execution of any
---------------------------------
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder and of any coupon appertaining
thereto shall be bound thereby.
62
<PAGE>
SECTION 905. Conformity with Trust Indenture Act. Every supplemental
-----------------------------------
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company so determines, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
SECTION 907. Notice of Supplemental Indentures. Promptly after the
---------------------------------
execution by the Company and the Trustee of any supplemental indenture pursuant
to the provisions of Section 902, 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 Principal, Premium, Interest and Additional
------------------------------------------------------
Amounts. The Company covenants and agrees for the benefit of the Holders of each
series of Securities that it shall duly and punctually pay to the Trustee on the
applicable date of payment the principal of (and premium, if any, on) and
interest and Additional Amounts, if any, on the Securities of such series in
accordance with the terms of such series of Securities, any coupons appertaining
thereto and this Indenture. Unless otherwise specified as contemplated by
Section 301 with respect to any series of Securities, any interest and
Additional Amounts, if any, on Bearer Securities on or before Maturity, other
than Additional Amounts, if any, payable as provided in Section 1009 in respect
of principal of (or premium, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless otherwise
specified with respect to Securities of any series pursuant to Section 301, at
the option of the Company, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security.
SECTION 1002. Maintenance of Office or Agency. If Securities of a series
-------------------------------
are issuable only as Registered Securities, the Company shall maintain in each
Place of Payment for any series of Securities an office or agency where
Securities of such series may be presented or surrendered for payment, where
Securities of such series may be surrendered for registration of transfer or
exchange and where notices and demands to or on the Company in respect of the
Securities of such series and this Indenture may be served. If Securities of a
series are issuable as Bearer Securities, the Company shall maintain: (i) in the
Borough of Manhattan, The City of
63
<PAGE>
New York, an office or agency where any Registered Securities of such series may
be presented or surrendered for payment, where any Registered Securities of such
series may be surrendered for exchange, where notices and demands to or on the
Company in respect of the Securities of such series and this Indenture may be
served and where Bearer Securities of such series and any coupons appertaining
thereto may be presented or surrendered for payment in the circumstances
described in the following paragraph (and not otherwise); (ii) subject to any
laws or regulations applicable thereto, in a Place of Payment for such series
which is located outside the United States, an office or agency where Securities
of such series and any coupons appertaining thereto may be presented and
surrendered for payment (including payment of any Additional Amounts payable on
Securities of such series pursuant to Section 1009); provided, however, that if
-------- -------
the Securities of such series are listed on the Luxembourg Stock Exchange, The
International Stock Exchange or any other stock exchange located outside the
United States and such stock exchange so requires, the Company shall maintain a
Paying Agent for the Securities of such series in Luxembourg, London or any
other required city located outside the United States, as the case may be, so
long as the Securities of such series are listed on such exchange; and (iii)
subject to any laws or regulations applicable thereto, in a Place of Payment for
such series located outside the United States an office or agency where any
Securities of such series may be surrendered for registration of transfer, where
Securities of such series may be surrendered for exchange and where notices and
demands to or on the Company in respect of the Securities of such series and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of each such office
or agency. If at any time the Company fails to maintain any such required office
or agency or fails 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, except that Bearer Securities of such
series and the related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts payable on Bearer Securities of
such series pursuant to Section 1009) at the offices specified in the Security,
in London, England, and the Company hereby appoints the same as its agent to
receive all such presentations, surrenders, notices and demands, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of the principal of (or premium, if any, on) or interest
or Additional Amounts, if any, on Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; provided, however, that, if the Securities of a series are
-------- -------
payable in Dollars, payment of the principal of (and premium, if any, on) and
interest and Additional Amounts; if any, on any Bearer Security shall be made at
the office of the Company's Paying Agent in the Borough of Manhattan, The City
of New York, if (but only if) payment in Dollars of the full amount of such
principal, premium, interest or Additional Amounts, as the case may be, at all
offices or agencies outside the United States maintained for the purpose by the
Company in accordance with this Indenture, is illegal or effectively precluded
by exchange controls or other similar restrictions.
64
<PAGE>
The Company may from time to time designate one or more other offices or
agencies where the Securities of one or more series and any coupons appertaining
thereto may be presented or surrendered for any or all of such purposes, and may
from time to time rescind such designations; provided, however, that no such
-------- -------
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in accordance with the requirements
set forth above for Securities of any series for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
Unless otherwise specified with respect to any Securities pursuant to Section
301, the Company hereby designates as a Place of Payment for each series of
Securities the office or agency of the Company in The City of New York, and
initially appoints the Trustee at its Corporate Trust Office as Paying Agent in
such city and as its agent to receive all such presentations, surrenders,
notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are denominated
in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long
as it is required under any other provision of the Indenture, then the Company
shall maintain with respect to each such series of Securities, or as so
required, at least one exchange rate agent.
SECTION 1003. Money for Securities Payments to Be Held in Trust. If the
-------------------------------------------------
Company at any time acts as its own Paying Agent with respect to any series of
any Securities and any coupons appertaining thereto, it shall, on or before each
due date of the principal of (and premium, if any, on) or interest or Additional
Amounts, if any, on any of the Securities of such series, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts, if any, 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 has one or more Paying Agents for any series of
Securities and any coupons appertaining thereto, it shall, on or before each due
date of the principal of (and premium, if any, on) or interest or Additional
Amounts, if any, on any Securities of such series, deposit with a Paying Agent a
sum (in the currency or currencies, currency unit or units or composite currency
or currencies described in the preceding paragraph) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts, if any, so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium, interest or Additional Amounts and (unless
such Paying Agent is the Trustee) the Company shall promptly notify the Trustee
of its action or 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, that such Paying
Agent shall:
65
<PAGE>
(1) hold all sums held by it for the payment of principal of (and
premium, if any, on) or interest or Additional Amounts, if any, 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 on the Securities) in the making of any such payment of
principal (and premium, if any) or interest or Additional Amounts, if any;
and
(3) at any time during the continuance of any such default, on the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee on the
same trusts as those on 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.
Except as otherwise provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
or Additional Amounts, if any, on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) interest or
Additional Amounts, if any, has become due and payable shall be paid to the
Company upon 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 of the
principal of (and premium, if any, on) and interest and any Additional Amounts,
if any, on any Security of such series, without interest thereon, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
- -------- -------
to make any such repayment, may at the expense of the Company cause to be
published once, in an Authorized Newspaper, 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. 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 of its Restricted Subsidiaries; provided that the Company
and any such Restricted Subsidiary shall not be required to preserve the
corporate existence of any such Restricted Subsidiary or any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer
66
<PAGE>
desirable in the conduct of the business of the Company and provided further
that any Restricted Subsidiary may consolidate with, merge into, or sell,
convey, lease or otherwise dispose of all of its property and assets to the
Company or any wholly owned Restricted Subsidiary.
SECTION 1005. Maintenance of Property. The Company shall cause all Property
-----------------------
used or useful in the conduct of its business or the business of any of its
Restricted Subsidiaries and material to the Company and its Restricted
Subsidiaries taken as a whole to be maintained and kept in good condition,
repair 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 that nothing in this Section
1005 shall prevent the Company from discontinuing the operation or maintenance
of any of such Property if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any of its
Restricted Subsidiaries.
SECTION 1006. [intentionally omitted]
SECTION 1007. Payment of Taxes and Other Claims. The Company shall pay or
---------------------------------
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any of its Restricted Subsidiaries or upon the
income, profits or Property of the Company or any of its Restricted Subsidiaries
and (b) all material lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon the Property of the Company or any of
its Restricted Subsidiaries; provided that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings upon stay of execution or the enforcement
thereof and for which adequate reserves in accordance with GAAP or other
appropriate provision has been made.
SECTION 1008. Statement as to Compliance. The Company shall deliver to the
--------------------------
Trustee within 120 calendar days after the end of each fiscal year of the
Company ending after the date hereof, a brief certificate from its principal
executive officer, principal financial officer or principal accounting officer
as to his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture and, in the event of any noncompliance,
specifying such noncompliance and the nature and status thereof. For purposes of
this Section 1008, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
The Company shall deliver written notice to the Trustee within 30 calendar
days after any executive officer of the Company becomes aware of the occurrence
of any event which constitutes, or with the giving of notice or the lapse of
time or both would constitute, a Default or Event of Default, describing such
Default or Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.
67
<PAGE>
SECTION 1009. Additional Amounts. If any Securities of a series provide for
------------------
the payment of Additional Amounts, the Company covenants and agrees for the
benefit of the Holders of Securities of such series that it shall pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context except in the case of
clause (1) of Section 502, the payment of the principal of or of any premium or
interest on, or in respect of, any Security of any series or payment of any
coupon or the net proceeds received on the sale or exchange of any Security of
any series, such mention shall be deemed to include mention of the payment of
Additional Amounts provided by the terms of such series established pursuant to
Section 301 to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to such terms and express mention
of the payment of Additional Amounts (if applicable) in any provisions hereof
shall not be construed as excluding Additional Amounts in those provisions
hereof in which such express mention is not made.
Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to Securities of
such series (or if the Securities of such series will not bear interest prior to
Maturity, the first day on which a payment of principal and any premium is
made), and at least 10 days prior to each date of payment of principal and any
premium or interest, if there has been any change with respect to the matters
set forth in the below-mentioned Company Certificate, the Company shall furnish
the Trustee and the principal Paying Agent or Paying Agents, if other than the
Trustee, with a Company Certificate instructing the Trustee and such Paying
Agent or Paying Agents whether such payment of principal of and any premium or
interest on the Securities of such series shall be made to Holders of Securities
of such series or any coupons appertaining thereto who are not United States
persons without withholding for or on account of any tax, assessment or other
governmental charge described in the Securities of or within the series. If any
such withholding is required, then such Company Certificate shall specify by
country the amount, if any, required to be withheld on such payments to such
Holders of Securities of such series or any coupons appertaining thereto and the
Company shall pay to the Trustee or such Paying Agent the Additional Amounts
required by the terms of such Securities. In the event that the Trustee or any
Paying Agent, as the case may be, shall not so receive the above-mentioned
certificate, then the Trustee or such Paying Agent shall be entitled (i) to
assume that no such withholding or deduction is required with respect to any
payment of principal or interest with respect to any Securities of such series
or any coupons appertaining thereto until it has received a certificate advising
otherwise and (ii) to make all payments of principal and interest with respect
to the Securities of such series or any coupons appertaining thereto without
withholding or deductions until otherwise advised. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them or in reliance on any Company Certificate furnished
pursuant to this Section or in reliance on the Company's not furnishing such a
Company Certificate.
68
<PAGE>
SECTION 1010. Waiver of Certain Covenants. The Company may omit in any
---------------------------
particular instance to comply with any term, provision or condition set forth in
Sections 1004 to 1008, inclusive, and with any other term, provision or
condition with respect to the Securities of any series specified in accordance
with Section 301 (except any such term, provision or condition which could not
be amended without the consent of all Holders of Securities of such series
pursuant to Section 902), if before or after the time for such compliance the
Holders of at least a majority in principal amount of all outstanding Securities
of such series, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article. Securities of any series which are
------------------------
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee. The election of the
-------------------------------------
Company to redeem any Securities shall be evidenced by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all of the Securities of any series, the Company shall, at least 30 days
prior to the giving of the notice of redemption in Section 1104 (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with a
Company Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If less
-------------------------------------------------
than all the Securities of any series issued on the same day with the same terms
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 of such series issued on such date with the same terms
not previously called for redemption, by lot, on a pro rata basis or such method
as the Trustee deems fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of such series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of such series.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
69
<PAGE>
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Security redeemed or to be redeemed only in part, to the portion of
the principal amount of such Security which has been or is to be redeemed.
SECTION 1104. Notice of Redemption. Notice of redemption shall be given in
--------------------
the manner provided in Section 106, not less than 30 days nor more than 60 days
prior to the Redemption Date, unless a shorter period is specified by the terms
of such series established pursuant to Section 301, to each Holder of Securities
to be redeemed, but failure to give such notice in the manner herein provided to
the Holder of any Security designated for redemption as a whole or in part, or
any defect in the notice to any such Holder, shall not affect the validity of
the proceedings for the redemption of any other such Security or portion
thereof.
Any notice which is mailed to the Holders of Registered Securities in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price, accrued interest to the Redemption Date
payable as provided in Section 1106, if any, and Additional Amounts, if
any;
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed;
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, on surrender of such Security, the holder will receive, without a
charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed;
(5) that on the Redemption Date, the Redemption Price and accrued
interest to the Redemption Date payable as provided in Section 1106, if
any, will become due and payable on each such Security, or the portion
thereof, to be redeemed and, if applicable, that interest thereon shall
cease to accrue on and after such date;
(6) the Place or Places of Payment where such Securities, together in
the case of Bearer Securities with all coupons appertaining thereto, if
any, maturing after the Redemption Date, are to be surrendered for payment
of the Redemption Price and accrued interest, if any;
(7) that the redemption is for a sinking fund, if such is the case;
70
<PAGE>
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons appertaining thereto maturing subsequent to the
date fixed for redemption or the amount of any such missing coupon or
coupons will be deducted from the Redemption Price, unless security or
indemnity satisfactory to the Company, the Trustee for such series and any
Paying Agent is furnished;
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if such
Bearer Securities may be exchanged for Registered Securities not subject to
the redemption on this Redemption Date pursuant to Section 305 or
otherwise, the last date, as determined by the Company, on which such
exchanges may be made; and
(10) the CUSIP number of such Security, if any, provided that neither
--------
the Company nor the Trustee shall have any responsibility for any such
CUSIP number.
Notice of redemption of Securities to be redeemed 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 1105. Deposit of Redemption Price. At least one Business Day prior
---------------------------
to any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, which it may
not do in the case of a sinking fund payment under Article Twelve, segregate and
hold in trust as provided in Section 1003) an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay on
the Redemption Date the Redemption Price of, and (except if the Redemption Date
is an Interest Payment Date) accrued interest on, all the Securities or portions
thereof which are to be redeemed on such date.
SECTION 1106. Securities Payable on Redemption Date. Notice of redemption
-------------------------------------
having been given as provided above, the Securities so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
such series) (together with accrued interest, if any, to the Redemption Date),
and from and after such date (unless the Company defaults in the payment of the
Redemption Price and accrued interest) such Securities shall, if the same were
interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with such notice, together with any coupons
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments of interest on
-------- -------
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only at an office or agency located outside the United States
(except as otherwise
71
<PAGE>
provided in Section 1002) and, unless otherwise specified as contemplated by
Section 301, only upon presentation and surrender of coupons for such interest;
and provided, further, that, installments of interest on Registered Securities
-------- -------
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 Bearer Security surrendered for redemption is not accompanied by all
coupons appertaining thereto maturing after the Redemption Date, such Security
may be paid after deducting from the Redemption Price an amount equal to the
face amount of all such missing coupons, or the surrender of such missing coupon
or coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security surrenders to
the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction has been made from the Redemption Price, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
-------- -------
by a coupon shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of such coupon.
If any Security called for redemption is not so paid upon surrender thereof
for redemption, the principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1107. Securities Redeemed in Part. Any Security which is to be
---------------------------
redeemed only in part (pursuant to the provisions of this Article or of Article
Twelve) shall be surrendered at a Place of Payment therefor (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing and
accompanied by appropriate evidence of genuineness and authority) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge a new Security or Securities of
the same series, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article. The provisions of this Article
------------------------
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
----------------------
payment," and any
- -------
72
<PAGE>
payment in excess of such minimum amount provided for by the terms of such
Securities of any series is herein referred to as an "optional sinking fund
---------------------
payment." If provided for by the terms of any Securities of any series, the cash
- -------
amount of any mandatory sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The
-----------------------------------------------------
Company may, in satisfaction of all or any part of any mandatory sinking fund
with respect to the Securities of a series, (i) deliver Outstanding Securities
of such series (other than any previously called for redemption), together in
the case of any Bearer Securities of such series with all unmatured coupons
appertaining thereto, and (ii) apply as a credit Securities of such series which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, as provided for by the terms
of such Securities, or which have otherwise been acquired by the Company,
provided that such Securities so delivered or applied as a credit have not been
- --------
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund. Not less than 60
-----------------------------------------
days prior to each sinking fund payment date for Securities of any series, the
Company shall deliver to the Trustee a Company Certificate specifying the amount
of the next ensuing mandatory sinking fund payment for such series pursuant to
the terms of such series, the portion thereof, if any, which is to be satisfied
by payment of cash in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of such series pursuant to
Section 1202, and the optional amount, if any, to be added in cash to the next
ensuing mandatory sinking fund payment, and shall also deliver to the Trustee
any Securities to be so delivered and credited. If such Company Certificate
specifies an optional amount to be added in cash to the next ensuing mandatory
sinking fund payment, the Company shall thereupon be obligated to pay the amount
therein specified. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed on such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
73
<PAGE>
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Repayment of Securities of any
------------------------
series before their Stated Maturity at the option of Holders thereof shall be
made in accordance with the terms of such Securities, if any, and (except as
otherwise specified by the terms of such series established pursuant to Section
301) in accordance with this Article.
SECTION 1302. Repayment of Securities. Securities of any series subject to
-----------------------
repayment in whole or in part at the option of the Holders thereof will, unless
otherwise provided in the terms of such Securities, be repaid at a price equal
to the principal amount thereof, together with interest, if any, thereon accrued
to the Repayment Date specified in or pursuant to the terms of such Securities.
The Company covenants that at least one Business Day prior to the Repayment Date
it shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as it own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay the principal (or, if so provided
by the terms of the Securities of any series, a percentage of the principal) of,
and (except if the Repayment Date is an Interest Payment Date) accrued interest
on, all the Securities or portions thereof, as the case may be, to be repaid on
such date.
SECTION 1303. Exercise of Option. Securities of any series subject to
------------------
repayment at the option of the Holders thereof will contain an "Option to Elect
Repayment" form on the reverse of such Securities. In order for any Security to
be repaid at the option of the Holder, the Trustee must receive at the Place of
Payment therefor specified in the terms of such Security (or at such other place
or places of which the Company shall from time to time notify the Holders of
such Securities), not earlier than 60 days nor later than 30 days prior to the
Repayment Date, (i) the Security so providing for such repayment together with
the "Option to Elect Repayment" form on the reverse thereof duly completed by
the Holder (or by the Holder's attorney duly authorized in writing) or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company in the United States setting forth the name
of the Holder of the Security, the principal amount of the Security, the
principal amount of the Security to be repaid, the CUSIP number, if any, or a
description of the tenor and terms of the Security, a statement that the option
to elect repayment is being exercised thereby and a guarantee that the Security
to be repaid, together with the duly completed form entitled "Option to Elect
Repayment" on the reverse of the Security, will be received by the Trustee not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, however, that such telegram, telex,
-------- -------
facsimile transmission or letter shall only be effective if such Security and
form duly completed are received by the Trustee by such fifth Business Day. If
less than the entire principal amount of such Security is to be repaid in
accordance with the terms of such Security, the principal amount of such
Security to be repaid, in increments of the minimum denomination for Securities
of such series, and the denomination
74
<PAGE>
or denominations of the Security or Securities to be issued to the Holder for
the portion of the principal amount of such Security surrendered which is not to
be repaid, must be specified. The principal amount of any Security providing for
prepayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of or within the
series of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become Due and
------------------------------------------------------
Payable. If Securities of any series providing for repayment at the option of
- -------
the Holders thereof have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company defaults in the payment of
such Securities on such Repayment Date) such Securities shall, if the same were
interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be repaid, except to the extent
provided below, shall be void. Upon surrender of any such Security for repayment
in accordance with such provisions, together with any coupons appertaining
thereto maturing after the Repayment Date, the principal amount of such security
so to be repaid shall be paid by the Company, together with accrued interest, if
any, to the Repayment Date; provided, however, that coupons whose Stated
-------- -------
Maturity is on or prior to the Repayment Date shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified pursuant to Section 301, only upon
presentation and surrender of such coupons; and provided, further, that, in the
-------- -------
case of Registered Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable (but without
interest thereon, unless the Company defaults in the payment thereof) 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 Bearer Security surrendered for repayment is not accompanied by all
coupons appertaining thereto maturing after the Repayment Date, such Security
may be paid after deducting from the amount payable therefor as provided in
Section 1302 an amount equal to the face amount of all such missing coupons, or
the surrender of such missing coupon or coupons may be waived by the Company and
the Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security surrenders to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction has been made as provided in the
preceding sentence, such Holder shall be entitled to receive the amount so
deducted; provided, however, that interest represented by a coupon shall be
-------- -------
payable only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of such
coupon.
75
<PAGE>
If the principal amount of any Security surrendered for repayment shall not
be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part. Upon surrender of any Registered
-------------------------
Security which is to be repaid in part only, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge and at the expense of the Company, a new Registered Security or
Securities of the same series, of any authorized denomination specified by the
Holder, in an aggregate principal amount equal to and in exchange for the
portion of the principal of such Security so surrendered which is not to be
repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's Option to Effect
----------------------------------------------------
Defeasance or Covenant Defeasance. If, pursuant to Section 301, provision is
- ---------------------------------
made for either or both of (i) defeasance of the Securities of or within a
series under Section 1402 or (ii) covenant defeasance of the Securities of or
within a series under Section 1403 to be applicable to the Securities of any
series, then the provisions of such Section or Sections, as the case may be,
together with the other provisions of this Article (with such modifications
thereto as may be specified pursuant to Section 301 with respect to any
Securities), shall be applicable to such Securities and any coupons appertaining
thereto, and the Company may at its option by Board Resolution, at any time,
with respect to such Securities and any coupons appertaining thereto, elect to
defease such Outstanding Securities and any coupons appertaining thereto
pursuant to Section 1402 (if applicable) or Section 1403 (if applicable) upon
compliance with the conditions set forth below in this Article.
SECTION 1402. Defeasance and Discharge. Upon the Company's exercise of the
------------------------
above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any coupons
appertaining thereto on the date the conditions set forth in Section 1404 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 such Outstanding Securities and any coupons
appertaining thereto, which shall thereafter be deemed "Outstanding" only for
the purposes of Section 1405 and the other Sections of this Indenture referred
to in clauses (i) and (ii) below, and to have satisfied all of its other
obligations under such Securities and any coupons appertaining thereto and this
Indenture insofar as such Securities and any coupons appertaining thereto 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: (i) the rights of
Holders of such Outstanding Securities and any coupons appertaining thereto to
receive, solely from the trust fund described in Section 1404 and as more fully
set forth in such Section,
76
<PAGE>
payments in respect of the principal of (and premium, if any, on) and interest
and Additional Amounts, if any, on such Securities and any coupons appertaining
thereto when such payments are due; (ii) the Company's obligations with respect
to such Securities under Sections 305, 306, 1002 and 1003 and with respect to
the payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1010; (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder; and (iv) this Article. Subject to compliance with this
Article Fourteen, the Company may exercise its option under this Section
notwithstanding the prior exercise of its option under Section 1403 with respect
to such Securities and any coupons appertaining thereto.
SECTION 1403. Covenant Defeasance. Upon the Company's exercise of the above
-------------------
option applicable to this Section with respect to any Securities of or within a
series, the Company shall be released from its obligations under Sections 1004
to 1008, inclusive, and, if specified pursuant to Section 301, its obligations
under any other covenant, with respect to such Outstanding Securities and any
coupons appertaining thereto on and after the date the conditions set forth in
Section 1404 are satisfied (hereinafter, "covenant defeasance"), and such
-------------------
Securities and any coupons appertaining thereto shall thereafter be deemed not
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with
Sections 1005 to 1008, inclusive, or such other covenant, but shall continue to
be deemed "Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to such Outstanding Securities and
any coupons appertaining thereto, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such Section or such other covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or such other
covenant or by reason of reference in any such Section or such other covenant 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 clause (4) of
Section 501 or otherwise, as the case may be, but, except as specified above,
the remainder of this Indenture and such Securities and any coupons appertaining
thereto shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of Section 1402 or Section 1403
to any Outstanding Securities of or within a series and any coupons appertaining
thereto:
(a) The Company has irrevocably deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
607 who shall agree to comply with the provisions of this Article Fourteen
applicable to it) 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 and any coupons appertaining
thereto: (i) an amount in such currency or currencies, currency unit or
units or composite currency or currencies in which such Securities and any
coupons appertaining thereto are then specified as payable at Stated
Maturity, or (ii) Government Obligations applicable to such Securities and
any coupons appertaining thereto (determined on the basis of the currency
or currencies, currency unit or units or composite currency or currencies
in which such Securities and any coupons appertaining
77
<PAGE>
thereto are then specified as payable at Stated Maturity) which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment of principal of (and premium, if any, on) and
interest and Additional Amounts, if any, on such Securities and any coupons
appertaining thereto, money in an amount, or (iii) a combination thereof in
an amount, sufficient, without consideration of any reinvestment of such
principal and interest, 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, and which shall be applied
by the Trustee (or other qualifying trustee) to pay and discharge, (A) the
principal of (and premium, if any, on) and interest and Additional Amounts,
if any, on such Outstanding Securities and any coupons appertaining thereto
on the Stated Maturity of such principal or installment of principal or
interest and (B) any mandatory sinking fund payments or analogous payments
applicable to such Outstanding Securities and any coupons appertaining
thereto on the day on which such payments are due and payable in accordance
with the terms of this Indenture and of such Securities and any coupons
appertaining thereto, provided that the Trustee has been irrevocably
--------
instructed to apply such money or the proceeds of such Government
Obligations to such payments with respect to such Securities. Before such a
deposit, the Company may give to the Trustee, in accordance with Section
1102, a notice of its election to redeem all or any portion of such
Outstanding Securities at a future date in accordance with the terms of the
Securities of such series and Article Eleven, which notice shall be
irrevocable. Such irrevocable redemption notice, if given, shall be given
effect in applying the foregoing.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound (and shall not cause the Trustee to have a
conflicting interest pursuant to Section 310(b) of the Trust Indenture Act
with respect to any Security of the Company).
(c) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to such Securities and
any coupons appertaining thereto has occurred and is continuing on the date
of such deposit or, insofar as clauses (5) and (6) of Section 501 are
concerned, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the Company has
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of execution 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 such Outstanding Securities and any coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of
78
<PAGE>
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.
(e) In the case of an election under Section 1403, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any coupons appertaining thereto
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.
(f) The Company has delivered to the Trustee a Company Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance under Section 1402 or the covenant defeasance under Section 1403
(as the case may be) have been complied with and an Opinion of Counsel to
the effect that either (i) as a result of a deposit pursuant to paragraph
(a) above and the related exercise of the Company's option under Section
1402 or Section 1403 (as the case may be), registration is not required
under the Investment Company Act of 1940, as amended, by the Company with
respect to the trust funds representing such deposit or by the Trustee for
such trust funds or (ii) all necessary registrations under such Act have
been effected.
(g) After the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
(h) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.
SECTION 1405. Deposited Money and Government Obligations to Be Held in
--------------------------------------------------------
Trust; Other Miscellaneous Provisions. Subject to the provisions of the last
- -------------------------------------
paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee) pursuant to
Section 1404 in respect of any Outstanding Securities of any series and any
coupons appertaining thereto shall be held in trust and applied by the Trustee
or such other qualifying trustee, in accordance with the provisions of such
Securities and any coupons appertaining thereto 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 or such other qualifying trustee
may determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but such money
need not be segregated from other funds except to the extent required by law.
79
<PAGE>
Unless otherwise specified with respect to any Security pursuant to Section
301, if, after a deposit referred to in Section 1404(a) has been made, (i) the
Holder of a Security in respect of which such deposit was made is entitled to,
and does, elect pursuant to Section 301 or the terms of such Security to receive
payment in a currency, currency unit or composite currency other than that in
which the deposit pursuant to Section 1404(a) has been made in respect of such
Security or (ii) a Conversion Event occurs in respect of the currency, currency
unit or composite currency in which the deposit pursuant to Section 1404(a) has
been made, the indebtedness represented by such Security and any coupons
appertaining thereto shall be deemed to have been, and will be, fully discharged
and satisfied through the payment of the principal of (and premium, if any, on),
and interest and Additional Amounts, if any, on such Security as the same become
due out of the proceeds yielded by converting (from time to time as specified
below in the case of any such election) the amount or other property deposited
in respect of such Security into the currency, currency unit or composite
currency in which such Security becomes payable as a result of such election or
Conversion Event based on the applicable market exchange rate for such currency,
currency unit or composite currency in effect on the second Business Day prior
to each payment date, except, with respect to a Conversion Event, for such
currency, currency unit or composite currency in effect (as nearly as feasible)
at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 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 such Outstanding Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding, the Trustee or
such other qualifying trustee shall deliver or pay to the Company, from time to
time upon Company Request, any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee or such other qualifying trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1406. Reinstatement. If the Trustee or Paying Agent is unable to
-------------
apply any money in accordance with this Article Fourteen with respect to any
Securities by reason of any order or judgement of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application then
the obligations under this Indenture and such Securities from which the Company
has been discharged or released pursuant to Sections 1402 or 1403 hereof shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article Fourteen with respect to such Securities, until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust pursuant to
Section 1405 hereof with respect to such Notes in accordance with this Article
Fourteen; provided that if the Company makes any payment of principal of or any
premium or interest or Additional Amounts on any such Security following such
reinstatement of its obligations, the Company shall be subrogated to the rights
80
<PAGE>
(if any) of the Holders of such Securities to receive such payment from the
money so held in trust.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called. A meeting of
-----------------------------------------
Holders of Securities of any series may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1502. Call, Notice and Place of Meetings.
----------------------------------
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place in The City of New York, as the Trustee
determines. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms
the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series have requested the Trustee to call a meeting of
the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee has not made
the first publication of the notice of such meeting within 21 days after
receipt of such request or does not thereafter proceed to cause the meeting
to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified, as the case may
be, may determine the time and the place in The City of New York, for such
meeting and may call such meeting for such purposes by giving notice
thereof as provided in paragraph (a) above.
SECTION 1503. Persons Entitled to Vote at Meetings. To be entitled to vote
------------------------------------
at any meeting of Holders of Securities of any series, a Person shall be (i) a
Holder of one or more Outstanding Securities of such series or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series are the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its counsel,
and any representatives of the Company and its counsel.
81
<PAGE>
SECTION 1504. Quorum; Action. The Persons entitled to vote a majority in
--------------
principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series; provided, however,
-------- -------
that if any action is to be taken at such meeting with respect to a consent or
waiver which this Indenture expressly provides may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding
Securities of a series, the Persons entitled to vote such specified percentage
in principal amount of the Outstanding Securities of such series shall
constitute a quorum. In the absence of a quorum within 30 minutes after the time
appointed for any such meeting, the meeting shall, if convened at the request of
Holders of Securities of such series, be dissolved. In any other case the
meeting may be adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 1502(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of any adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding
Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Outstanding Securities of such series; provided,
--------
however, that, except as limited by the proviso to Section 902, any resolution
- -------
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of such
series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and any coupons
appertaining thereto, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage in principal amount of
all Outstanding Securities affected thereby, or of the Holders of such series
and one or more additional series;
82
<PAGE>
(1) there shall be no minimum quorum requirement for such meeting; and
(2) the principal amount of the Outstanding Securities of such series
which vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under this
Indenture.
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
----------------------------------------------------------
Meetings.
- --------
(a) Notwithstanding any provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting
of Holders of Securities of a series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard
to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it
deems appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved
in the manner specified in Section 104 or by having the signature of the
Person executing the proxy witnessed or guaranteed by any trust company,
bank or banker authorized by Section 104 to certify to the holding of
Bearer Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and
genuine without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary
chairman of the meeting, unless the meeting has been called by the Company
or by Holders of Securities as provided in Section 1502(b), in which case
the Company or the Holders of Securities of or within the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented
at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by such Holder;
provided, however, that no vote shall be cast or counted at any meeting in
-------- -------
respect of any Security challenged as not Outstanding and ruled by the
chairman of the meeting to be not Outstanding. The chairman of the meeting
shall have no right to vote, except as a Holder of a Security of such
series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from
time to time by
83
<PAGE>
Persons entitled to vote a majority in principal amount of the Outstanding
Securities of such series represented at the meeting, and the meeting may
be held as so adjourned without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings. The vote on
-----------------------------------------------
any resolution submitted to any meeting of Holders of Securities of any series
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities of such series or of their representatives by proxy and
the principal amounts and series numbers of the Outstanding Securities of such
series held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting of
Holders of Securities of any series shall be prepared by the secretary of the
meeting and there shall be attached to such record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the fact, setting forth a copy of the notice of
the meeting and showing that such notice was given as provided in Section 1502
and, if applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 1507. Evidence of Action Taken by Holders. Any request, demand,
-----------------------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by a specified percentage in principal
amount of the Holders of any or all series may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such specified
percentage of Holders in person or by agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Article
Six) conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Article.
SECTION 1508. Proof of Execution of Instruments. Subject to Article Six,
---------------------------------
the execution of any instrument by a Holder or his agent or proxy may be proved
in accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee.
84
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
MCLEODUSA INCORPORATED
By:_____________________________
Name:
Title:
Attest:
__________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
By:_____________________________
Name:
Title:
Attest:
___________________
Name:
Title:
85
<PAGE>
STATE OF IOWA )
) SS.:
COUNTY OF LINN )
On the _______ day of _______, 1999, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he is ________________________________________ of McLeodUSA Incorporated,
one of the corporations described in and which executed the foregoing instrument
and that he signed his name thereto by authority of the Board of Directors of
said corporation.
_______________________________________
Notary Public
State of
My commission expires / /
[Seal]
86
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the _____ day of ________, 1999, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he is ____________________ of United States Trust Company of New York, one
of the corporations described in and which executed the foregoing instrument and
that he signed his name thereto by authority of the Board of Directors of said
corporation.
______________________________________________
Notary Public
State of
My commission expires / /
[Seal]
87
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) which are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) which are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section 1.165-
12(c)(1)(v) are herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise McLeodUSA Incorporated or its agent that such financial institution will
provide a certificate within a reasonable time stating that it agrees to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the United States
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by a financial institution for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, such financial institution described in clause
(iii) above (whether or not also described in clause (i) or (ii)), certifies
that it has not acquired the Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United States or
its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the above-captioned
Securities held by you for our account in accordance with your Operating
Procedures if any applicable statement herein is not
<PAGE>
correct on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] _______________ of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: __________ ___, 19___
[To be dated no earlier than the 15th day prior
to the earlier of (i) the Exchange Date or
(ii) the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
[Name of Person Making Certification]
______________________________
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] _______________
principal amount of the above-captioned Securities (i) is owned by person(s)
which are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States persons(s) which are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in United States Treasury Regulations Section 1.165-12(c)(1)(v) are
herein referred to as "financial institutions") purchasing for their own account
or for resale, or (b) United States person(s) who acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise McLeodUSA
Incorporated or its agent that such financial institution will provide a
certificate within a reasonable time stating that it agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by a
financial institution for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and that such financial institutions described in clause (iii) above (whether or
not also described in clause (i) or (ii)) have certified that they have not
acquired the Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations
<PAGE>
with respect to any portion of the part submitted herewith for exchange (or, if
relevant, collection of any interest) are no longer true and cannot be relied on
as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: __________ ___, 19___
[To be dated no earlier than the earlier of
the Exchange Date or the relevant Interest
Payment Date occurring prior to the Exchange
Date, as applicable]
[Morgan Guaranty Trust Company of New York,
Brussels Office,] as Operator of the
Euroclear System
[Cedel S.A.]
By:______________________________
______________________________
______________________________
<PAGE>
EXHIBIT 4.22
================================================================================
MCLEODUSA INCORPORATED
and
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
____________________
Indenture
Dated as of August __, 1999
____________________
Subordinated Debt Securities
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
RECITALS Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.................................................................. 1
Act................................................................................... 2
Additional Amounts.................................................................... 2
Affiliate............................................................................. 2
Attributable Indebtedness............................................................. 2
Authenticating Agent.................................................................. 2
Authorized Newspaper.................................................................. 2
Bearer Security....................................................................... 3
Board of Directors.................................................................... 3
Board Resolution...................................................................... 3
Business Day.......................................................................... 3
Capital Lease Obligation.............................................................. 3
Capital Stock......................................................................... 3
CEDEL................................................................................. 3
Class A Common Stock.................................................................. 3
Commission............................................................................ 3
Common Depositary..................................................................... 3
Company............................................................................... 4
Company Certificate................................................................... 4
Company Request" and "Company Order................................................... 4
Conversion Event...................................................................... 4
Corporate Trust Office................................................................ 4
corporation........................................................................... 4
coupon................................................................................ 4
covenant defeasance................................................................... 4
Default............................................................................... 4
Defaulted Interest.................................................................... 4
defeasance............................................................................ 4
Disqualified Stock.................................................................... 5
Dollar" or " $........................................................................ 5
DTC................................................................................... 5
ECU................................................................................... 5
Euroclear............................................................................. 5
European Communities.................................................................. 5
European Monetary System.............................................................. 5
Event of Default...................................................................... 5
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exchange Act........................................................................... 5
Exchange Date.......................................................................... 5
Foreign Currency....................................................................... 5
GAAP................................................................................... 5
Government Obligations................................................................. 6
Guarantee.............................................................................. 6
Holder................................................................................. 6
Indebtedness........................................................................... 6
Indenture.............................................................................. 7
Indexed Security....................................................................... 7
interest............................................................................... 7
Interest Payment Date.................................................................. 8
Interest Rate or Currency Protection Agreement......................................... 8
mandatory sinking fund payment......................................................... 8
Maturity............................................................................... 8
Notice of Default...................................................................... 8
Opinion of Counsel..................................................................... 8
optional sinking fund payment.......................................................... 8
Original Issue Discount Security....................................................... 8
Outstanding............................................................................ 8
Paying Agent........................................................................... 9
Payment Default........................................................................ 10
Person................................................................................. 10
Place of Payment....................................................................... 10
Predecessor Security................................................................... 10
Property............................................................................... 10
Redemption Date........................................................................ 10
Redemption Price....................................................................... 10
Registered Security.................................................................... 10
Regular Record Date.................................................................... 10
Repayment Date......................................................................... 10
Repayment Price........................................................................ 11
Responsible Officer.................................................................... 11
Restricted Subsidiary.................................................................. 11
Sale and Leaseback Transaction......................................................... 11
Securities Act......................................................................... 11
Security............................................................................... 11
Security Register" and "Security Registrar............................................. 11
Senior Discount Notes.................................................................. 11
Senior Indebtedness.................................................................... 11
Special Record Date.................................................................... 12
Stated Maturity........................................................................ 12
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Subsidiary....................................................................... 12
Trust Indenture Act.............................................................. 12
Trustee.......................................................................... 12
Trustee Permitted Investments.................................................... 12
United States.................................................................... 14
United States person............................................................. 14
Unrestricted Subsidiary.......................................................... 14
Voting Stock..................................................................... 14
Yield to Maturity................................................................ 14
SECTION 102. Compliance Certificates and Opinions................................... 14
SECTION 103. Form of Documents Delivered to Trustee................................. 15
SECTION 104. Acts of Holders........................................................ 16
SECTION 105. Notices to Trustee and Company......................................... 17
SECTION 106. Notice to Holders; Waiver.............................................. 18
SECTION 107. Effect of Headings and Table of Contents............................... 19
SECTION 108. Successors and Assigns................................................. 19
SECTION 109. Separability Clause.................................................... 19
SECTION 110. Benefits of Indenture.................................................. 19
SECTION 111. No Personal Liability.................................................. 19
SECTION 112. Governing Law.......................................................... 19
SECTION 113. Legal Holidays......................................................... 20
SECTION 114. Counterparts........................................................... 20
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities.................................................... 20
SECTION 202. Form of Trustee's Certificate of Authentication........................ 21
SECTION 203. Securities Issuable in Global Form..................................... 21
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.................................. 22
SECTION 302. Denominations......................................................... 26
SECTION 303. Execution, Authentication, Delivery and Dating........................ 26
SECTION 304. Temporary Securities.................................................. 28
SECTION 305. Registration, Registration of Transfer and Exchange................... 31
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...................... 34
SECTION 307. Payment of Interest; Interest Rights Preserved........................ 36
SECTION 308. Persons Deemed Owners................................................. 38
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 309. Cancellation.......................................................... 38
SECTION 310. Computation of Interest............................................... 39
SECTION 311. CUSIP Numbers......................................................... 39
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................................ 39
SECTION 402. Application of Trust Funds............................................. 41
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default..................................................... 41
SECTION 502. Acceleration of Maturity; Rescission and Annulment.................... 43
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee....... 44
SECTION 504. Trustee May File Proofs of Claim...................................... 45
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities or Coupons................................................. 45
SECTION 506. Application of Money Collected........................................ 46
SECTION 507. Limitation on Suits................................................... 46
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium, Interest and Additional Amounts.............................. 47
SECTION 509. Restoration of Rights and Remedies.................................... 47
SECTION 510. Rights and Remedies Cumulative........................................ 47
SECTION 511. Delay or Omission Not Waiver.......................................... 48
SECTION 512. Control by Holders of Securities...................................... 48
SECTION 513. Waiver of Past Defaults............................................... 48
SECTION 514. Waiver of Usury, Stay or Extension Laws............................... 48
SECTION 515. Undertaking for Costs................................................. 49
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.................................................... 49
SECTION 602. Certain Rights of Trustee............................................. 49
SECTION 603. Not Responsible for Recitals or Issuance of Securities................ 51
SECTION 604. May Hold Securities................................................... 51
SECTION 605. Money Held in Trust; Trustee Permitted Investments.................... 51
SECTION 606. Compensation and Reimbursement........................................ 52
SECTION 607. Trustee Eligibility; Conflicting Interests............................ 53
SECTION 608. Resignation and Removal; Appointment of Successor..................... 53
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 609. Acceptance of Appointment by Successor............................... 55
SECTION 610. Merger, Conversion, Consolidation or Succession to Business.......... 56
SECTION 611. Appointment of Authenticating Agent.................................. 56
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders......................... 58
SECTION 702. Reports by Trustee................................................... 58
SECTION 703. Reports by Company................................................... 58
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders............ 60
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales,
Leases and Conveyances............................................... 60
SECTION 802. Rights and Duties of Successor Entity................................ 61
SECTION 803. Company Certificate and Opinion of Counsel........................... 61
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders................... 61
SECTION 902. Supplemental Indentures with Consent of Holders...................... 63
SECTION 903. Execution of Supplemental Indentures................................. 64
SECTION 904. Effect of Supplemental Indentures.................................... 64
SECTION 905. Conformity with Trust Indenture Act.................................. 65
SECTION 906. Reference in Securities to Supplemental Indentures................... 65
SECTION 907. Notice of Supplemental Indentures.................................... 65
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, Interest and
Additional Amounts................................................... 65
SECTION 1002. Maintenance of Office or Agency...................................... 65
SECTION 1003. Money for Securities Payments to Be Held in Trust.................... 67
SECTION 1004. Existence............................................................ 68
SECTION 1005. Maintenance of Property.............................................. 69
SECTION 1006. [intentionally omitted].............................................. 69
SECTION 1007. Payment of Taxes and Other Claims.................................... 69
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1008. Statement as to Compliance........................................... 69
SECTION 1009. Additional Amounts................................................... 70
SECTION 1010. Waiver of Certain Covenants.......................................... 71
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article............................................. 71
SECTION 1102. Election to Redeem; Notice to Trustee................................ 71
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.................... 71
SECTION 1104. Notice of Redemption................................................. 72
SECTION 1105. Deposit of Redemption Price.......................................... 73
SECTION 1106. Securities Payable on Redemption Date................................ 73
SECTION 1107. Securities Redeemed in Part.......................................... 74
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article............................................. 74
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities................ 75
SECTION 1203. Redemption of Securities for Sinking Fund............................ 75
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article............................................. 76
SECTION 1302. Repayment of Securities.............................................. 76
SECTION 1303. Exercise of Option................................................... 76
SECTION 1304. When Securities Presented for Repayment Become
Due and Payable...................................................... 77
SECTION 1305. Securities Repaid in Part............................................ 78
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance.................................... 78
SECTION 1402. Defeasance and Discharge............................................. 78
SECTION 1403. Covenant Defeasance.................................................. 79
SECTION 1404. Conditions to Defeasance or Covenant Defeasance...................... 79
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions........................ 81
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1406. Reinstatement.................................................... 82
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called........................ 83
SECTION 1502. Call, Notice and Place of Meetings............................... 83
SECTION 1503. Persons Entitled to Vote at Meetings............................. 83
SECTION 1504. Quorum; Action................................................... 84
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings.......................................... 85
SECTION 1506. Counting Votes and Recording Action of Meetings.................. 86
SECTION 1507. Evidence of Action Taken by Holders.............................. 86
SECTION 1508. Proof of Execution of Instruments................................ 86
ARTICLE SIXTEEN
SUBORDINATION OF SECURITIES
SECTION 1601. Securities Subordinated to Senior Indebtedness................... 87
SECTION 1602. Subrogation...................................................... 88
SECTION 1603. Obligation of the Company Unconditional.......................... 88
SECTION 1604. Payments on Securities Permitted................................. 89
SECTION 1605. Effectuation of Subordination by Trustee......................... 89
SECTION 1606. Knowledge of Trustee............................................. 89
SECTION 1607. Trustee May Hold Senior Indebtedness............................. 89
SECTION 1608. Rights of Holders of Senior Indebtedness Not Impaired............ 90
</TABLE>
TESTIMONIUM
SIGNATURES
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION
vii
<PAGE>
Reconciliation and tie between
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and Indenture
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
310(a)(1), (2) and (5) 607(a)
310(a)(3) and (4) Not applicable
310(b) 608(d)
310(c) Not applicable
311 Not applicable
312(a) 704
312(b) Not applicable
312(c) 701
313(a) and (c) 702
313(b) Not applicable
314(a)(1), (2) and (3) 703
314(a)(4) 1008
314(b) Not applicable
314(c) and (e) 102
314(d) Not applicable
315(a), (c), (d) and (e) Not applicable
315(b) 601
316(a)(1)(A) 101 ("Outstanding")
316(a) (last sentence) 512
316(a)(1)(B) 513
316(a)(2) and (c) Not applicable
316(b) 508
317(a)(1) 503
317(a)(2) 504
317(b) Not applicable
318(a) 112
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 of the Trust Indenture Act are a part of and govern
every qualified indenture, whether or not physically contained
therein.
viii
<PAGE>
INDENTURE, dated as of August __, 1999, by and between MCLEODUSA
INCORPORATED, a Delaware corporation (hereinafter called the "Company"), having
-------
its principal office at 6400 C Street, S.W., Cedar Rapids, Iowa 52406 and UNITED
STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized under the
New York banking law, as trustee hereunder (hereinafter called the "Trustee"),
-------
currently having its Corporate Trust Office at 114 West 47th Street, New York,
New York 10036.
RECITALS
The Company deems it necessary to issue from time to time for its lawful
purposes subordinated debt securities (hereinafter called the "Securities")
----------
evidencing its unsecured and subordinated indebtedness, and has duly authorized
the execution and delivery of this Indenture to provide for the issuance from
time to time of the Securities, unlimited as to aggregate principal amount, to
bear interest at the rates or formulas, to mature at such times and to have such
other provisions as shall be fixed therefor as hereinafter provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act (as
herein defined) and the rules and regulations of the Commission (as herein
defined) promulgated thereunder which are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders (as herein defined) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101 Definitions. For all purposes of this Indenture, except as
-----------
otherwise expressly provided or the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and "self-
---------------- ----
liquidating paper," as used in Section 311 of the Trust Indenture Act,
-----------------
shall have the meanings assigned to them in the rules of the Commission
adopted under the Trust Indenture Act;
1
<PAGE>
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP (as herein defined); and
(4) the words "herein," "hereof" and "hereunder" and other words of
------ ------ ---------
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in Section 104(a).
---
"Additional Amounts" means any additional amounts which are required by a
------------------
Security, under circumstances specified therein, to be paid by the Company in
respect of certain taxes imposed on certain Holders and which are owing to such
Holders.
"Affiliate" means, as to any Person, any other Person which directly or
---------
indirectly controls, or is under common control with, or is controlled by, such
Person; provided that each Unrestricted Subsidiary shall be deemed to be an
Affiliate of the Company and of each other Subsidiary of the Company; provided,
further, that, except for the purposes of the definition of "Outstanding" and
Section 607, neither the Company nor any of its Restricted Subsidiaries shall
be deemed to be Affiliates of each other. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling," "under
common control with" and "controlled by"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.
"Attributable Indebtedness" means, with respect to any Sale and Leaseback
-------------------------
Transaction of any Person, as at the time of determination, the greater of (i)
the capitalized amount in respect of such transaction that would appear on the
balance sheet of such Person in accordance with GAAP and (ii) the present value
(discounted at a rate consistent with accounting guidelines, as determined in
good faith by the responsible accounting officer of such Person) of the payments
during the remaining term of the lease (including any period for which such
lease has been extended or may, at the option of the lessor, be extended) or
until the earliest date on which the lessee may terminate such lease without
penalty or upon payment of a penalty (in which case the rental payments shall
include such penalty).
"Authenticating Agent" means any authenticating agent appointed by the
--------------------
Trustee pursuant to Section 611.
"Authorized Newspaper" means a newspaper, printed in the English language
--------------------
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in each place in connection with which the
term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
2
<PAGE>
"Bearer Security" means a Security which is payable to bearer.
---------------
"Board of Directors" means the board of directors of the Company, the
------------------
executive committee or any other committee of such board duly authorized to act
for it in respect hereof.
"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" when used with respect to any Place of Payment or any other
------------
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
301, any day, other than a Saturday or Sunday, which is neither a legal holiday
nor a day on which banking institutions in such Place of Payment or particular
location are authorized or required by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means the obligation to pay rent
------------------------
or other payment amounts under a lease of (or other Indebtedness arrangement
conveying the right to use) real or personal 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 prepared in accordance with GAAP, and
the stated maturity thereof shall be the date of the last payment of rent or any
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.
"Capital Stock" in any Person means any and all shares, interests,
-------------
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than indebtedness convertible into an
equity interest), warrants or options to subscribe for or acquire an equity
interest in such Person.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or its
-----
successor.
"Class A Common Stock" means the Class A Common Stock, par value $0.01 per
--------------------
share, of the Company.
"clearing agency" has the meaning set forth in Section 3(a)(23) of the
---------------
Exchange Act.
"Commission" means the United States Securities and Exchange Commission,
----------
as from time to time constituted, created under the Exchange Act, or, if at any
time after execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Depositary" has the meaning specified in Section 304(b).
-----------------
3
<PAGE>
"Company" means the Person named as the "Company" in the first paragraph
-------
of this Indenture until a successor corporation has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation, and any other obligor on the Securities.
"Company Certificate" means a certificate signed in the name of the
-------------------
Company by (i) the Chairman of the Board of Directors, a Vice Chairman of the
Board of Directors, the President, the Chief Executive Officer or a Vice
President, and (ii) the Chief Financial Officer, the Chief Accounting Officer,
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
and delivered to the Trustee, which certificate shall comply with the provisions
of Section 102 hereof.
"Company Request" and "Company Order" mean, respectively, a written
--------------- -------------
request or order signed in the name of the Company by (i) the Chairman of the
Board of Directors, a Vice Chairman of the Board of Directors, the President,
the Chief Executive Officer or a Vice President, and (ii) the Chief Financial
Officer, the Chief Accounting Officer, the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary, and delivered to the Trustee.
"Conversion Event" means the cessation of use of (i) a Foreign Currency
----------------
(other than the ECU or other currency unit) both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit (or composite currency) other than the
ECU for the purposes for which it was established.
"Corporate Trust Office" means the principal office of the Trustee in the
----------------------
Borough of Manhattan, The City of New York, New York which at any particular
time its corporate trust business shall be principally administered, which at
the date hereof is located at 114 West 47th Street, New York, New York 10036.
"corporation" includes corporations, associations, companies, real estate
-----------
investment trusts and business trusts.
"coupon" means any interest coupon appertaining to a Bearer Security.
------
"covenant defeasance" has the meaning specified in Section 1403.
-------------------
"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.
------------------
"defeasance" has the meaning specified in Section 1402.
----------
4
<PAGE>
"Disqualified Stock" means any Capital Stock 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, or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the Stated
Maturity of the Notes.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
------ -
currency of the United States of America as at the time is legal tender for the
payment of public and private debts.
"DTC" means The Depository Trust Company.
---
"ECU" means the European Currency Unit as defined and revised from time to
---
time by the Council of the European Communities.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
---------
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the European
--------------------
Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System established
-------------------------
by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder by the Commission.
"Exchange Date" has the meaning specified in Section 304(b).
-------------
"Foreign Currency" means any currency, currency unit or composite
----------------
currency, including, without limitation, the ECU issued by the government of one
or more countries other than the United States of America or by any recognized
confederation or association of such governments.
"GAAP" means United States generally accepted accounting principles,
----
consistently applied, as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination; provided that, except as
--------
5
<PAGE>
otherwise specifically provided herein, all calculations made for purposes of
determining compliance with Section 801 and Article Ten hereof with respect to a
series of Securities shall utilize GAAP as in effect on the date of the original
issuance and authentication of the Securities of such series pursuant to this
Indenture.
"Government Obligations" means securities which are (i) direct obligations
----------------------
of the United States of America or the government which issued the Foreign
Currency in which the Securities of a particular series are payable, for the
payment of which its full faith and credit is pledged, or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America or such government which issued the Foreign
Currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of interest
on or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
--------
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
"Guarantee" means any direct or indirect obligation, contingent or
---------
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner. The terms
"Guaranteed," "Guaranteeing" and "Guarantor" shall have correlative meanings.
"Holder" when used with respect to a Registered Security, means the Person
------
in whose name such Registered Security is registered in the Security Register
and, when used with respect to a Bearer Security or any coupon, means the bearer
thereof.
"Indebtedness" means, at any time (without duplication), with respect to
------------
any Person, whether recourse as to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, Guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with the acquisition of
Property, assets or businesses, excluding trade accounts payable made in the
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business, which in either case are not more than 60 days overdue or which are
being contested in good faith), (v) any Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person and, to the extent held
6
<PAGE>
by Persons other than such Person or its Restricted Subsidiaries, the maximum
fixed redemption or repurchase price of Disqualified Stock of such Person's
Restricted Subsidiaries, at the time of determination, (vii) every obligation
under Interest Rate and Currency Protection Agreements of such Person, (viii)
any Attributable Indebtedness with respect to any Sale and Leaseback Transaction
to which such Person is a party and (ix) any obligation of the type referred to
in clauses (i) through (viii) of this definition of another Person and all
dividends and distributions of another Person the payment of which, in either
case, such Person has Guaranteed or is responsible or liable, directly or
indirectly, as obligor, Guarantor or otherwise. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Disqualified Stock that does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Stock as if such Disqualified Stock were repurchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Indenture; provided that, if such Disqualified Stock is not then permitted
to be repurchased, the repurchase price shall be the book value of such
Disqualified Stock. The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation;
provided that the amount outstanding at any time of any Indebtedness issued with
original issue discount (including, without limitation, the Senior Discount
Notes) is the face amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP.
"Indenture" means this instrument as originally executed or as it may from
---------
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, and includes
the terms of particular series of Securities established as contemplated by
Section 301; provided, however, that, if at any time more than one Person is
-------- -------
acting as Trustee under this instrument, "Indenture" when used with respect to
any one or more series of Securities with respect to which such Person is acting
as Trustee, shall mean this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of those particular series of Securities with respect to which
such Person is acting as Trustee established as contemplated by Section 301,
exclusive, however, of any provisions or terms which relate solely to other
series of Securities with respect to which such Person is not acting as Trustee,
regardless of when such terms or provisions were adopted, and exclusive of any
provisions or terms adopted by means of one or more indentures supplemental
hereto executed and delivered after such Person had become such Trustee but to
which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that the
----------------
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"interest" when used with respect to an Original Issue Discount Security
--------
which by its terms bears interest only after Maturity, means interest payable
after Maturity, and, when used
7
<PAGE>
with respect to a Security which provides for the payment of Additional Amounts
pursuant to Section 1009, includes such Additional Amounts.
"Interest Payment Date" when used with respect to any Security, means the
---------------------
Stated Maturity of an installment of interest on such Security.
"Interest Rate or Currency Protection Agreement" of any Person means any
----------------------------------------------
forward contract, futures contract, swap, option, future option or other
financial agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreements) relating to, or the value of which is dependent
upon, interest rates or currency exchange rates or indices.
"mandatory sinking fund payment" has the meaning specified in Section
------------------------------
1201.
"Maturity" when used with respect to any Security, means the date on which
--------
the principal of such Security or an installment of principal become due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment, repurchase or otherwise.
"Notice of Default" has the meaning specified in Section 501.
-----------------
"Opinion of Counsel" means a written opinion of counsel, who may be an
------------------
employee of or counsel for the Company or other counsel satisfactory to the
Trustee.
"optional sinking fund payment" has the meaning specified in Section 1201.
-----------------------------
"Original Issue Discount Security" means any Security which provides for
--------------------------------
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding" when used with respect to Securities, means, as of the date
-----------
of determination, all Securities theretofore authenticated and delivered under
this Indenture, exclusive of:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities, or portions thereof, for whose payment or redemption
or repayment at the option of the Holder 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 is acting as its own Paying Agent) for the holders of such
Securities and any coupons appertaining thereto, provided that, if such
--------
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or other provision therefor satisfactory
to the Trustee has been made;
8
<PAGE>
(3) Securities, except solely to the extent provided in Section 401,
1402 or 1403, as applicable, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Four or
Fourteen; and
(4) 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 has been presented to the Trustee proof satisfactory
to it that such Securities are held by a bona fide purchaser in whose hands
such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the required
- -------- -------
principal amount of the Outstanding Securities have concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder or are
present at a meeting of Holders for quorum purposes, and for the purpose of
making the calculations required by Section 313 of the Trust Indenture Act, (i)
the principal amount of an Original Issue Discount Security which may be counted
in making such determination or calculation and which shall be deemed
Outstanding for such purpose shall be equal to the amount of principal thereof
which would be (or has been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency which may be counted in making such determination or
calculation and which shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined pursuant to Section 301 as of the
date such Security is originally issued by the Company, of the principal amount
(or, in the case of an Original Issue Discount Security, the Dollar equivalent
as of such date of original issuance of the amount determined as provided in
clause (i) above) of such Security, (iii) the principal amount of any Indexed
Security which may be counted in making such determination or calculation and
which shall be deemed Outstanding for such purpose shall be equal to the
principal face amount of such Indexed Security at original issuance, unless
otherwise provided with respect to such Indexed Security pursuant to Section
301, and (iv) Securities owned by the Company or any other obligor on the
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not Outstanding, except that, for the purposes of
determining whether the Trustee is protected in making such calculation or in
relying on any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which the Trustee knows are so owned 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 on the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
------------
principal of (and premium, if any, on) and interest and Additional Amounts, if
any, on any Securities or coupons on behalf of the Company, or if no such Person
is authorized, the Company.
9
<PAGE>
"Payment Default" means any failure to pay any scheduled installment of
---------------
principal of, premium, if any, or interest on any indebtedness within the grace
period provided for such payment in the documentation governing such
indebtedness.
"Person" means any individual, corporation, partnership, limited liability
------
company, limited liability partnership, joint venture, association, joint-stock
company, real estate investment trust, business trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" when used with respect to the Securities of or within
----------------
any series, means the Corporate Trust Office of the Trustee and any place or
places which the Company may from time to time designate as the place or places
where the principal of (and premium, if any, on) and interest and Additional
Amounts, if any, on such Securities are payable as specified as contemplated by
Sections 301 and 1002 and presentations, surrenders, notices and demands with
respect to such Securities and this Indenture may be made.
"Predecessor Security" when used with respect to any particular Security,
--------------------
means every previous Security evidencing all or a portion of the same debt as
evidenced by such Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.
"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, excluding Capital Stock in any other Person.
"Redemption Date" when used with respect to any Security to be redeemed,
---------------
means the date fixed for such redemption by or pursuant to this Indenture or the
terms of such Security.
"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 or the
terms of such Security.
"Registered Security" means any Security which is registered in the
-------------------
Security Register.
"Regular Record Date" when used with respect to an installment of interest
-------------------
payable on any Interest Payment Date on the Registered Securities of or within
any series, means the date specified for that purpose as contemplated by Section
301, whether or not a Business Day.
"Repayment Date" when used with respect to any Security to be repaid or
---------------
repurchased at the option of the Holder, means the date fixed for such repayment
or repurchase by or pursuant to this Indenture or the terms of such Security.
10
<PAGE>
"Repayment Price" when used with respect to any Security to be repaid or
---------------
repurchased at the option of the Holder, means the price at which it is to be
repaid or repurchased by or pursuant to this Indenture or the terms of such
Security.
"Responsible Officer" when used with respect to the Trustee, means any
-------------------
vice president (whether or not designated by numbers or words added before or
after said title), any assistant vice president, any assistant secretary or any
other officer or assistant officer of the Trustee in the corporate trust
department or similar group of the Trustee or, with respect to any particular
matter arising hereunder, any officer of the Trustee to whom such matter has
been assigned.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
---------------------
been designated as an Unrestricted Subsidiary pursuant to this Indenture.
"Sale and Leaseback Transaction" means, with respect to any Person, any
------------------------------
direct or indirect arrangement pursuant to which 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.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder by the Commission.
"Security" has the meaning specified in the first recital of this
--------
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; provided, however, that, if at any time
-------- -------
there is more than one Person acting as Trustee under this Indenture,
"Securities" when used with respect to the Indenture with respect to which such
Person is acting as Trustee, shall have the meaning stated in the first recital
of this Indenture and shall more particularly mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities of or within
any series with respect to which such Person is not acting as Trustee.
"Security Register" and "Security Registrar" have the respective meanings
----------------- ------------------
specified in Section 305.
"Senior Discount Notes" means the Company's 10 1/2% Senior Discount Notes
---------------------
due March 1, 2007.
"Senior Indebtedness" means, with respect to the Company, the principal of
-------------------
(and premium, if any) and interest and Additional Amounts, if any, on, or
substantially similar payments to be made by the Company in respect of, any
Indebtedness, whether the same is outstanding as of the date hereof or hereafter
incurred, created, guaranteed, or assumed, and whether or not contingent, other
than (i) any such Indebtedness as to which, in the instrument, agreement or
other document creating or evidencing such Indebtedness pursuant to which such
Indebtedness is outstanding, it is expressly provided that such Indebtedness is
not superior in right of payment to the Securities issued hereunder or ranks
equally with the Securities issued
11
<PAGE>
hereunder, (ii) any such Indebtedness which is subordinated to the Indebtedness
of the Company to substantially the same extent as or to a greater extent than
the Securities issued hereunder are subordinated and (iii) the Securities issued
hereunder.
"Special Record Date" when used with respect to the payment of any
-------------------
Defaulted Interest on the Registered Securities of or within any series, means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity" when used with respect to any Security or any
---------------
installment of principal thereof or interest thereon or any Additional Amounts
with respect thereto, means the date specified in such Security or a coupon
representing such installment of interest as the fixed date on which the
principal of such Security or such installment of principal or interest is, or
such Additional Amounts are, 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 unless such contingency has occurred).
"Subsidiary" means, with respect to any Person, (i) any corporation more
----------
than 50 percent of the outstanding shares of Voting Stock of which is owned,
directly or indirectly, by such Person, or by one of more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries of such
Person, (ii) any general partnership, limited liability company, joint venture
or similar entity, more than 50 percent of the outstanding partnership,
membership or similar interests of which are 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 other Subsidiaries of such Person and (iii) any limited
partnership of which such Person or any Subsidiary of such Person is a general
partner.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
-------------------
and 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 has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then acting as a Trustee hereunder; provided,
--------
however, that, if at any time there is more than one such Person, "Trustee" when
- -------
used with respect to the Securities of or within any series, shall mean only the
Trustee with respect to the Securities of such series, and no Trustee of
Securities for any series shall be responsible for the acts or omissions of a
Trustee for any other series of Securities.
"Trustee Permitted Investments" means:
-----------------------------
(1) Government Obligations;
(2) Direct obligations and fully guaranteed certificates of
beneficial interest of the Export-Import Bank of the United States;
consolidated debt obligations and letter
12
<PAGE>
of credit-backed issues of the Federal Home Loan Banks; participation
certificates and senior debt obligations of the Federal Home Loan Mortgage
Corporation; debentures of the Federal Housing Administration; mortgage-
backed securities (except stripped mortgage securities which are valued
greater than par on the portion of unpaid principal) and senior debt
obligations of the Federal National Mortgage Association; participation
certificates of the General Services Administration; guaranteed mortgage-
backed securities and guaranteed participation certificates and guaranteed
pool certificates of the Small Business Administration; debt obligations
and letter of credit-backed issues of the Student Loan Marketing
Association; local authority bonds of the U.S. Department of Housing and
Urban Development; guaranteed Title XI financing of the U.S. Maritime
Administration; guaranteed transit bonds of the Washington Metropolitan
Area Transit Authority; or Resolution Funding Corporation securities;
(3) Direct obligations of any state of the United States of America
or any subdivision or agency thereof whose unsecured, uninsured and
unguaranteed general obligation debt is rated, at the time of purchase, at
least as high as the rating then in effect on the Securities by Standard &
Poor's Rating Services, or any obligation fully and unconditionally
guaranteed by any state, subdivision or agency whose unsecured, uninsured
and unguaranteed general obligation debt is rated, at the time of purchase,
at least as high as the rating then in effect on the Securities by Standard
& Poor's Rating Services;
(4) Commercial paper (having original maturities of not more than 270
days) rated, at the time of purchase, "A-1+" by Standard & Poor's Rating
Services or "P-1" by Moody's Investors Services, Inc.;
(5) Federal funds, unsecured certificates of deposit, time deposits
or bankers acceptances (in each case having maturities of not more than 365
days) of any domestic bank (including the Trustee in its commercial
capacity), including a branch office of a foreign bank which branch office
is located in the United States, provided that written legal opinions in
--------
form acceptable to the Trustee are received to the effect that full and
timely payment of such deposit or similar obligation is enforceable against
the principal office or any branch of such bank, which, at the time of
purchase, has a rating of "A-1+" by Standard & Poor's Rating Services or
"P-1" by Moody's Investors Services, Inc.;
(6) Deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of not less than
$3,000,000, provided that such deposits are continuously and fully insured
--------
by the Federal Deposit Insurance Corporation, including, without
limitation, an insured money market account of the Trustee;
(7) Investments in money-market funds rated in the highest rating
category by Standard & Poor's Rating Services or Moody's Investors
Services, Inc.; such funds may include those for which the Trustee or an
affiliate of the Trustee provides services for
13
<PAGE>
a fee, whether as investment advisor, custodian, transfer agent, sponsor,
distributor or otherwise; and
(8) Shares of an open-end, diversified investment company which is
registered under the Investment Company Act of 1940, as amended, and which
(i) invests exclusively in permitted investments of the type set forth in
clauses (1) through (7) above; (ii) seeks to maintain a constant net asset
value per share in accordance with regulations of the Commission; and (iii)
has aggregate net assets of at least $50,000,000 on the date of purchase.
Any investment made in accordance with this Indenture may (i) be executed by the
Trustee or the Company with or through the Trustee or its affiliates and (ii) be
made in securities of any entity for which the Trustee or any of its affiliates
serves as offeror, distributor, advisor or other service provider.
"United States" means, unless otherwise specified with respect to any
-------------
Securities pursuant to Section 301, the United States of America (including the
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with respect to
--------------------
any Securities pursuant to Section 301, an individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
"Unrestricted Subsidiary" means any Subsidiary of the Company that the
-----------------------
Company has classified as an Unrestricted Subsidiary and that has not been
reclassified as a Restricted Subsidiary pursuant to this Indenture.
"Voting Stock" means with respect to any Person, securities of any class
------------
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.
"Yield to Maturity" means the yield to maturity, computed at the time of
-----------------
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.
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 a Company Certificate
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenants, compliance with which constitute
14
<PAGE>
conditions 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 (other than certificates provided
pursuant to Section 1008) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation on 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 or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(4) a statement as to whether or not, 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 in which
--------------------------------------
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion as 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, on an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters on which his or her certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, on a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
15
<PAGE>
If any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities of all series or one or more series,
as the case may be, 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. If Securities of a series are
issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of the Outstanding Securities of
such series may, alternatively, be embodied in and evidenced by the record
of such Holders voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of such Holders duly called and
held in accordance with the provisions of Article Fifteen, or a combination
of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments or record or both are delivered to the Trustee and, if
expressly required herein, to the Company. Such instrument or instrument
and any such record (and the action embodied therein and evidenced thereby)
are herein sometimes referred to as the "Act" of the Holders signing such
---
instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent,
or of the holding by any Person of a Security, shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the
Company and any agent of the Trustee or the Company, if made in the manner
provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved 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 or her the execution thereof or by any other means
acceptable to the Trustee. If such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the
Security Register.
(d) The ownership of Bearer Securities may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company,
16
<PAGE>
bank, banker or other depositary, wherever situated, if such certificate is
deemed by the Trustee to be satisfactory, showing that at the date therein
mentioned such Person had on deposit with such depositary, or exhibited to
it, the Bearer Securities therein described; or such facts may be proved by
the certificate or affidavit of the Person holding such Bearer Securities,
if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of
any Bearer Security continues until (i) another certificate or affidavit
bearing a later date issued in respect of the same Bearer Security is
produced, (ii) such Bearer Security is produced to the Trustee by some
other Person, (iii) such Bearer Security is surrendered in exchange for a
Registered Security or (iv) such Bearer Security is no longer Outstanding.
The ownership of Bearer Securities may also be proved in any other manner
which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, in 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 not be
obligated to do so. Notwithstanding Section 316(c) of the Trust Indenture
Act, 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 purpose
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 eleven months after the record date.
(f) 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, any Security Registrar, any Paying Agent, any Authenticating Agent
or the Company in reliance thereon, whether or not notation of such action
is made on such Security.
SECTION 105. Notices to Trustee and Company. Any request, demand,
------------------------------
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made on, given or
furnished to, or filed with:
17
<PAGE>
(1) the Trustee by any Holder or the Company shall be sufficient for
every purpose hereunder if in writing and mailed, first class postage
prepaid, to the Trustee addressed to it at the address of its Corporate
Trust Office specified in the first paragraph of this Indenture, Attention:
Corporate Trust Administration; or
(2) the Company by the Trustee or any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first class postage prepaid, to the Company addressed
to it at the address of its 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. When this Indenture provides for
-------------------------
notice of any event to Holders of Registered Securities by the Company or the
Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at such Holder's address as it appears
in the Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case in
which notice to Holders of Registered Securities 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 of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice.
If, by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it is impracticable to give such notice
by mail, then such notification to Holders of Registered Securities as is made
with the approval of the Trustee shall constitute a sufficient notification to
such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with
respect to any Securities pursuant to Section 301, when this Indenture provides
for notice to Holders of Bearer Securities of any event, such notices shall be
sufficiently given if published in an Authorized Newspaper in The City of New
York and in such other city or cities as may be specified in such Securities
and, if the Securities of such series are listed on any securities exchange
outside the United States, in any place at which such Securities are listed on a
securities exchange to the extent that such securities exchange so requires, on
a Business Day, such publication to be not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.
If, by reason of the suspension of publication of any Authorized Newspaper
or Authorized Newspapers or by reason of any other cause, it is impracticable to
publish any notice to Holders of Bearer Securities as provided above, then such
notification to Holders of Bearer Securities as is given with the approval of
the Trustee shall constitute sufficient notice to such
18
<PAGE>
Holders for every purpose hereunder. Neither the failure to give notice by
publication to any particular Holder of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of such
notice with respect to other Holders of Bearer Securities or the sufficiency of
any notice to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
When 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 on such waiver.
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.
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 any Security or any coupon 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 any
---------------------
Security or any coupon, express or implied, shall give to any Person, other than
the parties hereto, any Security Registrar, any Paying Agent, any Authenticating
Agent and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. No Personal Liability. No recourse under or on any obligation,
---------------------
covenant or agreement contained in this Indenture or in any Security or any
coupon, or because of any indebtedness evidenced thereby, shall be had against
any promoter, as such or, against any past, present or future director, officer,
employee or shareholder, as such, of the Company or of any successor, either
directly or through the Company or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities by the Holders thereof
and as part of the consideration for the issue of the Securities.
SECTION 112. Governing Law. This Indenture and the Securities and any
-------------
coupons shall be governed by and construed in accordance with the laws of the
State of New York
19
<PAGE>
applicable to agreements made and to be performed in such State. This Indenture
is subject to the provisions of the Trust Indenture Act which, by the provisions
thereof, are deemed or required to be part of this Indenture and shall, to the
extent applicable, be governed by such provisions. if any provision of this
indenture limits, qualifies or conflicts with the duties imposed by operation of
Section 318(c) of the Trust Indenture Act, the imposed duties shall control.
SECTION 113. Legal Holidays. In any case in which any Interest Payment
--------------
Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security is not a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or any coupon other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu hereof),
payment of the principal of (and premium, if any, on) or interest or Additional
Amounts, if any, on such Security need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date,
Redemption Date, Repayment Date or sinking fund payment date, or at the Stated
Maturity or Maturity; provided, however, that no interest shall accrue on the
-------- -------
amount so payable for the period from and after such Interest Payment Date,
Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity or
Maturity, as the case may be.
SECTION 114. Counterparts. This Indenture may be executed in several
------------
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities. The Registered Securities, if any, of
-------------------
each series and the Bearer Securities, if any, and any coupons of each series,
shall be in substantially the forms as are established in or pursuant to one or
more indentures supplemental hereto and/or Board Resolutions, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301, Bearer
Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed or
engraved or produced by any combination of these methods on a steel engraved
border or steel engraved
20
<PAGE>
border or steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities or coupons, as evidenced by
their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication. Subject to
-----------------------------------------------
Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
_____________________,
as Trustee
By:________________________________
Authorized Officer
SECTION 203. Securities Issuable in Global Form. If Securities of or
----------------------------------
within a series are issuable in global form, as specified as contemplated by
Section 301, then, notwithstanding clause (8) of Section 301 and the provisions
of Section 302, any such Security shall represent such of the Outstanding
Securities of such series as are specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from
time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in the manner and in
accordance with instructions given by such Person or Persons specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or 304. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and in accordance with instructions given by the Person or
Persons specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
21
<PAGE>
Notwithstanding the provisions of Section 307, unless otherwise specified
as contemplated by Section 301, payment of principal of (and premium, if any,
on) and interest and Additional Amounts, if any, on any Security in permanent
global form shall be made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided in the
preceding paragraph, the Company, the Trustee and any agent of the Company or
the Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent
global Security in registered form, or (ii) in the case of a permanent global
Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal
------------------------------------
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to one or more Board Resolutions, and/or indentures
supplemental hereto, prior to the issuance of Securities of any series, any or
all of the following, as applicable (each of which (except for the matters set
forth in clauses (1), (2) and (15) below), if so provided, may be determined
from time to time by the Company with respect to unissued Securities of or
within the series when issued from time to time):
(1) the title of the Securities of or within the series (which shall
distinguish the Securities of such series from all other series of
Securities);
(2) any limit on the aggregate principal amount of the Securities of
or within the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of or within the series pursuant to Section 304, 305, 306, 906,
1107 or 1305);
(3) the date or dates, or the method by which such date or dates will
be determined, on which the principal of the Securities of or within the
series shall be payable and the amount of principal payable thereon;
(4) the rate or rates at which the Securities of or within the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue or the method by which such date or dates shall be determined, the
Interest Payment Dates on which such interest will be payable and the
Regular Record Date, if any, for the interest payable on any Registered
Security on any Interest Payment Date, or the method by which such date
shall be determined,
22
<PAGE>
and the basis on which interest shall be calculated if other than a 360-day
year comprised of twelve 30-day months;
(5) the place or places, if any, other than or in addition to the
Corporate Trust Office where the principal of (and premium, if any, on) and
interest and Additional Amounts, if any, on Securities of or within the
series shall be payable, any Registered Securities of or within the series
may be surrendered for registration of transfer, exchange or conversion and
notices or demands to or on the Company in respect of the Securities of or
within the series and this Indenture may be served;
(6) the period or periods within which, the price or prices
(including the premium, if any) at which, the currency or currencies,
currency unit or units or composite currency or currencies in which, and
other terms and conditions upon which Securities of or within the series
may be redeemed, in whole or in part, at the option of the Company, if the
Company is to have the option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of or within the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the period or
periods within which or the date or dates on which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon which
Securities of or within the series shall be redeemed, repaid or purchased,
in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of or within
the series shall be issuable and, if other than the denomination of $5,000,
the denomination or denominations in which any Bearer Securities of or
within the series shall be issuable;
(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) the percentage of the principal amount at which Securities will
be issued and, if other than the principal amount thereof, the portion of
the principal amount of Securities of or within the series which shall be
payable upon declaration of acceleration of the Maturity thereof pursuant
to Section 502, or, if applicable, the portion of the principal amount of
Securities which is convertible in accordance with the provisions of this
Indenture, or the method by which such portion shall be determined;
(11) if other than Dollars, the Foreign Currency or Currencies in
which payment of the principal of (and premium, if any, on) or interest or
Additional Amounts, if any, on the Securities of or within the series shall
be payable or in which the Securities of or within the series shall be
denominated;
23
<PAGE>
(12) whether the amount of payments of the principal of (and premium,
if any, on) or interest or Additional Amounts, if any, on the Securities of
or within the series may be determined with reference to an index, formula
or other method (which index, formula or method may be based, without
limitation, on one or more currencies, currency units, composite
currencies, commodities, equity indices or other indices), and the manner
in which such amounts shall be determined;
(13) whether the principal of (and premium, if any, on) or interest or
Additional Amounts, if any, on the Securities of or within the series are
to be payable, at the election of the Company or a Holder thereof, in a
currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Securities are denominated or
stated to be payable, the period or periods within which (including the
Election Date), and the terms and conditions upon which, such election may
be made, and the time and manner of, and identity of the exchange rate
agent with responsibility for, determining the exchange rate between the
currency or currencies, currency unit or units or composite currency or
currencies in which such Securities are denominated or stated to be payable
and the currency or currencies, currency unit or units or composite
currency or currencies in which such Securities are to be so payable;
(14) provisions, if any, granting special rights to the Holders of
Securities of or within the series on the occurrence of such events as may
be specified;
(15) any deletions from, modifications of or additions to the Events
of Default or covenants of the Company with respect to Securities of or
within the series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(16) whether Securities of or within the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or both,
any restrictions applicable to the offer, sale or delivery of Bearer
Securities and the terms upon which Bearer Securities of or within the
series may be exchanged for Registered Securities of or within the series
and vice versa (if permitted by applicable laws and regulations), whether
any Securities of or within the series are to be issuable initially in
temporary global form and whether any Securities of or within the series
are to be issuable in permanent global form (with or without coupons) and,
if so, whether beneficial owners of interests in any such permanent global
Security may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination and the circumstances
under which any such exchanges may occur, if other than in the manner
provided in Section 305, and, if Registered Securities of or within the
series are to be issuable as a global Security, the identity of the
depositary for such series, and the date as of which any Bearer Securities
of or within the series and any temporary global Security representing
Outstanding Securities of or within the series shall be dated if other than
the date of original issuance of the first Security of the series to be
issued;
24
<PAGE>
(17) the Person to whom any interest on any Registered Security of
the series shall be payable, if other than 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, the manner in
which, or the Person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary global Security on an Interest Payment Date will be paid if other
than in the manner provided in Section 304;
(18) the applicability, if any, of Sections 1402 and/or 1403 to the
Securities of or within the series and any provisions in modification of,
in addition to or in lieu of any of the provisions of Article Fourteen;
(19) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or terms
of such certificates, documents or conditions;
(20) if the Securities of or within the series are to be issued upon
the exercise of debt warrants, the time, manner and place for such
Securities to be authenticated and delivered;
(21) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1009 on the Securities of or
within the series to any Holder who is not a United States person
(including any modification to the definition of such term) in respect of
any tax, assessment or governmental charge and, if so, whether the Company
will have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option);
(22) the obligation, if any, of the Company to permit the conversion
of the Securities of such series into Class A Common Stock, preferred stock
of the Company or other debt securities of the Company, and the terms and
conditions on which such conversion shall be effected (including, without
limitation, the initial conversion price or rate, the conversion period,
any adjustment of the applicable conversion price and any requirements
relative to the reservation of such shares for purposes of conversion;
(23) whether and to what extent the Securities of the series are to be
guaranteed by one or more of the Subsidiaries of the Company or by other
Persons; and
(24) any other terms of the series, including subordination provisions
associated with the Securities of any series (which terms shall not be
inconsistent with the provisions of this Indenture).
25
<PAGE>
All Securities of any one series and the coupons appertaining to any Bearer
Securities of such series, if any, shall be substantially identical except, in
the case of Registered or Bearer Securities issued in global form, as to
denomination and except as may otherwise be provided in or pursuant to such
Board Resolution or in any such indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened, without the consent of the Holders, for
issuances of additional Securities of such series.
If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions or supplemental
indentures, a copy of an appropriate record of such action(s) shall be certified
by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order for authentication and
delivery of such Securities.
SECTION 302. Denominations. The Securities of each series shall be issuable
-------------
as Bearer Securities, as Registered Securities or in any combination thereof,
and in such denominations and amounts as are specified as contemplated by
Section 301. With respect to any series denominated in Dollars, in the absence
of any such provisions with respect to the Securities of any series, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of
$5,000.
SECTION 303. Execution, Authentication, Delivery and Dating. The
----------------------------------------------
Securities and any coupons shall be executed on behalf of the Company by its
Chief Executive Officer, its President or any Executive Vice President and shall
be attested by the Company's Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities and any coupons 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 and such
coupons.
Any Securities or any coupons 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 or any coupons.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with any
coupons, 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 shall authenticate and deliver such Securities in accordance with
the Company Order; provided, however, that, in connection with its original
-------- -------
issuance, no Bearer Security shall be mailed or otherwise delivered to any
location in the United States; and provided, further, that, unless otherwise
-------- -------
specified with respect to any
26
<PAGE>
series of Securities pursuant to Section 301, a Bearer Security may be delivered
in connection with its original issuance only if the Person entitled to receive
such Bearer Security has furnished a certificate to Euroclear or CEDEL, as the
case may be, in the form set forth in Exhibit A-1 to this Indenture or such
other certificate as may be specified with respect to any series of Securities
pursuant to Section 301, dated no earlier than 15 days prior to the earlier of
the date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture.
Except as permitted by Section 306, the Trustee shall not authenticate and
deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled. If all of the Securities of any series
are not to be issued at one time and if the Board Resolution or supplemental
indenture establishing such series so permits, such Company Order may set forth
procedures acceptable to the Trustee for the issuance of such Securities and
determining the terms of particular Securities of such series, such as the
interest rate or formula, maturity date, date of issuance and date from which
interest shall accrue.
In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities and any
coupons appertaining thereto, the Trustee shall be entitled to receive, and
(subject to Section 315(a) through 315(d) of the Trust Indenture Act) shall be
fully protected in relying on:
(1) an Opinion of Counsel complying with Section 102 and stating
that:
(A) the form or forms of such Securities and any coupons
appertaining thereto have been, or will have been upon compliance with
such procedures as may be specified therein, established in conformity
with the provisions of this Indenture;
(B) the terms of such Securities and any coupons appertaining
thereto have been, or will have been upon compliance with such
procedures as may be specified therein, established in conformity with
the provisions of this Indenture; and
(C) such Securities, together with any coupons appertaining
thereto, when executed by the Company, completed pursuant to such
procedures as may be specified therein and delivered by the Company to
the Trustee for authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance with this
Indenture and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute
legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or
27
<PAGE>
affecting the enforcement of creditors' rights generally and to
general equitable principles and to such other matters as may be
specified therein; and
(2) a Company Certificate complying with Section 102 and stating that
all conditions precedent provided for in this Indenture relating to the
issuance of such Securities have been, or will have been upon compliance
with such procedures as may be specified therein, complied with and that,
to the best of the knowledge of the signers of such certificate, no Event
of Default with respect to such Securities has occurred and is continuing.
The Trustee shall not be required to authenticate such Securities if the issue
of such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties, obligations or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver a Company Order, an Opinion of Counsel or a
Company Certificate otherwise required pursuant to the preceding paragraph at
the time of issuance of each Security of such series, but such order, opinion
and certificate with appropriate modifications to cover such future issuances,
shall be delivered at or before the time of issuance of the first Security of
such series.
Each Registered Security shall be dated the date of its authentication and
each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
No Security or coupon shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
or the Security to which such coupon appertains a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized officer, and such certificate on any Security
shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and is entitled to the benefits of
this Indenture. Notwithstanding the foregoing, if any Security has been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company delivers such Security to the Trustee for cancellation as
provided in Section 309 together with a written statement (which need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel) stating
that such Security has never been issued or sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. Temporary Securities.
--------------------
(a) Pending the preparation of definitive Securities of any series,
the Company may execute, and upon a Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or
28
<PAGE>
otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, in
registered form, or, if authorized, in bearer form (with or without
coupons), 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.
In the case of Securities of any series, such temporary Securities may be
in global form.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with Section 304(b) or as otherwise provided in
or pursuant to a Board Resolution), if temporary Securities of any series
are issued, the Company shall cause definitive Securities of such series to
be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company
in a Place of Payment for such series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any
series, together with any non-matured coupons appertaining thereto, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of the
same series of authorized denominations; provided, however, that no
-------- -------
definitive Bearer Security shall be delivered in exchange for a temporary
Registered Security; and provided, further, that a definitive Bearer
-------- -------
Security shall be delivered in exchange for a temporary Bearer Security
only in compliance with the conditions set forth in Section 303. Until so
exchanged, the temporary Securities or coupons appertaining thereto of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities or coupons appertaining thereto of such
series.
(b) Unless otherwise provided as contemplated in Section 301, this
Section 304(b) shall govern the exchange of temporary Securities issued in
global form other than through the facilities of DTC. If any such temporary
Security is issued in global form, then such temporary global Security
shall, unless otherwise provided therein, be delivered to the London office
of a depositary or common depositary (the "Common Depositary"), for the
-----------------
benefit of Euroclear and CEDEL.
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary
global Security (the "Exchange Date"), the Company shall deliver to the
-------------
Trustee definitive Securities, in an aggregate principal amount equal to
the principal amount of such temporary global Security, executed by the
Company. On or after the Exchange Date, such temporary global Security
shall be surrendered by the Common Depositary to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or from time to
time in part, for definitive Securities without charge, and the Trustee
shall authenticate and deliver, in the name of Euroclear or CEDEL, as the
case may be, in exchange for each
29
<PAGE>
portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of or within the same series of authorized
denominations and of like tenor as the portion of such temporary global
Security to be exchanged. The definitive Securities to be delivered in
exchange for any such temporary global Security shall be in bearer form,
registered form, permanent global bearer form or permanent global
registered form, or any combination thereof, as specified as contemplated
by Section 301, and, if any combination thereof is so specified, as
requested by the Common Depositary;
provided, however, that, unless otherwise specified in such temporary
-------- -------
global Security, upon such presentation by the Common Depositary, such
temporary global Security shall be accompanied by a certificate dated the
Exchange Date or a subsequent date and signed by Euroclear as to the
portion of such temporary global Security held for its account then to be
exchanged and a certificate dated the Exchange Date or a subsequent date
and signed by CEDEL as to the portion of such temporary global Security
held for its account then to be exchanged, each in the form set forth in
Exhibit A-2 to this Indenture or in such other form as may be established
pursuant to Section 301; and provided, further, that definitive Bearer
-------- -------
Securities shall be delivered in exchange for a portion of a temporary
global Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same
series and of like tenor following the Exchange Date when the account
holder instructs Euroclear or CEDEL, as the case may be, to request such
exchange on his behalf and delivers to Euroclear or CEDEL, as the case may
be, a certificate in the form set forth in Exhibit A-1 to this Indenture
(or in such other form as may be established pursuant to Section 301),
dated no earlier than 15 days prior to the Exchange Date, copies of which
certificate shall be available from the offices of Euroclear and CEDEL, the
Trustee, any Authenticating Agent appointed for such series of Securities
and each Paying Agent. Unless otherwise specified in such temporary global
Security, any such exchange shall be made free of charge to the beneficial
owners of such temporary global Security, except that a Person receiving
definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such
definitive Securities in person at the offices of Euroclear or CEDEL.
Definitive Securities in bearer form to be delivered in exchange for any
portion of a temporary global Security shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of the same series
and of like tenor authenticated and delivered hereunder, except that,
unless otherwise specified as contemplated by Section 301, interest payable
on a temporary global Security on an Interest Payment Date for Securities
of such series occurring prior to the applicable Exchange Date shall be
payable to Euroclear and CEDEL on such Interest Payment Date upon delivery
by Euroclear and
30
<PAGE>
CEDEL to the Trustee of a certificate or certificates in the form set forth
in Exhibit A-2 to this Indenture (or in such other forms as may be
established pursuant to Section 301), for credit without further interest
on or after such Interest Payment Date to the respective accounts of
Persons who are the beneficial owners of such temporary global Security on
such Interest Payment Date and who have each delivered to Euroclear or
CEDEL, as the case may be, a certificate dated no earlier than 15 days
prior to the Interest Payment Date occurring prior to such Exchange Date in
the form set forth in Exhibit A-1 to this Indenture (or in such other forms
as may be established pursuant to Section 301). Notwithstanding anything to
the contrary herein contained, the certifications made pursuant to this
paragraph shall satisfy the certification requirements of the preceding two
paragraphs of this Section 304(b) and of the third paragraph of Section 303
of this Indenture and the interests of the Persons who are the beneficial
owners of the temporary global Security with respect to which such
certification was made will be exchanged for definitive Securities of the
same series and of like tenor on the Exchange Date or the date of
certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and
until such interest in such temporary global Security has been exchanged
for an interest in a definitive Security. Any interest so received by
Euroclear and CEDEL and not paid as herein provided shall be returned to
the Trustee prior to the expiration of two years after such Interest
Payment Date in order to be repaid to the Company.
SECTION 305. Registration, Registration of Transfer and Exchange. The
---------------------------------------------------
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for each
series of Securities (the registers maintained in such office or in any such
office or agency of the Company in a Place of Payment being herein sometimes
referred to collectively as the "Security Register") in which, subject to such
-----------------
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby initially appointed "Security Registrar" for
------------------
the purpose of registering Registered Securities and transfers of Registered
Securities on such Security Register as herein provided. In the event that the
Trustee ceases to be Security Registrar, it shall have the right to examine the
Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Security of any series at any office
or agency of the Company in a Place of Payment for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount, being a number not contemporaneously outstanding, and
containing identical terms and provisions.
31
<PAGE>
Subject to the provisions of this Section 305, at the option of the Holder,
Registered Securities of any series may be exchanged for other Registered
Securities of the same series, of any authorized denomination or denominations
and of a like aggregate principal amount, containing identical terms and
provisions, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any such Registered Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered Securities which the Holder making the
exchange is entitled to receive. Unless otherwise specified with respect to any
series of Securities as contemplated by Section 301, Bearer Securities may not
be issued in exchange for Registered Securities.
If (but only if) permitted as contemplated by Section 301, at the option of
the Holder, Bearer Securities of any series may be exchanged for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the Bearer Securities to
be exchanged at any such office or agency, with all unmatured coupons and all
matured coupons in default appertaining thereto. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
in an amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Bearer Security surrenders to any Paying Agent any such missing
coupon in respect of which such a payment has been made, such Holder shall be
entitled to receive the amount of payment; provided, however, that, except as
-------- -------
otherwise provided in Section 1002, interest represented by a coupon shall be
payable only upon presentation and surrender of such coupons at an office or
agency located outside the United States. Notwithstanding the foregoing, in case
a Bearer Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the relevant
Interest Payment Date or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date for payment, as the case
may be, and interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture. 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.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the depositary for any permanent global
Security is DTC, then, unless the terms of such global Security expressly permit
such global Security to be exchanged in whole or in part for
32
<PAGE>
definitive Securities, a global Security may be transferred, in whole but not in
part, only to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor
to DTC for such global Security selected and approved by the Company or to a
nominee of such successor to DTC. If at any time DTC notifies the Company that
it is unwilling or unable to continue as depositary for the applicable global
Security or Securities or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act if so required by applicable law or
regulation, the Company shall appoint a successor depositary with respect to
such global Security or Securities. If (i) a successor depositary for such
global Security or Securities is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such unwillingness,
inability or ineligibility, (ii) an Event of Default has occurred and is
continuing and the beneficial owners representing a majority in principal amount
of the applicable series of Securities represented by such global Security or
Securities advise DTC to cease acting as depositary for such global Security or
Securities or (iii) the Company, in its sole discretion, determines at any time
that all Outstanding Securities (but not less than all) Securities of any series
issued or issuable in the form of one or more global Securities shall no longer
be represented by such global Security or Securities (provided, however, that
-------- -------
the Company may not make such determination during the 40-day restricted period
provided by Regulation S under the Securities Act or during any other similar
period during which the Securities must be held in global form as may be
required by the Securities Act), then, upon surrender of the global Security or
Securities appropriately endorsed, the Company shall execute, and the Trustee
shall authenticate and deliver definitive Securities of like series, rank, tenor
and terms in definitive form in an aggregate principal amount equal to the
principal amount of such global Security or Securities. If any beneficial owner
of an interest in a permanent global Security is otherwise entitled to exchange
such interest for Securities of such series and of like tenor and principal
amount of another authorized form and denomination, as specified as contemplated
by Section 301 and provided that any applicable notice provided in the permanent
global Security has been given, then without unnecessary delay but in any event
not earlier than the earliest date on which such interest may be so exchanged,
upon surrender of the global Security or Securities appropriately endorsed, the
Company shall execute, and the Trustee shall authenticate and deliver definitive
Securities in aggregate principal amount equal to the principal amount of such
beneficial owner's interest in such permanent global Security. On or after the
earliest date on which such interests may be so exchanged, such permanent global
Security shall be surrendered for exchange by DTC or such other depositary as is
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose; provided, however, that no such exchanges may
------- --------
occur during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those selected
for redemption; and provided, further, that no Bearer Security delivered in
-------- -------
exchange for a portion of a permanent global Security shall be mailed or
otherwise delivered to any location in the United States. If a Registered
Security is issued in exchange for any portion of a permanent global Security
after the close of business at the office or agency where such exchange occurs
on (i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date or (ii) any Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, interest or Defaulted
33
<PAGE>
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of such Registered
Security, but will be payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person to whom interest in respect of
such portion of such permanent global Security is payable in accordance with the
provisions of this Indenture.
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 Registered Security presented or surrendered for registration of
transfer or for exchange or redemption shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge which may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security may be
among those selected for redemption during a period beginning at the opening of
business 15 days before selection of the Securities to be redeemed under Section
1103 and ending at the close of business on (A) if such Securities are issuable
only as Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if such Securities are issuable as Bearer Securities, the day
of the first publication of the relevant notice of redemption or, if such
Securities are also issuable as Registered Securities and there is no
publication, the day of the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of such series
and like tenor, provided that such Registered Security is simultaneously
--------
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any
------------------------------------------------
mutilated Security or a Security with a mutilated coupon appertaining thereto is
surrendered to the Trustee or the Company, together with, in proper cases, such
security or indemnity as may be required by the Company or the Trustee to save
each of them or any of their agents harmless, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new
34
<PAGE>
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.
If there is delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security or coupon, and
(ii) such security or indemnity as may be required by them to save each of them
and any of their agents harmless, then, in the absence of notice to the Company
or the Trustee that such Security or coupon has been acquired by a bona fide
purchaser, the Company shall execute, and upon Company Request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security to which a destroyed, lost or stolen coupon
appertains (with all appurtenant coupons not destroyed, lost or stolen), a new
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case any
such mutilated, destroyed, lost or stolen Security or coupon has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; provided, however, that payment of principal of (and premium, if any,
-------- -------
on) and interest and Additional Amounts, if any, on any Bearer Securities shall,
except as otherwise provided in Section 1002, be payable only at an office or
agency located outside the United States and, unless otherwise specified as
contemplated by Section 301, any interest on Bearer Securities shall be payable
only upon presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge which may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series and any coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and any coupons appertaining thereto or the destroyed, lost or stolen coupon are
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
such series and any coupons appertaining thereto duly issued hereunder.
35
<PAGE>
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 or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved. Except as
----------------------------------------------
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, interest on any Registered 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 on any Registered Security may at the Company's option
be paid by (i) 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 on the Security Register or (ii) transfer to an
account maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301 with respect to
the Securities of any series, payment of interest may be made, in the case of a
Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.
Unless otherwise provided as contemplated by Section 301, every permanent
global Security will provide that interest, if any, payable on any Interest
Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case may be,
with respect to that portion of such permanent global Security held for its
account by Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.
In case a Bearer Security of any series is surrendered in exchange for a
Registered Security of such series after the close of business (at an office or
agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, any interest on any Registered
Security of any series which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date ("Defaulted Interest") shall
------------------
forthwith cease to be payable to the registered Holder thereof upon the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election, as provided in paragraph
(1) or (2) below:
36
<PAGE>
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Registered Security of such series and the date of the
proposed payment (which shall not be less than 20 days after such notice is
received by the Trustee), and at the same time the Company shall deposit
with the Trustee an amount of money in the currency or currencies, currency
unit or units or composite currency or currencies in which the Securities
of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) 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 on or 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 provided in this paragraph. 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 mailed, first-class
postage prepaid, to each Holder of Registered Securities of such series at
such Holder's address as it appears in the Security Register not less than
10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company cause a similar
notice to be published at least once in an Authorized Newspaper in each
place of payment, but such publications shall not be a condition precedent
to the establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to paragraph (2) below. In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series
in exchange for a Registered Security of such series after the close of
business at such office or agency on any Special Record Date and before the
opening of business at such office or agency on the related proposed date
for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such proposed date of payment
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the
37
<PAGE>
requirements of any securities exchange on which such Securities may be
listed, and on such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this paragraph, such manner of payment is deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners. Prior to due presentment of a
---------------------
Registered 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
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any, on) and (subject to
Sections 305 and 307) interest and Additional Amounts, if any, on such
Registered Security and for all other purposes whatsoever, whether or not such
Registered Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
Title to any Bearer Security and any coupons shall pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the
Holder of any Bearer Security and the Holder of any coupon as the absolute owner
of such Security or coupon for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever, whether or not such
Security or coupon be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.
SECTION 309. Cancellation. All Securities and coupons surrendered for
------------
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and coupons and any Securities and coupons surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities
38
<PAGE>
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 canceled by the Trustee. If
the Company so acquires 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 canceled as provided in this Section, except as expressly
permitted by this Indenture. Canceled Securities and coupons held by the Trustee
shall be destroyed by the Trustee and the Trustee shall deliver a certificate of
such destruction to the Company unless the Company delivers a Company Order
which directs their return to it.
SECTION 310. Computation of Interest. Except as otherwise specified as
-----------------------
contemplated by Section 301 with respect to Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.
SECTION 311. CUSIP Numbers. The Company in issuing the Securities may use
-------------
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall
---------------------------------------
upon Company Request cease to be of further effect with respect to any series of
Securities specified in such Company Request (except as to any surviving rights
of registration of transfer or exchange of Securities of such series herein
expressly provided for and any right to receive Additional Amounts, as provided
in Section 1009), and the Trustee, upon receipt of a Company Order and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when:
(1) either:
(A) all Securities of such series theretofore authenticated and
delivered and any coupons appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section
305, (ii) Securities of such series and coupons appertaining
39
<PAGE>
thereto which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306, (iii) coupons
appertaining to Securities called for redemption and maturing after
the relevant Redemption Date, whose surrender has been waived as
provided in Section 1106, and (iv) Securities of such series and
coupons appertaining thereto for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of clauses
(i) and (ii) below, any coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee funds
in trust for the purpose, in the currency or currencies, currency unit
or units or composite currency or currencies in which the Securities
of such series are payable, and in an amount sufficient to pay and
discharge the entire indebtedness on such Securities and such coupons
not theretofore delivered to the Trustee for cancellation, for the
principal (and premium, if any) and interest and Additional Amounts,
if any, to the date of such deposit (in the case of Securities which
have become due and payable) or the Stated Maturity or Redemption
Date, as the case may be;
(2) The Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) The Company has delivered to the Trustee a Company Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company
40
<PAGE>
to any Authenticating Agent under Section 611 and, if money has been deposited
with and held by the Trustee pursuant to subparagraph (B) of paragraph (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003, shall survive.
SECTION 402. Application of Trust Funds. 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, the coupons 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 principal (and premium, if any) and interest and Additional Amounts, if
any, for the payment of which such money has been deposited with or received by
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. Subject to any modifications, additions or
-----------------
deletions relating to any series of Securities as contemplated pursuant to
Section 301, "Event of Default," whenever used herein with respect to any
----------------
particular series of Securities, means any one of the following events (whatever
the reason for such Event of Default and whether or not it is voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest on or any Additional
Amounts payable in respect of any Security of or within such series or of
any coupon appertaining thereto, when such interest, Additional Amounts or
coupon becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of such series when the same becomes due and payable at
its Maturity, or the failure to make an offer to purchase any Security of
such series with respect to which a repurchase is required by the terms
thereof; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of any Security of such series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture with respect to any Security of
such series (other than a covenant or warranty a default in the performance
of which or the breach of which is elsewhere specifically provided for in
this Section), and continuance of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Securities of such
series, a written
41
<PAGE>
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
-----------------
(5) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Restricted
Subsidiary of the Company in an involuntary case or proceeding under United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency, or other
similar law or (ii) a decree or order adjudging the Company or any
Restricted Subsidiary of the Company a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of, or in respect of, the Company or any
Restricted Subsidiary of the Company under United States bankruptcy laws,
as now or hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency, or similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Restricted Subsidiary of the Company or of
any substantial part of the Property or assets of the Company or any
Restricted Subsidiary of the Company, or ordering the winding-up or
liquidation of the affairs of the Company or any Restricted Subsidiary of
the Company, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of 60
consecutive calendar days; or
(6) (i) the commencement by the Company or any Restricted Subsidiary
of the Company of a voluntary case or proceeding under United States
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or insolvent;
or (ii) the consent by the Company or any Restricted Subsidiary of the
Company to the entry of a decree or order for relief in respect of the
Company or any Restricted Subsidiary of the Company in an involuntary case
or proceeding under United States bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state, or foreign bankruptcy,
insolvency, or other similar law or to the commencement of any bankruptcy
or insolvency case or proceeding against the Company or any Restricted
Subsidiary of the Company; or (iii) the filing by the Company or any
Restricted Subsidiary of the Company of a petition or answer or consent
seeking reorganization or relief under United States bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law; or (iv) the consent by
the Company or any Restricted Subsidiary of the Company to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company or any Restricted Subsidiary of the Company or of any
substantial part of the Property or assets of the Company or any Restricted
Subsidiary of the Company, or the making by the Company or any Restricted
Subsidiary of the Company of an assignment for the benefit of creditors; or
(v) the admission by the Company or any Restricted Subsidiary of the
Company in writing of its inability to pay its debts generally
42
<PAGE>
as they become due; or (vi) the taking of corporate action by the Company
or any Restricted Subsidiary of the Company in furtherance of any such
action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment. (1) If an
--------------------------------------------------
Event of Default (other than an Event of Default set forth in Section 501(5) or
(6)) with respect to Securities of any series at the time Outstanding occurs and
is continuing, then and in every such case, unless the principal of all of the
Outstanding Securities of such series already has become due and payable, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series may declare the principal (or, if any
Securities are Original Issue Discount Securities or Indexed Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Securities of such series and any accrued and unpaid interest thereon to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
or specified portion thereof and any accrued and unpaid interest thereon shall
become immediately due and payable. If an Event of Default set forth in Section
501(5) or (6) occurs with respect to the Securities of any series, then in each
such case, the principal of all the Securities of such series and any accrued
and unpaid interest thereon shall be due and payable immediately, without notice
to the Company and without any declaration or other act on the part of the
Trustee or any Holder of any Securities of such series.
(2) At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of a majority in principal amount of the
Outstanding Securities of such series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(A) The Company has paid or deposited with the Trustee a sum
sufficient to pay, in the currency, currency unit or composite currency in
which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series):
(i) all overdue installments of interest on and any Additional
Amounts payable in respect of all Outstanding Securities of such
series and any coupons appertaining thereto;
(ii) the principal of (and premium, if any, on) any Outstanding
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
borne by or provided for in such Securities;
(iii) to the extent that payment of such interest is lawful,
interest on overdue installments of interest and any Additional
Amounts at the rate or rates borne by or provided for in such
Securities; and
43
<PAGE>
(iv) 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
(B) all Events of Default with respect to Securities of such series,
other than the nonpayment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on Securities of such series which
have become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
resulting therefrom.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. The Company covenants that if:
- -------
(1) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Security of any series or any coupon
appertaining thereto when such interest or Additional Amount becomes due
and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security of any series at its Maturity,
then the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of the Securities of such series and any such coupons,
the whole amount then due and payable on such Securities and any such coupons
for principal (and premium, if any) and interest and Additional Amounts, if any,
with interest on any overdue principal (and premium, if any) and, to the extent
that payment of such interest is legally enforceable, on any overdue
installments of interest or Additional Amounts, if any, at the rate or rates
borne by or provided for in such Securities, and, in addition thereto, such
further amount as is sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor on the Securities of such series 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 on the Securities of
such series, wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
coupons appertaining thereto by such appropriate judicial proceedings as the
Trustee deems most effectual to protect and enforce any such rights,
44
<PAGE>
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of
--------------------------------
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor on the Securities of such series or the
property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities of any series is then
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee has made any demand on the Company for the
payment of overdue principal, premium, if any, or interest or Additional
Amounts, if any) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(1) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of
principal (and premium, if any) and interest and Additional Amounts, if
any, owing and unpaid in respect of the Securities of such series and to
file such other papers or documents and take such other action, including
participating as a member of any official creditors committee appointed in
the matter, as it may deem necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series and any coupons appertaining thereto to
make such payments to the Trustee, and in the event that the Trustee consents to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee or any predecessor Trustee under Section
606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or
--------------------------------------------------------------
Coupons. All rights of action and claims under this Indenture or any of the
- -------
Securities or any coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or coupons or the production thereof in
any proceeding relating thereto, and any such
45
<PAGE>
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities and coupons 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 shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest or Additional
Amounts, if any, on presentation of the Securities or coupons, or both, as the
case may be, and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
(1) to the payment of all amounts due the Trustee and any predecessor
Trustee under Section 606;
(2) to the payment of the amounts then due and unpaid on the
Securities and coupons for principal (and premium, if any) and interest and
Additional Amounts, if any, payable, 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 aggregate amounts due and payable on
such Securities and coupons for principal (and premium, if any) and
interest and Additional Amounts, if any, respectively; and
(3) to the payment of the remainder, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 506. At least 15 calendar days before such
record date, the Company shall mail to each Holder and the Trustee a notice that
states such record date, the payment date and amount to be paid. The Trustee
may mail such notice in the name and at the expense of the Company.
SECTION 507. Limitation on Suits. No Holder of any Security of any series
-------------------
or any coupon appertaining thereto shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
46
<PAGE>
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium,
-------------------------------------------------------------
Interest and Additional Amounts. Notwithstanding any other provision in this
- -------------------------------
Indenture, the Holder of any Security or coupon shall have the right which is
absolute and unconditional to receive payment of the principal of (and premium,
if any, on ) and (subject to Sections 305 and 307) interest and Additional
Amounts, if any, on such Security or payment of such coupon on or after the
respective due dates expressed in such Security or coupon (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 or affected without the
consent of such Holder.
SECTION 509. Restoration of Rights and Remedies. If the Trustee or any
----------------------------------
Holder of a Security or coupon 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 the Company, the Trustee and the
Holders of Securities and coupons shall, subject to any determination in such
proceeding, 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 or coupons in the last paragraph of Section 306, no right or
remedy herein conferred on or reserved to the Trustee or to the Holders of
Securities or coupons 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.
47
<PAGE>
SECTION 511. Delay or Omission Not Waiver. No delay or omission of the
----------------------------
Trustee or of any Holder of any Security or coupon to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities or coupons, as the
case may be.
SECTION 512. Control by Holders of Securities. The Holders of not less
--------------------------------
than a majority in principal amount of the Outstanding Securities of any series
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Securities of such series,
provided that:
- --------
(1) such direction is not in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of Securities of
such series not joining therein (but the Trustee shall have no obligation
as to the determination of such undue prejudice).
SECTION 513. Waiver of Past Defaults. The Holders of at least a majority
-----------------------
in principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series and any coupons appertaining
thereto waive any past default hereunder with respect to such series and its
consequences, except a default:
(1) in the payment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on any Security of such series or
any coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected thereby.
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 resulting therefrom.
SECTION 514. Waiver of Usury, Stay or Extension Laws. The Company covenants
---------------------------------------
(to the extent which it may lawfully do so) that it shall not at any time insist
on, or plead, or in any
48
<PAGE>
manner whatsoever claim or take the benefit or advantage of, any usury, stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent which 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.
SECTION 515. Undertaking for Costs. All parties to this Indenture agree,
---------------------
and each Holder of any Security by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any, on) or
interest or Additional Amounts, if any, on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults. Within 90 days after the occurrence of
------------------
any default hereunder known to a Responsible Officer with respect to the
Securities of any series, the Trustee shall give to the Holders of the
Securities of such series, in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act, notice of such default hereunder known to the
Trustee, unless such default has been cured or waived; provided, however, that,
-------- -------
except in the case of a default in the payment of the principal of (or premium,
if any, on) or interest or Additional Amounts, if any, on any Security of such
series, or in the payment of any sinking fund installment with respect to the
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities and coupons of such series; and provided, further, that in the
-------- ------
case of any default or breach of the character specified in clause (4) of
Section 501 with respect to the Securities of such series and any coupons
appertaining thereto, no such notice to Holders shall be given until at least 60
days after the occurrence thereof. For the purposes of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
-------
would become, an Event of Default with respect to the Securities of such series.
SECTION 602. Certain Rights of Trustee. Subject to the provisions of
-------------------------
Section 315(a) through 315(d) of the Trust Indenture Act:
49
<PAGE>
(1) the Trustee shall perform only such duties as are expressly
undertaken by it to perform under this Indenture;
(2) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(3) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security, together with any coupons appertaining thereto,
to the Trustee for authentication and delivery pursuant to Section 303,
which shall be sufficiently evidenced as provided therein) and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(4) whenever, in the administration of this Indenture, the Trustee
deems it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence is specifically prescribed herein) may, in the absence of bad
faith on its part, rely on a Company Certificate;
(5) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(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 of Securities of any series or any coupons
appertaining thereto pursuant to this Indenture, unless such Holders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(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, coupon or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee determines 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;
(8) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee
50
<PAGE>
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(9) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred on it by this
Indenture;
(10) The Trustee shall not be deemed to have knowledge of any event or
fact upon the occurrence of which it may be required to take action
hereunder unless a Responsible Officer of the Trustee has actual knowledge
of the occurrence of such event or fact; and
(11) The Trustee shall not be required 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
has reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
SECTION 603. Not Responsible for Recitals or Issuance of Securities. The
------------------------------------------------------
recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or any coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities. The Trustee, any Paying Agent, Security
-------------------
Registrar, Authenticating Agent or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and coupons and, subject to Sections 310(b) and 311 of the Trust Indenture Act,
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee, Paying Agent, Security Registrar,
Authenticating Agent or such other agent.
SECTION 605. Money Held in Trust; Trustee Permitted Investments. 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, or investment of, any money received by it hereunder except as
otherwise agreed with and for the sole benefit of the Company.
Pending their use under this Indenture, moneys held by the Trustee
hereunder may be invested in Trustee Permitted Investments maturing or
redeemable at the option of the holder at or before the time when such moneys
are expected to be needed by the Trustee and shall be
51
<PAGE>
so invested pursuant to a Company Order if no Event of Default known to the
Trustee then exists under this Indenture and otherwise at the discretion of the
Trustee. Any investment pursuant to this Section 605 shall be held by the
Trustee as a part of the moneys held by the Trustee hereunder, as applicable,
and shall be sold or redeemed to the extent necessary to make payments or
transfers or anticipated payments from such moneys.
The Trustee shall be entitled to rely on all written investment
instructions provided by the Company hereunder, and shall have no duty to
monitor the compliance thereof with the restrictions set forth herein. The
Trustee shall have no responsibility or liability for any depreciation in the
value of any investment or for any loss, direct or indirect, resulting from any
investment made in accordance with a Company Order. The Trustee shall be without
liability to the Company or any Holder or any other person in the event that any
investment made in accordance with a Company Order shall cause any person to
incur any liability or rebates or other monies payable pursuant to the Internal
Revenue Code of 1986, as amended.
Any interest realized on investments and any profit realized upon the sale
or other disposition thereof shall be credited to moneys held by the Trustee
hereunder and any loss shall be charged thereto.
SECTION 606. Compensation and Reimbursement. The Company agrees:
------------------------------
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse each
of the Trustee and any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by it in
connection with its administration of the trust hereunder (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except to the extent any such expense, disbursement or
advance may be attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense, arising
out of or in connection with the acceptance or administration of the trust
or trusts or the performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder except to the extent any such loss, liability or expense may be
attributable to its own negligence or bad faith.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities on all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (or premium, if any, on) or interest or
Additional Amounts, if any, on particular Securities or any coupons.
52
<PAGE>
The Company's payment obligations pursuant to this Section 606 shall
survive the resignation or removal of the Trustee and discharge of this
Indenture. Subject to any other rights available to the Trustee under
applicable bankruptcy law, when the Trustee incurs expenses after the occurrence
of a Default specified in Section 501(5) or Section 501(6) hereof, the expenses
are intended to constitute expenses of administration under bankruptcy law.
SECTION 607. Trustee Eligibility; Conflicting Interests. There shall at all
------------------------------------------
times be a Trustee hereunder which is eligible to act as Trustee under Section
310(a)(1) of the Trust Indenture Act and has a combined capital and surplus of
at least $50,000,000. If such Trustee publishes reports of condition at least
annually, pursuant to law or the requirements of Federal, State, Territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Trustee shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. No obligor on the Securities or Affiliate of
any such obligor shall serve as Trustee on such Securities. If at any time the
Trustee ceases to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
SECTION 608. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
an instrument of acceptance by a successor Trustee has not 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 with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series delivered to the
Trustee and the Company.
(d) If at any time:
(1) the Trustee fails to comply with the provisions of Section
310(b) of the Trust Indenture Act after written request therefor by
the Company or any Holder of a Security who has been a bona fide
Holder of a Security for at least six months, unless the Trustee's
duty to resign is stayed in accordance with the provisions of Section
310(b) of the Trust Indenture Act, or
53
<PAGE>
(2) the Trustee ceases to be eligible under Section 607 and
fails to resign after written request therefor by the Company or any
Holder of a Security 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 a decree or
order for relief by a court having jurisdiction in the premises shall
have been entered in respect of the Trustee in an involuntary case
under the United States bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy,
insolvency or similar law; or a decree or order by a court having
jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trustee or of its
Property and assets or affairs, or any public officer shall take
charge or control of the Trustee or of its Property and assets or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, or
(4) the Trustee shall commence a voluntary case under the United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or similar law or
shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Trustee or its Property and assets or
affairs, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as
they become due, or shall take corporate action in furtherance of any
such action,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove the Trustee and appoint a successor Trustee with
respect to all Securities, or (ii) subject to Section 315(e) of the Trust
Indenture Act, any Holder of a Security who has been a bona fide Holder of
a Security for at least six months may, on behalf of such Holder and all
others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee resigns, is removed or becomes incapable of
acting, or if a vacancy occurs in the office of Trustee for any cause with
respect to the Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee
or Trustees with respect to the Securities of such series (it being
understood that any such successor Trustee may be appointed with respect to
the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any
particular series). If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series is appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed
54
<PAGE>
shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series has been so
appointed by the Company or the Holders of Securities and accepted
appointment in the manner hereinafter provided, any Holder of a Security
who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of such Holder and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of
any series in the manner provided for notices to the Holders of Securities
in Section 106. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Company and the retiring Trustee an
instrument accepting such appointment, and, thereupon, the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
but, on 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, subject nevertheless to its claim, if any,
provided for in Section 606.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine, wherein each successor
Trustee shall accept such appointment and which (i) shall contain such
provisions as are necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of such series to
which the appointment of such successor Trustee relates, (ii) if the
retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as are necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of such series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee and (iii)
shall add to or change any of the provisions of this Indenture
55
<PAGE>
as are necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees co-
trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and, upon the execution
and delivery of such supplemental indenture, the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of such
series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee
shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder with respect to
the Securities of such series to which the appointment of such successor
Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article and under the Trust Indenture Act.
SECTION 610. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
--------
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities or coupons have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities or coupons so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities or coupons. In case any Securities or coupons have not been
authenticated by such predecessor Trustee, any such successor Trustee may
authenticate and deliver such Securities or coupons, in either its own name or
that of its predecessor Trustee, with the full force and effect which this
Indenture provides for the certificate of authentication of the Trustee.
SECTION 611. Appointment of Authenticating Agent. At any time when any of
-----------------------------------
the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer
56
<PAGE>
or partial redemption or repayment thereof, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder. Any
such appointment shall be evidenced by an instrument in writing signed by a
Responsible Officer of the Trustee, a copy of which instrument shall be promptly
furnished to the Company. Whenever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and, except as may otherwise be provided pursuant to Section 301, shall
at all times be a bank or trust company or corporation organized and doing
business and in good standing under the laws of the United States of America or
of any State or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State or
District of Columbia authorities. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
ceases to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
is a party, or any corporation succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation is otherwise eligible under this
Section, without the execution or filing of any paper or further act on the part
of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time resign
by giving written notice of resignation to the Trustee for such series and the
Company. The Trustee for any series of Securities may at any time terminate the
agency of an Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent ceases to be eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment to all Holders of Securities of or within the series with respect to
which such Authenticating Agent will serve in the manner set forth in Section
106. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
57
<PAGE>
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation including reimbursement of its reasonable expenses for
its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By:_________________________________,
as Authenticating Agent
By:_________________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders. Every Holder of
--------------------------------------------
Securities or coupons, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of the
Trust Indenture Act, 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 Section 312(b) of the Trust
Indenture Act.
SECTION 702. Reports by Trustee. Within 60 days after August 1 of each year
------------------
commencing with the first August 1 after the first issuance of Securities
pursuant to this Indenture, the Trustee shall transmit by mail to all Holders of
Securities as provided in Section 313(c) of the Trust Indenture Act a brief
report dated as of such August 1 if required by Section 313(a) of the Trust
Indenture Act.
SECTION 703. Reports by Company. The Company will:
------------------
58
<PAGE>
(1) deliver to the Trustee and each Holder, within 15 days after the
same are filed with the Commission, copies of all reports and information
(or copies of such portions of any of the foregoing as the Commission may
by rules and regulations prescribe), if any, exclusive of exhibits, which
the Company and any guarantors are required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act or pursuant to the
immediately following sentence. So long as any Securities remain
outstanding, the Company and any Subsidiary guarantors shall file with the
Commission such reports as may be required pursuant to Section 13 of the
Exchange Act in respect of a security registered pursuant to Section 12 of
the Exchange Act. If the Company or any Subsidiary guarantors are not
subject to the requirements of Section 13 or 15(d) of the Exchange Act (or
otherwise required to file reports pursuant to the immediately preceding
sentence), the Company shall deliver to the Trustee and to each Holder,
within 15 days after the Company and any Subsidiary guarantors would have
been required to file such information with the Commission were they
required to do so, financial statements, including any notes thereto (and,
in the case of a fiscal year end, an auditors' report by an independent
certified public accounting firm of established national reputation), and a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," substantially equivalent to that which they would have been
required to include in such quarterly or annual reports, information,
documents or other reports if they had been subject to the requirements of
Section 13 or 15(d) of the Exchange Act. Notwithstanding the foregoing, to
the extent then permitted by federal securities laws or regulations or "no-
action" letters interpreting such laws or regulations, separate financial
statements and other information of any Subsidiary guarantors shall not be
required. The Company and any Subsidiary guarantors shall also comply with
the other provisions of Section 314(a) of the Trust Indenture Act;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to the Holders of Securities, within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, such summaries of
any information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission; and
(4) delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants
59
<PAGE>
hereunder (as to which the Trustee is entitled to rely exclusively on
Company Certificates).
SECTION 704. Company to Furnish Trustee Names and Addresses of Holders. The
---------------------------------------------------------
Company shall furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular Record
Date for interest for each series of Securities, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders of Registered Securities of such series as of such Regular Record
Date, or if there is no Regular Record Date for interest for such series of
Securities, semi-annually, on such dates as are set forth in the Board
Resolution or indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that, so long as the Trustee is the Security Registrar, no
- -------- -------
such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Company and Sales, Leases and
-----------------------------------------------------------
Conveyances. Except as otherwise provided with respect to any series of
- -----------
Securities, the Company may consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person,
provided that in any such case (i) either the Company shall be the continuing
corporation or the surviving Person or the Person formed by or surviving such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized and validly existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) such
surviving Person assumes all the obligations, including the due and punctual
payment of the principal of (and premium, if any, on) and interest and
Additional Amounts, if any, on all Securities, according to their tenor, and the
due and punctual performance and observance of all covenants and conditions, of
the Company under the Securities and the Indenture pursuant to a supplemental
Indenture in form reasonably satisfactory to the Trustee; and (iii) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company or any Subsidiary as a result of such
transaction as having been incurred by the Company or such Subsidiary at the
time of the transaction, no Event of Default and no event which, after notice or
the lapse of time or both, would become an Event of Default shall have occurred
and be continuing.
60
<PAGE>
SECTION 802. Rights and Duties of Successor Entity. In case of any such
-------------------------------------
consolidation, merger, sale, lease or conveyance and upon any such assumption by
the successor entity, such successor entity shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
party of the first part, and the predecessor entity, except in the event of a
lease, shall be relieved of any further obligation under this Indenture and the
Securities. Such successor entity thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore have not been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
entity, instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any
Securities which such successor entity thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 803. Company Certificate and Opinion of Counsel. Any consolidation,
------------------------------------------
merger, sale, lease or conveyance permitted under Section 801 is also subject to
the condition that the Trustee receive a Company Certificate and an Opinion of
Counsel to the effect that any such consolidation, merger, sale, lease or
conveyance, and the assumption by any successor entity, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders. Without
--------------------------------------------------
the consent of any Holders of Securities or coupons, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for
61
<PAGE>
the benefit of such series) or to surrender any right or power herein
conferred on the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such Events of Default
are to be for the benefit of less than all series of Securities, stating
that such Events of Default are expressly being included solely for the
benefit of such series); provided, however, that, in respect of any such
-------- -------
additional Events of Default, such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default or may limit the right of the
Holders of a majority in aggregate principal amount of such series of
Securities to which such additional Events of Default apply to waive such
default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of the principal of (or
premium, if any, on) or interest or Additional Amounts, if any, on Bearer
Securities, to permit Bearer Securities to be issued in exchange for
Registered Securities, to permit Bearer Securities to be issued in exchange
for Bearer Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form, provided that
--------
any such action shall not adversely affect the interests of the Holders of
Securities of any series or any coupons appertaining thereto in any
material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
--------
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and
any coupons appertaining thereto as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as are necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision
hereof which may be defective or inconsistent with any other provision
hereof, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
the provisions of this Indenture or to make any other changes, provided
--------
that, in each case, such provisions shall not adversely affect the
62
<PAGE>
interests of the Holders of Securities of any series or any coupons
appertaining thereto in any material respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as are necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 401, 1402 and
1403; provided that, in each case, any such action shall not adversely
--------
affect the interests of the Holders of Securities of such series and any
coupons appertaining thereto or any other series of Securities in any
material respect; or
(11) to make any change that does not adversely affect the legal
rights under this Indenture of any Holder of Securities of any series; or
(12) to add a guarantor of the Securities of any series; or
(13) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders. With the
-----------------------------------------------
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities affected by such supplemental indenture, by Act of such
Holders delivered to the Company and the Trustee, the Company (when authorized
by or pursuant to a Board Resolution) and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and coupons under this Indenture; provided, however, that no such
-------- -------
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of principal of or interest on, any Security;
or reduce the principal amount thereof or the rate or amount of interest
thereon or any Additional Amounts payable in respect thereof, or any
premium payable upon the redemption thereof, or change any obligation of
the Company to pay Additional Amounts pursuant to Section 1009 (except as
contemplated by clause (1) of Section 801 and permitted by clause (1) of
Section 901), or reduce the amount of the principal of an Original Issue
Discount Security which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 or the amount
thereof provable in bankruptcy pursuant to Section 504; or adversely affect
any right of repayment at the option of the Holder of any Security, or
change any Place of Payment where, or the currency or currencies, currency
unit or units or composite currency or currencies in which, the principal
of any Security or any premium or any Additional Amounts payable in respect
thereof or the 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, in the case of redemption or repayment at the
option of the Holder, on or after the Redemption Date or the Repayment
Date, as the case may be); or
63
<PAGE>
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which
is required for any waiver with respect to such series (or compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting; or
(3) modify any of the provisions of this Section, Section 513 or
Section 1010, except to increase the required percentage to effect such
action or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; or
(4) release any guarantors from their guarantees of the Securities,
or, except as contemplated in any supplemental indenture, make any change
in a guarantee of a Security that would adversely affect the interests of
the Holders, or
(5) modify the ranking or priority of the Securities.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act approves the substance thereof.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included for the benefit of
one or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
SECTION 903. Execution of Supplemental Indentures. In executing, or
------------------------------------
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying on, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures. Upon the execution of any
---------------------------------
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder and of any coupon appertaining
thereto shall be bound thereby.
64
<PAGE>
SECTION 905. Conformity with Trust Indenture Act. Every supplemental
-----------------------------------
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company so determines, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
SECTION 907. Notice of Supplemental Indentures. Promptly after the
---------------------------------
execution by the Company and the Trustee of any supplemental indenture pursuant
to the provisions of Section 902, 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 Principal, Premium, Interest and Additional
------------------------------------------------------
Amounts. The Company covenants and agrees for the benefit of the Holders of each
- -------
series of Securities that it shall duly and punctually pay to the Trustee on the
applicable date of payment the principal of (and premium, if any, on) and
interest and Additional Amounts, if any, on the Securities of such series in
accordance with the terms of such series of Securities, any coupons appertaining
thereto and this Indenture. Unless otherwise specified as contemplated by
Section 301 with respect to any series of Securities, any interest and
Additional Amounts, if any, on Bearer Securities on or before Maturity, other
than Additional Amounts, if any, payable as provided in Section 1009 in respect
of principal of (or premium, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless otherwise
specified with respect to Securities of any series pursuant to Section 301, at
the option of the Company, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security.
SECTION 1002. Maintenance of Office or Agency. If Securities of a series
-------------------------------
are issuable only as Registered Securities, the Company shall maintain in each
Place of Payment for any series of Securities an office or agency where
Securities of such series may be presented or surrendered for payment, where
Securities of such series may be surrendered for registration of transfer or
exchange and where notices and demands to or on the Company in respect of the
Securities of such series and this Indenture may be served. If Securities of a
series are issuable as Bearer Securities, the Company shall maintain: (i) in the
Borough of Manhattan, The City of
65
<PAGE>
New York, an office or agency where any Registered Securities of such series may
be presented or surrendered for payment, where any Registered Securities of such
series may be surrendered for exchange, where notices and demands to or on the
Company in respect of the Securities of such series and this Indenture may be
served and where Bearer Securities of such series and any coupons appertaining
thereto may be presented or surrendered for payment in the circumstances
described in the following paragraph (and not otherwise); (ii) subject to any
laws or regulations applicable thereto, in a Place of Payment for such series
which is located outside the United States, an office or agency where Securities
of such series and any coupons appertaining thereto may be presented and
surrendered for payment (including payment of any Additional Amounts payable on
Securities of such series pursuant to Section 1009); provided, however, that if
-------- -------
the Securities of such series are listed on the Luxembourg Stock Exchange, The
International Stock Exchange or any other stock exchange located outside the
United States and such stock exchange so requires, the Company shall maintain a
Paying Agent for the Securities of such series in Luxembourg, London or any
other required city located outside the United States, as the case may be, so
long as the Securities of such series are listed on such exchange; and (iii)
subject to any laws or regulations applicable thereto, in a Place of Payment for
such series located outside the United States an office or agency where any
Securities of such series may be surrendered for registration of transfer, where
Securities of such series may be surrendered for exchange and where notices and
demands to or on the Company in respect of the Securities of such series and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of each such office
or agency. If at any time the Company fails to maintain any such required office
or agency or fails 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, except that Bearer Securities of such
series and the related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts payable on Bearer Securities of
such series pursuant to Section 1009) at the offices specified in the Security,
in London, England, and the Company hereby appoints the same as its agent to
receive all such presentations, surrenders, notices and demands, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of the principal of (or premium, if any, on) or interest
or Additional Amounts, if any, on Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank located
in the United States; provided, however, that, if the Securities of a series are
-------- -------
payable in Dollars, payment of the principal of (and premium, if any, on) and
interest and Additional Amounts; if any, on any Bearer Security shall be made at
the office of the Company's Paying Agent in the Borough of Manhattan, The City
of New York, if (but only if) payment in Dollars of the full amount of such
principal, premium, interest or Additional Amounts, as the case may be, at all
offices or agencies outside the United States maintained for the purpose by the
Company in accordance with this Indenture, is illegal or effectively precluded
by exchange controls or other similar restrictions.
66
<PAGE>
The Company may from time to time designate one or more other offices or
agencies where the Securities of one or more series and any coupons appertaining
thereto may be presented or surrendered for any or all of such purposes, and may
from time to time rescind such designations; provided, however, that no such
-------- -------
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in accordance with the requirements
set forth above for Securities of any series for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
Unless otherwise specified with respect to any Securities pursuant to Section
301, the Company hereby designates as a Place of Payment for each series of
Securities the office or agency of the Company in The City of New York, and
initially appoints the Trustee at its Corporate Trust Office as Paying Agent in
such city and as its agent to receive all such presentations, surrenders,
notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are denominated
in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long
as it is required under any other provision of the Indenture, then the Company
shall maintain with respect to each such series of Securities, or as so
required, at least one exchange rate agent.
SECTION 1003. Money for Securities Payments to Be Held in Trust. If the
-------------------------------------------------
Company at any time acts as its own Paying Agent with respect to any series of
any Securities and any coupons appertaining thereto, it shall, on or before each
due date of the principal of (and premium, if any, on) or interest or Additional
Amounts, if any, on any of the Securities of such series, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts, if any, 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 has one or more Paying Agents for any series of
Securities and any coupons appertaining thereto, it shall, on or before each due
date of the principal of (and premium, if any, on) or interest or Additional
Amounts, if any, on any Securities of such series, deposit with a Paying Agent a
sum (in the currency or currencies, currency unit or units or composite currency
or currencies described in the preceding paragraph) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts, if any, so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium, interest or Additional Amounts and (unless
such Paying Agent is the Trustee) the Company shall promptly notify the Trustee
of its action or 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, that such Paying
Agent shall:
67
<PAGE>
(1) hold all sums held by it for the payment of principal of (and
premium, if any, on) or interest or Additional Amounts, if any, 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 on the Securities) in the making of any such payment of
principal (and premium, if any) or interest or Additional Amounts, if any;
and
(3) at any time during the continuance of any such default, on the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee on the
same trusts as those on 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.
Except as otherwise provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
or Additional Amounts, if any, on any Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) interest or
Additional Amounts, if any, has become due and payable shall be paid to the
Company upon 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 of the
principal of (and premium, if any, on) and interest and any Additional Amounts,
if any, on any Security of such series, without interest thereon, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
- -------- -------
to make any such repayment, may at the expense of the Company cause to be
published once, in an Authorized Newspaper, 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. 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 of its Restricted Subsidiaries; provided that the Company
and any such Restricted Subsidiary shall not be required to preserve the
corporate existence of any such Restricted Subsidiary or any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer
68
<PAGE>
desirable in the conduct of the business of the Company and provided further
that any Restricted Subsidiary may consolidate with, merge into, or sell,
convey, lease or otherwise dispose of all of its property and assets to the
Company or any wholly owned Restricted Subsidiary.
SECTION 1005. Maintenance of Property. The Company shall cause all Property
-----------------------
used or useful in the conduct of its business or the business of any of its
Restricted Subsidiaries and material to the Company and its Restricted
Subsidiaries taken as a whole to be maintained and kept in good condition,
repair 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 that nothing in this Section
1005 shall prevent the Company from discontinuing the operation or maintenance
of any of such Property if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any of its
Restricted Subsidiaries.
SECTION 1006. [intentionally omitted]
SECTION 1007. Payment of Taxes and Other Claims. The Company shall pay or
---------------------------------
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any of its Restricted Subsidiaries or upon the
income, profits or Property of the Company or any of its Restricted Subsidiaries
and (b) all material lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon the Property of the Company or any of
its Restricted Subsidiaries; provided that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings upon stay of execution or the enforcement
thereof and for which adequate reserves in accordance with GAAP or other
appropriate provision has been made.
SECTION 1008. Statement as to Compliance. The Company shall deliver to the
--------------------------
Trustee within 120 calendar days after the end of each fiscal year of the
Company ending after the date hereof, a brief certificate from its principal
executive officer, principal financial officer or principal accounting officer
as to his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture and, in the event of any noncompliance,
specifying such noncompliance and the nature and status thereof. For purposes of
this Section 1008, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
The Company shall deliver written notice to the Trustee within 30 calendar
days after any executive officer of the Company becomes aware of the occurrence
of any event which constitutes, or with the giving of notice or the lapse of
time or both would constitute, a Default or Event of Default, describing such
Default or Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.
69
<PAGE>
SECTION 1009. Additional Amounts. If any Securities of a series provide for
------------------
the payment of Additional Amounts, the Company covenants and agrees for the
benefit of the Holders of Securities of such series that it shall pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context except in the case of
clause (1) of Section 502, the payment of the principal of or of any premium or
interest on, or in respect of, any Security of any series or payment of any
coupon or the net proceeds received on the sale or exchange of any Security of
any series, such mention shall be deemed to include mention of the payment of
Additional Amounts provided by the terms of such series established pursuant to
Section 301 to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to such terms and express mention
of the payment of Additional Amounts (if applicable) in any provisions hereof
shall not be construed as excluding Additional Amounts in those provisions
hereof in which such express mention is not made.
Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to Securities of
such series (or if the Securities of such series will not bear interest prior to
Maturity, the first day on which a payment of principal and any premium is
made), and at least 10 days prior to each date of payment of principal and any
premium or interest, if there has been any change with respect to the matters
set forth in the below-mentioned Company Certificate, the Company shall furnish
the Trustee and the principal Paying Agent or Paying Agents, if other than the
Trustee, with a Company Certificate instructing the Trustee and such Paying
Agent or Paying Agents whether such payment of principal of and any premium or
interest on the Securities of such series shall be made to Holders of Securities
of such series or any coupons appertaining thereto who are not United States
persons without withholding for or on account of any tax, assessment or other
governmental charge described in the Securities of or within the series. If any
such withholding is required, then such Company Certificate shall specify by
country the amount, if any, required to be withheld on such payments to such
Holders of Securities of such series or any coupons appertaining thereto and the
Company shall pay to the Trustee or such Paying Agent the Additional Amounts
required by the terms of such Securities. In the event that the Trustee or any
Paying Agent, as the case may be, shall not so receive the above-mentioned
certificate, then the Trustee or such Paying Agent shall be entitled (i) to
assume that no such withholding or deduction is required with respect to any
payment of principal or interest with respect to any Securities of such series
or any coupons appertaining thereto until it has received a certificate advising
otherwise and (ii) to make all payments of principal and interest with respect
to the Securities of such series or any coupons appertaining thereto without
withholding or deductions until otherwise advised. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them or in reliance on any Company Certificate furnished
pursuant to this Section or in reliance on the Company's not furnishing such a
Company Certificate.
70
<PAGE>
SECTION 1010. Waiver of Certain Covenants. The Company may omit in any
---------------------------
particular instance to comply with any term, provision or condition set forth in
Sections 1004 to 1008, inclusive, and with any other term, provision or
condition with respect to the Securities of any series specified in accordance
with Section 301 (except any such term, provision or condition which could not
be amended without the consent of all Holders of Securities of such series
pursuant to Section 902), if before or after the time for such compliance the
Holders of at least a majority in principal amount of all outstanding Securities
of such series, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article. Securities of any series which are
------------------------
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee. The election of the
-------------------------------------
Company to redeem any Securities shall be evidenced by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all of the Securities of any series, the Company shall, at least 30 days
prior to the giving of the notice of redemption in Section 1104 (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with a
Company Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If less
-------------------------------------------------
than all the Securities of any series issued on the same day with the same terms
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 of such series issued on such date with the same terms
not previously called for redemption, by lot, on a pro rata basis or such method
as the Trustee deems fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of such series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of such series.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
71
<PAGE>
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Security redeemed or to be redeemed only in part, to the portion of
the principal amount of such Security which has been or is to be redeemed.
SECTION 1104. Notice of Redemption. Notice of redemption shall be given in
--------------------
the manner provided in Section 106, not less than 30 days nor more than 60 days
prior to the Redemption Date, unless a shorter period is specified by the terms
of such series established pursuant to Section 301, to each Holder of Securities
to be redeemed, but failure to give such notice in the manner herein provided to
the Holder of any Security designated for redemption as a whole or in part, or
any defect in the notice to any such Holder, shall not affect the validity of
the proceedings for the redemption of any other such Security or portion
thereof.
Any notice which is mailed to the Holders of Registered Securities in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price, accrued interest to the Redemption Date
payable as provided in Section 1106, if any, and Additional Amounts, if
any;
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed;
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, on surrender of such Security, the holder will receive, without a
charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed;
(5) that on the Redemption Date, the Redemption Price and accrued
interest to the Redemption Date payable as provided in Section 1106, if
any, will become due and payable on each such Security, or the portion
thereof, to be redeemed and, if applicable, that interest thereon shall
cease to accrue on and after such date;
(6) the Place or Places of Payment where such Securities, together in
the case of Bearer Securities with all coupons appertaining thereto, if
any, maturing after the Redemption Date, are to be surrendered for payment
of the Redemption Price and accrued interest, if any;
(7) that the redemption is for a sinking fund, if such is the case;
72
<PAGE>
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons appertaining thereto maturing subsequent to the
date fixed for redemption or the amount of any such missing coupon or
coupons will be deducted from the Redemption Price, unless security or
indemnity satisfactory to the Company, the Trustee for such series and any
Paying Agent is furnished;
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if such
Bearer Securities may be exchanged for Registered Securities not subject to
the redemption on this Redemption Date pursuant to Section 305 or
otherwise, the last date, as determined by the Company, on which such
exchanges may be made; and
(10) the CUSIP number of such Security, if any, provided that neither
--------
the Company nor the Trustee shall have any responsibility for any such
CUSIP number.
Notice of redemption of Securities to be redeemed 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 1105. Deposit of Redemption Price. At least one Business Day prior
---------------------------
to any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, which it may
not do in the case of a sinking fund payment under Article Twelve, segregate and
hold in trust as provided in Section 1003) an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay on
the Redemption Date the Redemption Price of, and (except if the Redemption Date
is an Interest Payment Date) accrued interest on, all the Securities or portions
thereof which are to be redeemed on such date.
SECTION 1106. Securities Payable on Redemption Date. Notice of redemption
-------------------------------------
having been given as provided above, the Securities so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
such series) (together with accrued interest, if any, to the Redemption Date),
and from and after such date (unless the Company defaults in the payment of the
Redemption Price and accrued interest) such Securities shall, if the same were
interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with such notice, together with any coupons
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments of interest on
-------- -------
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only at an office or agency located outside the United States
(except as otherwise
73
<PAGE>
provided in Section 1002) and, unless otherwise specified as contemplated by
Section 301, only upon presentation and surrender of coupons for such interest;
and provided, further, that, installments of interest on Registered Securities
-------- -------
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 Bearer Security surrendered for redemption is not accompanied by all
coupons appertaining thereto maturing after the Redemption Date, such Security
may be paid after deducting from the Redemption Price an amount equal to the
face amount of all such missing coupons, or the surrender of such missing coupon
or coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security surrenders to
the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction has been made from the Redemption Price, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
-------- -------
by a coupon shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation and
surrender of such coupon.
If any Security called for redemption is not so paid upon surrender thereof
for redemption, the principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1107. Securities Redeemed in Part. Any Security which is to be
---------------------------
redeemed only in part (pursuant to the provisions of this Article or of Article
Twelve) shall be surrendered at a Place of Payment therefor (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing and
accompanied by appropriate evidence of genuineness and authority) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge a new Security or Securities of
the same series, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article. The provisions of this Article
------------------------
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 301 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
----------------------
payment," and any
- -------
74
<PAGE>
payment in excess of such minimum amount provided for by the terms of such
Securities of any series is herein referred to as an "optional sinking fund
---------------------
payment." If provided for by the terms of any Securities of any series, the cash
- -------
amount of any mandatory sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The
-----------------------------------------------------
Company may, in satisfaction of all or any part of any mandatory sinking fund
with respect to the Securities of a series, (i) deliver Outstanding Securities
of such series (other than any previously called for redemption), together in
the case of any Bearer Securities of such series with all unmatured coupons
appertaining thereto, and (ii) apply as a credit Securities of such series which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, as provided for by the terms
of such Securities, or which have otherwise been acquired by the Company,
provided that such Securities so delivered or applied as a credit have not been
- --------
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund. Not less than 60
-----------------------------------------
days prior to each sinking fund payment date for Securities of any series, the
Company shall deliver to the Trustee a Company Certificate specifying the amount
of the next ensuing mandatory sinking fund payment for such series pursuant to
the terms of such series, the portion thereof, if any, which is to be satisfied
by payment of cash in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of such series pursuant to
Section 1202, and the optional amount, if any, to be added in cash to the next
ensuing mandatory sinking fund payment, and shall also deliver to the Trustee
any Securities to be so delivered and credited. If such Company Certificate
specifies an optional amount to be added in cash to the next ensuing mandatory
sinking fund payment, the Company shall thereupon be obligated to pay the amount
therein specified. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed on such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
75
<PAGE>
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Repayment of Securities of any
------------------------
series before their Stated Maturity at the option of Holders thereof shall be
made in accordance with the terms of such Securities, if any, and (except as
otherwise specified by the terms of such series established pursuant to Section
301) in accordance with this Article.
SECTION 1302. Repayment of Securities. Securities of any series subject to
-----------------------
repayment in whole or in part at the option of the Holders thereof will, unless
otherwise provided in the terms of such Securities, be repaid at a price equal
to the principal amount thereof, together with interest, if any, thereon accrued
to the Repayment Date specified in or pursuant to the terms of such Securities.
The Company covenants that at least one Business Day prior to the Repayment Date
it shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as it own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay the principal (or, if so provided
by the terms of the Securities of any series, a percentage of the principal) of,
and (except if the Repayment Date is an Interest Payment Date) accrued interest
on, all the Securities or portions thereof, as the case may be, to be repaid on
such date.
SECTION 1303. Exercise of Option. Securities of any series subject to
------------------
repayment at the option of the Holders thereof will contain an "Option to Elect
Repayment" form on the reverse of such Securities. In order for any Security to
be repaid at the option of the Holder, the Trustee must receive at the Place of
Payment therefor specified in the terms of such Security (or at such other place
or places of which the Company shall from time to time notify the Holders of
such Securities), not earlier than 60 days nor later than 30 days prior to the
Repayment Date, (i) the Security so providing for such repayment together with
the "Option to Elect Repayment" form on the reverse thereof duly completed by
the Holder (or by the Holder's attorney duly authorized in writing) or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company in the United States setting forth the name
of the Holder of the Security, the principal amount of the Security, the
principal amount of the Security to be repaid, the CUSIP number, if any, or a
description of the tenor and terms of the Security, a statement that the option
to elect repayment is being exercised thereby and a guarantee that the Security
to be repaid, together with the duly completed form entitled "Option to Elect
Repayment" on the reverse of the Security, will be received by the Trustee not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, however, that such telegram, telex,
-------- -------
facsimile transmission or letter shall only be effective if such Security and
form duly completed are received by the Trustee by such fifth Business Day. If
less than the entire principal amount of such Security is to be repaid in
accordance with the terms of such Security, the principal amount of such
Security to be repaid, in increments of the minimum denomination for Securities
of such series, and the denomination
76
<PAGE>
or denominations of the Security or Securities to be issued to the Holder for
the portion of the principal amount of such Security surrendered which is not to
be repaid, must be specified. The principal amount of any Security providing for
prepayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of or within the
series of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become Due and
------------------------------------------------------
Payable. If Securities of any series providing for repayment at the option of
the Holders thereof have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company defaults in the payment of
such Securities on such Repayment Date) such Securities shall, if the same were
interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be repaid, except to the extent
provided below, shall be void. Upon surrender of any such Security for repayment
in accordance with such provisions, together with any coupons appertaining
thereto maturing after the Repayment Date, the principal amount of such security
so to be repaid shall be paid by the Company, together with accrued interest, if
any, to the Repayment Date; provided, however, that coupons whose Stated
-------- -------
Maturity is on or prior to the Repayment Date shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified pursuant to Section 301, only upon
presentation and surrender of such coupons; and provided, further, that, in the
-------- -------
case of Registered Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable (but without
interest thereon, unless the Company defaults in the payment thereof) 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 Bearer Security surrendered for repayment is not accompanied by all
coupons appertaining thereto maturing after the Repayment Date, such Security
may be paid after deducting from the amount payable therefor as provided in
Section 1302 an amount equal to the face amount of all such missing coupons, or
the surrender of such missing coupon or coupons may be waived by the Company and
the Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security surrenders to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction has been made as provided in the
preceding sentence, such Holder shall be entitled to receive the amount so
deducted; provided, however, that interest represented by a coupon shall be
-------- -------
payable only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of such
coupon.
77
<PAGE>
If the principal amount of any Security surrendered for repayment shall not
be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part. Upon surrender of any Registered
-------------------------
Security which is to be repaid in part only, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge and at the expense of the Company, a new Registered Security or
Securities of the same series, of any authorized denomination specified by the
Holder, in an aggregate principal amount equal to and in exchange for the
portion of the principal of such Security so surrendered which is not to be
repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's Option to Effect
----------------------------------------------------
Defeasance or Covenant Defeasance. If, pursuant to Section 301, provision is
- ---------------------------------
made for either or both of (i) defeasance of the Securities of or within a
series under Section 1402 or (ii) covenant defeasance of the Securities of or
within a series under Section 1403 to be applicable to the Securities of any
series, then the provisions of such Section or Sections, as the case may be,
together with the other provisions of this Article (with such modifications
thereto as may be specified pursuant to Section 301 with respect to any
Securities), shall be applicable to such Securities and any coupons appertaining
thereto, and the Company may at its option by Board Resolution, at any time,
with respect to such Securities and any coupons appertaining thereto, elect to
defease such Outstanding Securities and any coupons appertaining thereto
pursuant to Section 1402 (if applicable) or Section 1403 (if applicable) upon
compliance with the conditions set forth below in this Article.
SECTION 1402. Defeasance and Discharge. Upon the Company's exercise of the
------------------------
above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any coupons
appertaining thereto on the date the conditions set forth in Section 1404 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 such Outstanding Securities and any coupons
appertaining thereto, which shall thereafter be deemed "Outstanding" only for
the purposes of Section 1405 and the other Sections of this Indenture referred
to in clauses (i) and (ii) below, and to have satisfied all of its other
obligations under such Securities and any coupons appertaining thereto and this
Indenture insofar as such Securities and any coupons appertaining thereto 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: (i) the rights of
Holders of such Outstanding Securities and any coupons appertaining thereto to
receive, solely from the trust fund described in Section 1404 and as more fully
set forth in such Section,
78
<PAGE>
payments in respect of the principal of (and premium, if any, on) and interest
and Additional Amounts, if any, on such Securities and any coupons appertaining
thereto when such payments are due; (ii) the Company's obligations with respect
to such Securities under Sections 305, 306, 1002 and 1003 and with respect to
the payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1010; (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder; and (iv) this Article. Subject to compliance with this
Article Fourteen, the Company may exercise its option under this Section
notwithstanding the prior exercise of its option under Section 1403 with respect
to such Securities and any coupons appertaining thereto.
SECTION 1403. Covenant Defeasance. Upon the Company's exercise of the above
-------------------
option applicable to this Section with respect to any Securities of or within a
series, the Company shall be released from its obligations under Sections 1004
to 1008, inclusive, and, if specified pursuant to Section 301, its obligations
under any other covenant, with respect to such Outstanding Securities and any
coupons appertaining thereto on and after the date the conditions set forth in
Section 1404 are satisfied (hereinafter, "covenant defeasance"), and such
-------------------
Securities and any coupons appertaining thereto shall thereafter be deemed not
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with
Sections 1005 to 1008, inclusive, or such other covenant, but shall continue to
be deemed "Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to such Outstanding Securities and
any coupons appertaining thereto, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such Section or such other covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or such other
covenant or by reason of reference in any such Section or such other covenant 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 clause (4) of
Section 501 or otherwise, as the case may be, but, except as specified above,
the remainder of this Indenture and such Securities and any coupons appertaining
thereto shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance. The
-----------------------------------------------
following shall be the conditions to application of Section 1402 or Section 1403
to any Outstanding Securities of or within a series and any coupons appertaining
thereto:
(a) The Company has irrevocably deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
607 who shall agree to comply with the provisions of this Article Fourteen
applicable to it) 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 and any coupons appertaining
thereto: (i) an amount in such currency or currencies, currency unit or
units or composite currency or currencies in which such Securities and any
coupons appertaining thereto are then specified as payable at Stated
Maturity, or (ii) Government Obligations applicable to such Securities and
any coupons appertaining thereto (determined on the basis of the currency
or currencies, currency unit or units or composite currency or currencies
in which such Securities and any coupons appertaining
79
<PAGE>
thereto are then specified as payable at Stated Maturity) which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment of principal of (and premium, if any, on) and
interest and Additional Amounts, if any, on such Securities and any coupons
appertaining thereto, money in an amount, or (iii) a combination thereof in
an amount, sufficient, without consideration of any reinvestment of such
principal and interest, 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, and which shall be applied
by the Trustee (or other qualifying trustee) to pay and discharge, (A) the
principal of (and premium, if any, on) and interest and Additional Amounts,
if any, on such Outstanding Securities and any coupons appertaining thereto
on the Stated Maturity of such principal or installment of principal or
interest and (B) any mandatory sinking fund payments or analogous payments
applicable to such Outstanding Securities and any coupons appertaining
thereto on the day on which such payments are due and payable in accordance
with the terms of this Indenture and of such Securities and any coupons
appertaining thereto, provided that the Trustee has been irrevocably
--------
instructed to apply such money or the proceeds of such Government
Obligations to such payments with respect to such Securities. Before such a
deposit, the Company may give to the Trustee, in accordance with Section
1102, a notice of its election to redeem all or any portion of such
Outstanding Securities at a future date in accordance with the terms of the
Securities of such series and Article Eleven, which notice shall be
irrevocable. Such irrevocable redemption notice, if given, shall be given
effect in applying the foregoing.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound (and shall not cause the Trustee to have a
conflicting interest pursuant to Section 310(b) of the Trust Indenture Act
with respect to any Security of the Company).
(c) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to such Securities
and any coupons appertaining thereto has occurred and is continuing on the
date of such deposit or, insofar as clauses (5) and (6) of Section 501 are
concerned, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the Company has
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of execution 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 such Outstanding Securities and any coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of
80
<PAGE>
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.
(e) In the case of an election under Section 1403, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any coupons appertaining thereto
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.
(f) The Company has delivered to the Trustee a Company Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance under Section 1402 or the covenant defeasance under Section
1403 (as the case may be) have been complied with and an Opinion of Counsel
to the effect that either (i) as a result of a deposit pursuant to
paragraph (a) above and the related exercise of the Company's option under
Section 1402 or Section 1403 (as the case may be), registration is not
required under the Investment Company Act of 1940, as amended, by the
Company with respect to the trust funds representing such deposit or by the
Trustee for such trust funds or (ii) all necessary registrations under such
Act have been effected.
(g) After the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
(h) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.
SECTION 1405. Deposited Money and Government Obligations to Be Held in
--------------------------------------------------------
Trust; Other Miscellaneous Provisions. Subject to the provisions of the last
- -------------------------------------
paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee) pursuant to
Section 1404 in respect of any Outstanding Securities of any series and any
coupons appertaining thereto shall be held in trust and applied by the Trustee
or such other qualifying trustee, in accordance with the provisions of such
Securities and any coupons appertaining thereto 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 or such other qualifying trustee
may determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but such money
need not be segregated from other funds except to the extent required by law.
81
<PAGE>
Unless otherwise specified with respect to any Security pursuant to Section
301, if, after a deposit referred to in Section 1404(a) has been made, (i) the
Holder of a Security in respect of which such deposit was made is entitled to,
and does, elect pursuant to Section 301 or the terms of such Security to receive
payment in a currency, currency unit or composite currency other than that in
which the deposit pursuant to Section 1404(a) has been made in respect of such
Security or (ii) a Conversion Event occurs in respect of the currency, currency
unit or composite currency in which the deposit pursuant to Section 1404(a) has
been made, the indebtedness represented by such Security and any coupons
appertaining thereto shall be deemed to have been, and will be, fully discharged
and satisfied through the payment of the principal of (and premium, if any, on),
and interest and Additional Amounts, if any, on such Security as the same become
due out of the proceeds yielded by converting (from time to time as specified
below in the case of any such election) the amount or other property deposited
in respect of such Security into the currency, currency unit or composite
currency in which such Security becomes payable as a result of such election or
Conversion Event based on the applicable market exchange rate for such currency,
currency unit or composite currency in effect on the second Business Day prior
to each payment date, except, with respect to a Conversion Event, for such
currency, currency unit or composite currency in effect (as nearly as feasible)
at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 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 such Outstanding Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding, the Trustee or
such other qualifying trustee shall deliver or pay to the Company, from time to
time upon Company Request, any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee or such other qualifying trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1406. Reinstatement. If the Trustee or Paying Agent is unable to
-------------
apply any money in accordance with this Article Fourteen with respect to any
Securities by reason of any order or judgement of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application then
the obligations under this Indenture and such Securities from which the Company
has been discharged or released pursuant to Sections 1402 or 1403 hereof shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article Fourteen with respect to such Securities, until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust pursuant to
Section 1405 hereof with respect to such Notes in accordance with this Article
Fourteen; provided that if the Company makes any payment of principal of or any
premium or interest or Additional Amounts on any such Security following such
reinstatement of its obligations, the Company shall be subrogated to the rights
82
<PAGE>
(if any) of the Holders of such Securities to receive such payment from the
money so held in trust.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called. A meeting of
-----------------------------------------
Holders of Securities of any series may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1502. Call, Notice and Place of Meetings.
----------------------------------
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place in The City of New York, as the Trustee
determines. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms
the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series have requested the Trustee to call a meeting of
the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee has not made
the first publication of the notice of such meeting within 21 days after
receipt of such request or does not thereafter proceed to cause the meeting
to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified, as the case may
be, may determine the time and the place in The City of New York, for such
meeting and may call such meeting for such purposes by giving notice
thereof as provided in paragraph (a) above.
SECTION 1503. Persons Entitled to Vote at Meetings. To be entitled to vote
------------------------------------
at any meeting of Holders of Securities of any series, a Person shall be (i) a
Holder of one or more Outstanding Securities of such series or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series are the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its counsel,
and any representatives of the Company and its counsel.
83
<PAGE>
SECTION 1504. Quorum; Action. The Persons entitled to vote a majority in
--------------
principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series; provided, however,
-------- -------
that if any action is to be taken at such meeting with respect to a consent or
waiver which this Indenture expressly provides may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding
Securities of a series, the Persons entitled to vote such specified percentage
in principal amount of the Outstanding Securities of such series shall
constitute a quorum. In the absence of a quorum within 30 minutes after the time
appointed for any such meeting, the meeting shall, if convened at the request of
Holders of Securities of such series, be dissolved. In any other case the
meeting may be adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 1502(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of any adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding
Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Outstanding Securities of such series; provided,
--------
however, that, except as limited by the proviso to Section 902, any resolution
- -------
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of such
series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and any coupons
appertaining thereto, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage in principal amount of
all Outstanding Securities affected thereby, or of the Holders of such series
and one or more additional series;
84
<PAGE>
(1) there shall be no minimum quorum requirement for such meeting; and
(2) the principal amount of the Outstanding Securities of such series
which vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under this
Indenture.
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
----------------------------------------------------------
Meetings.
- --------
(a) Notwithstanding any provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting
of Holders of Securities of a series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard
to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it
deems appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved
in the manner specified in Section 104 or by having the signature of the
Person executing the proxy witnessed or guaranteed by any trust company,
bank or banker authorized by Section 104 to certify to the holding of
Bearer Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and
genuine without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary
chairman of the meeting, unless the meeting has been called by the Company
or by Holders of Securities as provided in Section 1502(b), in which case
the Company or the Holders of Securities of or within the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented
at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by such Holder;
provided, however, that no vote shall be cast or counted at any meeting in
-------- -------
respect of any Security challenged as not Outstanding and ruled by the
chairman of the meeting to be not Outstanding. The chairman of the meeting
shall have no right to vote, except as a Holder of a Security of such
series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from
time to time by
85
<PAGE>
Persons entitled to vote a majority in principal amount of the Outstanding
Securities of such series represented at the meeting, and the meeting may
be held as so adjourned without further notice.
SECTION 1506. Counting Votes and Recording Action of Meetings. The vote on
-----------------------------------------------
any resolution submitted to any meeting of Holders of Securities of any series
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities of such series or of their representatives by proxy and
the principal amounts and series numbers of the Outstanding Securities of such
series held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting of
Holders of Securities of any series shall be prepared by the secretary of the
meeting and there shall be attached to such record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the fact, setting forth a copy of the notice of
the meeting and showing that such notice was given as provided in Section 1502
and, if applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 1507. Evidence of Action Taken by Holders. Any request, demand,
-----------------------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by a specified percentage in principal
amount of the Holders of any or all series may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such specified
percentage of Holders in person or by agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Article
Six) conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Article.
SECTION 1508. Proof of Execution of Instruments. Subject to Article Six,
---------------------------------
the execution of any instrument by a Holder or his agent or proxy may be proved
in accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee.
86
<PAGE>
ARTICLE SIXTEEN
SUBORDINATION OF SECURITIES
SECTION 1601. Securities Subordinated to Senior Indebtedness. The Company
----------------------------------------------
covenants and agrees, and each Holder of Securities, by its acceptance thereof,
likewise covenants and agrees, that the indebtedness represented by the
Securities and the payment of any and all amounts payable in respect of each and
all of the Securities is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of Senior Indebtedness, whether outstanding on the date of this Indenture or
thereafter incurred, assumed or guaranteed.
In the event (a) of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company whether in
a bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise, except a distribution in connection
with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Company which complies with the
requirements of Article Eight, or (b) that a default shall have occurred and be
-------------
continuing with respect to the payment of any amount payable in respect of any
Senior Indebtedness, or (c) that the principal of the Securities of any Series
shall have been declared due and payable pursuant to Section 502 and such
-----------
declaration shall not have been rescinded and annulled as provided in Section
-------
502, then:
- ---
(1) in a circumstance described in the foregoing clause (a) or (b) the
Holders of all Senior Indebtedness, and in the circumstance described in the
foregoing clause (c) the Holders of all Senior Indebtedness outstanding at the
time the principal of such Securities (or in the case of Original Issue Discount
Securities, such portion of the principal amount) shall have been so declared
due and payable, shall first be entitled to receive payment of the full amount
due thereon, or provision shall be made for such payment in money or money's
worth, before the Holders of any of the Securities are entitled to receive any
payment in respect of the indebtedness evidenced by the Securities;
(2) any payment by, or distribution of assets of, the Company of any kind
or character, whether in cash, property or securities (other than securities of
the Company as reorganized or readjusted or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this Article
with respect to the Securities, to the payment of all Senior Indebtedness,
provided that the rights of the holders of the Senior Indebtedness are not
altered by such reorganization or readjustment), to which the Holders of any of
the Securities would be entitled except for the provisions of this Article shall
be paid or delivered by the person making such payment or distribution, whether
a trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instrument evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of such
Senior Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid after giving effect
to any concurrent
87
<PAGE>
payment or distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of the
indebtedness evidenced by the Securities under this Indenture; and
(3) in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Company of any kind or character, whether in
cash, property or securities (other than securities of the Company as
reorganized or readjusted or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with respect to the
Securities, to the payment of all Senior Indebtedness, provided that the rights
of the holders of Senior Indebtedness are not altered by such reorganization or
readjustment), shall be received by the Holders of any of the Securities before
all Senior Indebtedness is paid in full, such payment or distribution shall be
paid over to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness may have been issued,
ratably as aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution (or
provision therefor) to the holders of such Senior Indebtedness.
SECTION 1602. Subrogation. Subject to the payment in full of all Senior
-----------
Indebtedness to which the indebtedness evidenced by the Securities is in the
circumstances subordinated as provided in Section 1601, the Holders of the
------------
Securities shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to such Senior Indebtedness until all
amounts owing on the Securities shall be paid in full, and, as between the
Company, its creditors other than holders of such Senior Indebtedness, and the
Holders of the Securities, no such payment or distribution made to the holders
of such Senior Indebtedness by virtue of this Article which otherwise would have
been made to the Holders of the Securities shall be deemed to be a payment by
the Company on account of such Senior Indebtedness, it being understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Indebtedness.
SECTION 1603. Obligation of the Company Unconditional. Nothing contained in
---------------------------------------
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of and interest on and any additional amounts owing in
respect of the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness nor shall anything herein or therein prevent
the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
88
<PAGE>
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Holders of the Securities shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other person making any payment or distribution,
delivered to the Trustee or to the Holders of the Securities, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 1604. Payments on Securities Permitted. Nothing contained in this
--------------------------------
Article or elsewhere in this Indenture, or in any of the Securities, shall
affect the obligation of the Company to make, or prevent the Company from
making, payment of the principal of or interest on or any additional amounts
owing in respect of the Securities in accordance with the provisions hereof and
thereof, except as otherwise provided in this Article.
SECTION 1605. Effectuation of Subordination by Trustee. Each Holder of
----------------------------------------
Securities, by its acceptance thereof, authorizes and directs the Trustee in his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his attorney-in-
fact for any and all such purposes.
SECTION 1606. Knowledge of Trustee. Notwithstanding the provisions of this
--------------------
Article or any other provisions of this Indenture, the Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be charged with knowledge of the existence of any facts which would prohibit
the making of any payment of moneys to or by the Trustee, or the taking of any
other action by the Trustee, unless and until the Trustee shall have received
written notice thereof from the Company, any Holder of Securities, any paying or
conversion agent of the Company or the holder or representative of any class of
Senior Indebtedness; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least three Business Days
prior to the date upon which, by the terms hereof, any money may become payable
for any purpose (including, without limitation, the payment of the principal of
or interest on, or additional amounts owing in respect of, any Security) then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have all power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it during or after such three
Business Day period.
SECTION 1607. Trustee May Hold Senior Indebtedness. The Trustee in its
------------------------------------
individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness at the time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
313 of the Trust Indenture Act or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.
89
<PAGE>
Nothing in this Article shall subordinate any claims of, or payments to,
the Trustee (under or pursuant to Section 606) to Senior Indebtedness.
-----------
SECTION 1608. Rights of Holders of Senior Indebtedness Not Impaired. No
-----------------------------------------------------
right of any present or future holder of any Senior Indebtedness to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Company or by any non-compliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
90
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
MCLEODUSA INCORPORATED
By:_____________________________
Name:
Title:
Attest:
____________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
By:_____________________________
Name:
Title:
Attest:
____________________
Name:
Title:
91
<PAGE>
STATE OF IOWA )
) SS.:
COUNTY OF LINN )
On the _______ day of _______, 1999, before me personally came __________,
to me known, who, being by me duly sworn, did depose and say that he is
________________________________________ of McLeodUSA Incorporated, one of the
corporations described in and which executed the foregoing instrument and that
he signed his name thereto by authority of the Board of Directors of said
corporation.
_______________________________________
Notary Public
State of
My commission expires / /
[Seal]
92
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the _____ day of ________, 1999, before me personally came
___________, to me known, who, being by me duly sworn, did depose and say that
he is ____________________ of United States Trust Company of New York, one of
the corporations described in and which executed the foregoing instrument and
that he signed his name thereto by authority of the Board of Directors of said
corporation.
______________________________________
Notary Public
State of
My commission expires / /
[Seal]
93
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) which are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) which are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section 1.165-
12(c)(1)(v) are herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise McLeodUSA Incorporated or its agent that such financial institution will
provide a certificate within a reasonable time stating that it agrees to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the United States
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by a financial institution for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, such financial institution described in clause
(iii) above (whether or not also described in clause (i) or (ii)), certifies
that it has not acquired the Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United States or
its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the above-captioned
Securities held by you for our account in accordance with your Operating
Procedures if any applicable statement herein is not
<PAGE>
correct on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] _______________ of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: __________ ___, 19___
[To be dated no earlier than the 15th day prior
to the earlier of (i) the Exchange Date or
(ii) the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
[Name of Person Making Certification]
_______________________________
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] _______________
principal amount of the above-captioned Securities (i) is owned by person(s)
which are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States persons(s) which are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in United States Treasury Regulations Section 1.165-12(c)(1)(v) are
herein referred to as "financial institutions") purchasing for their own account
or for resale, or (b) United States person(s) who acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise McLeodUSA
Incorporated or its agent that such financial institution will provide a
certificate within a reasonable time stating that it agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by a
financial institution for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and that such financial institutions described in clause (iii) above (whether or
not also described in clause (i) or (ii)) have certified that they have not
acquired the Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations
<PAGE>
with respect to any portion of the part submitted herewith for exchange (or, if
relevant, collection of any interest) are no longer true and cannot be relied on
as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: __________ ___, 19___
[To be dated no earlier than the earlier of
the Exchange Date or the relevant Interest
Payment Date occurring prior to the Exchange
Date, as applicable]
[Morgan Guaranty Trust Company of New York,
Brussels Office,] as Operator of the
Euroclear System
[Cedel S.A.]
By:____________________________________
____________________________________
____________________________________
<PAGE>
Exhibit 4.24
McLEODUSA INCORPORATED
CERTIFICATE OF DESIGNATIONS OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF __% SERIES A
CUMULATIVE CONVERTIBLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
McLeodUSA Incorporated (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Company (the "Board of Directors") by the Company's Amended and Restated
Certificate of Incorporation, as amended (the "Restated Certificate of
Incorporation") and pursuant to authority conferred upon the Pricing Committee
(the "Pricing Committee") of the Board of Directors by the Company's Amended and
Restated Bylaws, as amended (the "Bylaws"), and pursuant to the provisions of
Sections 141(c)(1) and 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Company in one or more series and the Pricing Committee has approved and adopted
the following resolution on [________] (the "Resolution"):
RESOLVED that, the Board of Directors and, pursuant to the authority
vested in the Pricing Committee by the Board of Directors and the Bylaws,
the Pricing Committee, hereby create, authorize and provide for the
issuance of __% Series A Cumulative Convertible Preferred Stock, par value
$0.01 per share, with a liquidation preference of $[____] per share,
consisting of [________] shares having the designations, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth in
the Restated Certificate of Incorporation and in this Resolution as
follows:
(a) Designation. There is hereby created out of the authorized and
-----------
unissued shares of Preferred Stock of the Company a series of Preferred Stock
designated as the __% Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"). The number of shares constituting the Series A
Preferred Stock shall be [________]. The liquidation preference of the Series A
Preferred Stock shall be $[____] per share (the "Liquidation Preference").
Capital terms used herein but not defined shall have the meanings assigned
to them in paragraph (l).
(b) Rank. The Series A Preferred Stock will, with respect to dividend
----
rights and rights on liquidation, winding-up and dissolution, rank (i) senior to
all classes of Common Stock
<PAGE>
and to each other class of Capital Stock of the Company or series of Preferred
Stock of the Company established hereafter by the Board of Directors of the
Company, the terms of which do not expressly provide that such class or series
ranks senior to, or on a parity with, the Series A Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company (collectively referred to, together with all classes of Common Stock of
the Company, as "Junior Stock"); (ii) on a parity with each class of Capital
Stock of the Company or series of Preferred Stock of the Company established
hereafter by the Board of Directors of the Company, the terms of which expressly
provide that such class or series will rank on a parity with the Series A
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution (collectively referred to as "Parity Stock"); and (iii) junior to
each class of Capital Stock of the Company or series of Preferred Stock of the
Company established hereafter by the Board of Directors of the Company, the
terms of which expressly provide that such class or series will rank senior to
the Series A Preferred Stock as to dividend rights or rights on liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Stock").
(c) Dividends.
---------
(i) Subject to the rights of any holders of Senior Stock or Parity
Stock, Holders of the outstanding shares of Series A Preferred Stock will
be entitled to receive, when, as and if declared by the Board of Directors
of the Company, out of funds legally available therefor, dividends on each
share of the Series A Preferred Stock at a rate per annum equal to [____]%
of the Liquidation Preference of such share payable quarterly (each such
quarterly period being herein called a "Dividend Period").
All dividends on the Series A Preferred Stock, to the extent accrued,
shall be cumulative, whether or not earned or declared, on a daily basis
from the last date through which dividends have been paid or, if no
dividends have been paid, from the Issue Date, and shall be payable
quarterly in arrears on [________ __, ________ __, ________ __ and
________ __] of each year (each a "Dividend Payment Date"), commencing
on [________ __], 1999 to Holders of record as they appear on the stock
register of the Company at the close of business on the Record Date (as
defined hereinafter) immediately preceding the relevant Dividend Payment
Date. No interest or sum of money or other property or securities in lieu
of interest will be payable in respect of any accumulated and unpaid
dividends. "Record Date" means, with respect to a Dividend Payment Date,
the date established by the Board of Directors as the record date therefor,
which date shall, in any event, be a date that is not more than 60 calendar
days nor less than 15 calendar days before such Dividend Payment Date.
Any dividend on the Series A Preferred Stock shall be, at the option
of the Company, payable (A) in cash or (B) through the delivery of a number
of shares of the Company's Class A Common Stock (dividends paid or payable
in Class A Common Stock are hereinafter referred to as "Dividend Common
Stock") equal to the total dividend amount divided by the applicable
Discounted Current Market Value (as defined below) of the Class A Common
Stock. No fractional shares of Class A Common Stock
2
<PAGE>
shall be issued as a dividend on the Series A Preferred Stock. The Transfer
Agent shall have the authority to aggregate any fractional shares of Class
A Common Stock that are issued as dividends, and to sell them at the best
available price and distribute the proceeds to the Holders thereof in
proportion to their respective interests. The Company shall reimburse the
Transfer Agent for any expenses incurred with respect to such sale,
including brokerage commissions. If the Company is not entitled to pay cash
for fractional shares, it shall pay cash to the Holder for the fractional
shares when it becomes legally and contractually able to pay such cash.
The "Discounted Current Market Value" of the Class A Common Stock with
respect to a Dividend Payment Date means the product of (x) 97% and (y) the
"Market Average Value" relating to such Dividend Payment Date. The "Market
Average Value" shall equal the average of the daily closing prices of the
Class A Common Stock for the five consecutive Trading Days ending on (and
including) the fourth Trading Day preceding such Dividend Payment Date.
The closing price for each Trading Day will be the last sales price on the
Nasdaq National Market (or the principal securities exchange or other
securities market on which the Class A Common Stock is then being traded.).
"Trading Day" means any day on which the Class A Common Stock is traded for
any period on the Nasdaq National Market (or on the principal securities
exchange or other securities market on which the Class A Common Stock is
then being traded).
(ii) All dividends paid with respect to shares of the Series A
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
Holders entitled thereto.
(ii) Dividends shall accrue whether or not the Company has earnings
or profits, whether or not there are funds legally available for the
payment of such dividends and whether or not dividends are declared.
Dividends shall accumulate to the extent that such dividends are not paid
on the Dividend Payment Date to which they relate. No dividend whatsoever
shall be declared or paid upon, or any sum set apart for the payment of
dividends upon, any outstanding share of the Series A Preferred Stock with
respect to any Dividend Period unless all dividends for all preceding
Dividend Periods have been declared and paid or declared and a sufficient
sum set apart for the payment of such dividend, upon all outstanding shares
of Series A Preferred Stock. No dividend will be declared or paid on any
Parity Stock unless full cumulative dividends have been paid on the Series
A Preferred Stock for all prior Dividend Periods; provided, however, that
-------- -------
if accrued dividends on the Series A Preferred Stock for all prior Dividend
Periods have not been paid in full, then any dividend declared for any
Dividend Period on the Series A Preferred Stock and on any Parity Stock
will be declared ratably in proportion to accrued and unpaid dividends on
the Series A Preferred Stock and such Parity Stock.
(iv) The Company will not (A) declare, pay or set apart funds for the
payment of any dividend or other distribution with respect to any Junior
Stock or (B) redeem, purchase or otherwise acquire for consideration any
Junior Stock through a sinking fund or otherwise, unless (1) all accrued
and unpaid dividends with respect to the Series A
3
<PAGE>
Preferred Stock and any Parity Stock at the time such dividends are payable
have been paid or funds have been set apart for payment of such dividends
and (2) sufficient funds have been paid or set apart for the payment of the
dividend for the current Dividend Period with respect to the Series A
Preferred Stock and any Parity Stock. Notwithstanding anything in this
Certificate of Designations to the contrary, the Company may declare and
pay dividends on Parity Stock which are payable solely in additional shares
of or by the increase in the liquidation value of Parity Stock or Junior
Stock or on Junior Stock which are payable in additional shares of or by
the increase in the liquidation value of Junior Stock, as applicable, or
repurchase, redeem or otherwise acquire Junior Stock in exchange for Junior
Stock and Parity Stock in exchange for Parity Stock or Junior Stock.
(v) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption may be declared and
paid at any time, without reference to any regular Dividend Payment Date,
to Holders of record on the Business Day immediately prior to the payment
thereof, as may be fixed by the Board of Directors of the Company.
(vi) Dividends payable on the Series A Preferred Stock for any period
other than a Dividend Period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. If a Dividend Payment Date is not
a Business Day, payment of dividends shall be made on the next succeeding
Business Day and dividends accruing for the intervening period shall be
paid on the next succeeding Dividend Payment Date.
(d) Liquidation Preference.
----------------------
(i) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, and subject to the rights of holders of Senior
Stock and Parity Stock, each Holder of Series A Preferred Stock shall be
entitled to be paid, out of the assets of the Company available for
distribution to its stockholders, an amount equal to the Liquidation
Preference for each share of Series A Preferred Stock held by such Holder,
plus, without duplication, an amount in cash equal to all accumulated and
unpaid dividends (whether or not earned or declared) thereon to the date
fixed for liquidation, dissolution or winding-up (including an amount equal
to a prorated dividend for the period from the last Dividend Payment Date
to the date fixed for liquidation, dissolution or winding-up that would
have been payable had the Series A Preferred Stock been the subject of a
redemption on such date pursuant to paragraph (e)(i)) before any
distribution is made on any Junior Stock. If, upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the
amounts payable with respect to the Series A Preferred Stock and all Parity
Stock are not paid in full, the Holders of Series A Preferred Stock and the
holders of Parity Stock will share equally and ratably (in proportion to
the respective amounts that would be payable on such shares of Series A
Preferred Stock and the Parity Stock, respectively, if all amounts payable
thereon had been paid in full) in any distribution of assets of the Company
to which each is entitled.
4
<PAGE>
After payment of the full amount of the Liquidation Preference of the
outstanding shares of Series A Preferred Stock (and, if applicable, an
amount equal to a prorated dividend), the Holders of shares of Series A
Preferred Stock will not be entitled to any further participation in any
distribution of assets of the Company.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets
of the Company nor the consolidation or merger of the Company with or into
one or more other entities shall be deemed to be a liquidation, dissolution
or winding-up of the Company.
(e) Redemption.
----------
(i) (A) Provisional Redemption. The Series A Preferred Stock may be
----------------------
redeemed, in whole or in part, at the option of the Company at a redemption
price of __% of the Liquidation Preference, plus accumulated and unpaid
dividends, if any, whether declared or undeclared, to the date fixed for
such redemption (the "Provisional Redemption Date") (the foregoing amounts,
together with the Additional Payment, as hereinafter defined, being the
"Provisional Redemption Price"), on or after [________], 2001, but prior to
[________], 2002, if the closing price of the Class A Common Stock equals
or exceeds 150% of the Conversion Price for at least 20 Trading Days within
any 30 Trading Day period (such redemption, a "Provisional Redemption").
In the event that the Company undertakes a Provisional Redemption, the
Holders of shares of Series A Preferred Stock that are called for
Provisional Redemption will also receive a payment (the "Additional
Payment") in an amount equal to the present value (calculated using the
bond equivalent yield on U.S. Treasury notes or bills having a term nearest
in length to that of the Additional Period (as hereinafter defined) as of
the day immediately preceding the date on which a notice of Provisional
Redemption is mailed to the Holders) of the aggregate amount of the
dividends that would thereafter have been payable on the Series A Preferred
Stock (whether or not such dividends have been declared) for the period
from the Provisional Redemption Date to [________ __], 2002 (such period
being referred to as the "Additional Period").
The Provisional Redemption Price shall be, at the option of the
Company, payable (v) in cash, (w) through the delivery of a number of
shares of Class A Common Stock equal to the Provisional Redemption Price
divided by the Provisional Redemption Value (as defined below) of the Class
A Common Stock or (x) any combination of (v) and (w). The "Provisional
Redemption Value" of the Class A Common Stock with respect to a Provisional
Redemption Date means the product of (y) 97% and (z) the average of the
daily closing prices of the Class A Common Stock for the five consecutive
Trading Days ending on (and including) the fourth Trading Day preceding
such Provisional Redemption Date. The closing price for each Trading Day
will be the last sales price on the Nasdaq National Market (or the
principal securities exchange or other securities market on which the Class
A Common Stock is then being traded).
5
<PAGE>
No fractional shares of Class A Common Stock shall be issued in
connection with the payment of the Provisional Redemption Price. The
Transfer Agent shall have the authority to aggregate any fractional shares
of Class A Common Stock that would otherwise be issued in connection with
the payment of the Provisional Redemption Price, and to sell them at the
best available price and distribute the proceeds to the Holders thereof in
proportion to their respective interests. The Company shall reimburse the
Transfer Agent for any expenses incurred with respect to such sale,
including brokerage commissions. If the Company is not entitled to pay
cash for fractional shares, it shall pay cash to the Holder for the
fractional shares when it becomes legally and contractually able to pay
such cash.
(B) Optional Redemption. Except under the foregoing circumstances
-------------------
with respect to a Provisional Redemption, and except under the
circumstances set forth in Section 4.5 of the Restated Certificate of
Incorporation (in which case the terms, conditions and procedures set forth
therein for redemption of any Capital Stock of the Company under such
circumstances shall apply to any redemption of shares of Series A Preferred
Stock pursuant thereto), the Series A Preferred Stock shall not be
redeemable at the option of the Company prior to [________ __], 2002. On
or after [________ __], 2002, each share of the Series A Preferred Stock
may be redeemed (subject to the legal availability of funds therefor) at
any time, in whole or in part, at the option of the Company (such
redemption, an "Optional Redemption"), at the redemption prices set forth
below, payable in cash, plus, without duplication, an amount in cash equal
to all accrued and unpaid dividends to the date fixed for redemption (the
"Optional Redemption Date") (including a cash amount equal to a prorated
dividend for the period from the Dividend Payment Date immediately
preceding the Optional Redemption Date) (the "Optional Redemption Price").
If redeemed during the 12-month period commencing on [________] (or,
if such date is not a day on which the Nasdaq National Market is open for
business, then the next day the Nasdaq National Market is open for
business) of the years set forth below, the redemption prices shall be:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
2002...................... $[________]
2003...................... [________]
2004...................... [________]
2005 and thereafter....... $[____]
</TABLE>
(C) In the case of any partial Optional Redemption or Provisional
Redemption, selection of the Series A Preferred Stock for redemption will be
made by the Company in compliance with the requirements of the principal
national securities exchange, if any, on
6
<PAGE>
which the Series A Preferred Stock is listed, or if the Series A Preferred
Stock is not listed on a national securities exchange, on a pro rata basis,
by lot or such other method as the Company, in its sole discretion, shall
deem fair and appropriate; provided, however, that the Company may redeem all
-------- -------
the shares held by Holders of fewer than 5 shares (or all of the shares held
by the Holders who would hold less than 5 shares as a result of such
redemption) as may be determined by the Company.
(D) In the case of an Optional Redemption Date or Provisional
Redemption Date falling after a Record Date and prior to the related Dividend
Payment Date, the Holders of the Series A Preferred Stock at the close of
business on such Record Date will be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date, notwithstanding
the redemption of such shares following such Record Date. Except as provided
for in the preceding sentence, no payment or allowance will be made for
accrued dividends on any shares of Series A Preferred Stock called for
redemption.
(ii) Procedure for Redemption. (A) On and after the Optional
------------------------
Redemption Date or Provisional Redemption Date, as the case may be, unless
the Company defaults in the payment of the applicable redemption price,
dividends will cease to accumulate on shares of Series A Preferred Stock
called for redemption and all rights of Holders of such shares will terminate
except for the right to receive the Optional Redemption Price or Provisional
Redemption Price, as the case may be, without interest; provided, however,
-------- -------
that if a notice of redemption shall have been given as provided in
subparagraph (ii)(B) and the funds and/or shares of Class A Common Stock, as
the case may be, necessary for redemption (including an amount in respect of
all dividends that will accrue to the Optional Redemption Date or Provisional
Redemption Date, as the case may be) shall have been segregated and
irrevocably set apart by the Company, in trust for the benefit of the Holders
of the shares of Series A Preferred Stock called for redemption, then
dividends shall cease to accumulate on the Optional Redemption Date or
Provisional Redemption Date, as the case may be, on the shares of Series A
Preferred Stock to be redeemed and, at the close of business on the day on
which such funds and/or shares of Class A Common Stock, as the case may be,
are segregated and set apart, the Holders of the shares of Series A Preferred
Stock to be redeemed shall, with respect to such shares to be redeemed, cease
to be stockholders of the Company and shall be entitled only to receive the
Optional Redemption Price or Provisional Redemption Price, as the case may
be, for such shares without interest from the Optional Redemption Date or
Provisional Redemption Date, as applicable.
(B) With respect to a redemption pursuant to paragraph (e)(i), the
Company will send a written notice of redemption by first class mail to each
Holder of record of shares of Series A Preferred Stock, not fewer than 30
days nor more than 60 days prior to the Optional Redemption Date or
Provisional Redemption Date, as applicable, at its registered address (the
"Redemption Notice"); provided, however, that no failure to give such notice
-------- -------
nor any deficiency therein shall affect the validity of the procedure for the
redemption of any shares of Series A Preferred Stock to be redeemed except as
to the
7
<PAGE>
Holder or Holders to whom the Company has failed to give said notice
or except as to the Holder or Holders whose notice was defective. The
Redemption Notice shall state:
(1) that the redemption is pursuant to paragraph (e)(i) hereof;
(2) the Optional Redemption Price or Provisional Redemption Price, as
applicable and, in the case of a Provisional Redemption, whether the
Provisional Redemption Price will be paid in cash, through the delivery
of shares of Class A Common Stock, or a combination thereof (and, if a
combination thereof, stating the percentages of the total Provisional
Redemption Price that will be paid in cash and in shares of Class A
Common Stock);
(3) in the case of a Provisional Redemption as to which all or a portion
of the Provisional Redemption Price is to be paid through the delivery of
shares of Class A Common Stock, that the determination of the number of
shares of Class A Common Stock to be delivered shall be calculated as set
forth in paragraph (e)(i)(A);
(4) whether all or less than all the outstanding shares of the Series A
Preferred Stock are to be redeemed and the total number of shares of the
Series A Preferred Stock being redeemed;
(5) the Optional Redemption Date or Provisional Redemption Date, as
applicable;
(6) that the Holder is to surrender to the Company, in the manner, at the
place or places and at the price designated, his certificate or
certificates representing the shares of Series A Preferred Stock to be
redeemed; and
(7) that dividends on the shares of the Series A Preferred Stock to be
redeemed shall cease to accumulate on such Optional Redemption Date or
Provisional Redemption Date, as the case may be, unless the Company
defaults in the payment of the Optional Redemption Price or Provisional
Redemption Price, as the case may be.
(C) Each Holder of Series A Preferred Stock shall surrender the
certificate or certificates representing such shares of Series A Preferred
Stock to the Company, duly endorsed (or otherwise in proper form for
transfer, as determined by the Company), in the manner and at the place
designated in the Redemption Notice, and on the Optional Redemption Date or
Provisional Redemption Date the full Optional Redemption Price or Provisional
Redemption Price, respectively, for such shares shall be payable in cash
and/or shares of Class A Common Stock, as the case may be, to the person
whose name appears on such certificate or certificates as the owner thereof,
and each surrendered certificate shall be canceled and retired. In the event
that less than all of the shares represented by any such
8
<PAGE>
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(f) Voting Rights.
-------------
(A) The Holders of Series A Preferred Stock, except as otherwise
required under Delaware law or as set forth in paragraphs (B) and (C) below,
shall not be entitled to vote on any matter required or permitted to be voted
upon by the stockholders of the Company.
(B) (1) If dividends on the Series A Preferred Stock are in arrears
and unpaid for six or more Dividend Periods (whether or not consecutive) (a
"Voting Rights Triggering Event"), then the Holders of the then outstanding
shares of Series A Preferred Stock (together with the holders of Parity Stock
upon which like rights have been conferred and are exercisable), voting
separately and as a class, shall have the right and power to elect to serve
on the Board of Directors the lesser of (x) two additional members to the
Board of Directors or (y) that number of directors constituting at least 25%
of the members of the Board of Directors, and the number of members of the
Board of Directors shall, subject to paragraph (f)(B)(5), be immediately and
automatically increased by such number.
(2) The voting rights set forth in paragraph (f)(B)(1) above will
continue until such time as all dividends in arrears on the Series A
Preferred Stock are paid in full, at which time the term of any directors
elected pursuant to the provisions of paragraph (f)(B)(1) above (subject to
the right of holders of any other Preferred Stock to elect directors pursuant
to the terms of the instruments governing such Preferred Stock) shall
terminate forthwith and the number of directors constituting the Board of
Directors shall be decreased by such number (until the occurrence of any
subsequent Voting Rights Triggering Event).
At any time after voting power to elect directors shall have become
vested and be continuing in the Holders of Series A Preferred Stock (together
with the holders of Parity Stock upon which like rights have been conferred
and are exercisable) pursuant to paragraph (f)(B)(1) hereof, or if vacancies
shall exist in the offices of directors elected by such holders, a proper
officer of the Company may, and upon the written request of the Holders of
record of at least 25% of the shares of Series A Preferred Stock then
outstanding or the holders of 25% of the shares of Parity Stock then
outstanding upon which like rights have been conferred and are exercisable
addressed to the secretary of the Company shall, call a special meeting of
the Holders of Series A Preferred Stock and the holders of such Parity Stock
for the purpose of electing the directors which such holders are entitled to
elect pursuant to the terms hereof; provided, however, that no such special
-------- -------
meeting shall be called if the next annual meeting of stockholders of the
Company is to be held within 60 days after the voting power to elect
directors shall have become vested, in which case such meeting shall be
deemed to have been called for such next annual meeting. If such meeting
shall not be called by a proper officer of the Company within 20 days after
personal service to the secretary of the Company at its principal executive
offices, then the Holders of record
9
<PAGE>
of at least 25% of the outstanding shares of Series A Preferred Stock or the
holders of 25% of the shares of Parity Stock upon which like rights have been
conferred and are exercisable may designate in writing one of their members
to call such meeting at the expense of the Company, and such meeting may be
called by the person so designated upon the notice required for the annual
meetings of stockholders of the Company and shall be held at the place for
holding the annual meetings of stockholders. Any holder of Series A Preferred
Stock or such Parity Stock so designated shall have, and the Company shall
provide, access to the lists of Holders of Series A Preferred Stock and the
holders of such Parity Stock to be called pursuant to the provisions hereof.
If no special meeting of the Holders of Series A Preferred Stock and the
holders of such Parity Stock is called as provided in this paragraph (f)(B),
then such meeting shall be deemed to have been called for the next annual
meeting of stockholders of the Company or special meeting of the holders of
any other Capital Stock of the Company.
(3) At any meeting held for the purposes of electing directors at
which the Holders of Series A Preferred Stock (together with the holders of
Parity Stock upon which like rights have been conferred and are exercisable)
shall have the right, voting together as a separate class, to elect directors
as aforesaid, the presence in person or by proxy of the holders of at least a
majority in voting power of the outstanding shares of Series A Preferred
Stock (and such Parity Stock) shall be required to constitute a quorum
thereof.
(4) Any vacancy occurring in the office of a director elected by the
Holders of Series A Preferred Stock (and such Parity Stock) may be filled by
the remaining director elected by the Holders of Series A Preferred Stock
(and such Parity Stock) unless and until such vacancy shall be filled by the
Holders of Series A Preferred Stock (and such Parity Stock).
(5) If an event occurs at any time that results in the holders of any
Parity Stock having voting rights to elect directors to the Board of
Directors, then Holders of Series A Preferred Stock shall, whether or not
such event otherwise constitutes a Voting Rights Triggering Event pursuant to
paragraph (f)(B)(1), have the voting rights set forth in paragraphs (f)(B)(1)
and (f)(B)(2), and such event shall be deemed (for purposes of this paragraph
(f) only) to constitute a Voting Rights Triggering Event. In addition, in
the event that during a time in which directors elected by the Holders of
Series A Preferred Stock pursuant to this paragraph (f)(B) are serving on the
Board of Directors ("Previously-Elected Directors") an event occurs that
results in holders of Parity Stock having voting rights to elect (voting
together with the Holders of Series A Preferred Stock) at least two directors
to the Board of Directors, the Holders of Series A Preferred Stock shall vote
together with the holders of such Parity Stock to elect such new directors,
and upon the election of the new directors the Previously-Elected Directors
shall (unless such Previously-Elected Directors are elected as new directors)
cease to serve on the Board of Directors.
(C) (1) So long as any shares of the Series A Preferred Stock are
outstanding, the Company will not authorize, create or increase the
authorized amount of any class or
10
<PAGE>
series of Senior Stock without the affirmative vote or consent of Holders of
at least two-thirds of the shares of Series A Preferred Stock then
outstanding, voting or consenting, as the case may be, as one class, given in
person or by proxy, either in writing or by resolution adopted at an annual
or special meeting. However, without the consent of any Holder of Series A
Preferred Stock, the Company may create additional classes of stock, increase
the authorized number of shares of Preferred Stock or issue a series of
Parity Stock or Junior Stock.
(2) So long as any shares of the Series A Preferred Stock are
outstanding, the Company will not amend this Certificate of Designations so
as to affect adversely the specified rights, preferences, privileges or
voting rights of Holders of shares of Series A Preferred Stock or to increase
or decrease the aggregate number of authorized shares of Series A Preferred
Stock without the affirmative vote or consent of Holders of at least a
majority of the issued and outstanding shares of Series A Preferred Stock,
voting or consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting. Notwithstanding the foregoing, the Company when authorized by
resolutions of its Board of Directors may amend or supplement this
Certificate of Designations without the consent of any Holder to cure any
ambiguity, defect or inconsistency or make any other change provided that
such amendments or supplements shall not adversely affect the interests of
the Holders.
(3) Except as set forth in paragraph (f)(C)(1) or (2) above, (x) the
creation, authorization or issuance of any shares of any Junior Stock or
Parity Stock, including the designation of a series of Series A Preferred
Stock, or (y) the increase or decrease in the amount of authorized Capital
Stock or any class, including Preferred Stock, shall not require the consent
of Holders of Series A Preferred Stock and shall not be deemed to affect
adversely the rights, preferences, privileges or voting rights of shares of
Series A Preferred Stock.
(D) In any case in which the Holders of Series A Preferred Stock shall
be entitled to vote pursuant to this paragraph (f) or pursuant to Delaware
law, each Holder of Series A Preferred Stock entitled to vote with respect to
such matters shall be entitled to one vote for each share of Series A
Preferred Stock held; provided that any shares of Series A Preferred Stock
that are held by the Company or by any Person controlled by the Company shall
not entitle the Holders thereof to any votes with respect thereto. For
purposes of this provision, "controlled by," as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting equity securities, by agreement or
otherwise.
(E) Except as required by law, the Holders of the Series A Preferred
Stock will not be entitled to vote on any merger or consolidation involving
the Company or a sale of all or substantially all the assets of the Company.
11
<PAGE>
(g) Conversion.
----------
(A) (1) At any time after the Issue Date, at the option of the
Holder thereof, any share of Series A Preferred Stock may be converted into
such number of fully paid and nonassessable shares of Class A Common Stock
(calculated as to each conversion to the nearest 1/10 of a share), as equals
the Liquidation Preference divided by the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. In case a share
of Series A Preferred Stock is called for Provisional Redemption or Optional
Redemption, such conversion right in respect of the share of Series A
Preferred Stock so called shall expire at the close of business on the
applicable Provisional Redemption Date or Optional Redemption Date, as the
case may be, unless the Company defaults in making the payment due upon
redemption.
(2) If on any date after [________ __], 2002, the closing price (as
defined in this paragraph (g)(A)(2)) of the Class A Common Stock has equaled
or exceeded 135% of the then current Conversion Price, as hereinafter
provided, for at least 20 out of 30 consecutive Market Days (as defined
below), then the Company shall have the right, for up to five Market Days
after any such date, to cause all the Series A Preferred Stock to convert
into such number of fully paid and nonassessable shares of Class A Common
Stock (calculated as to each conversion to the nearest 1/10 of a share) as
equals the Liquidation Preference divided by the Conversion Price determined
as hereinafter provided, in effect at the time of conversion. The Company
may exercise such right by sending written notice of such exercise to the
Transfer Agent whenever the conversion will automatically occur. The Series
A Preferred Stock shall convert on the date such notice is received by the
Transfer Agent, and the Conversion Price shall be the Conversion Price in
effect on such date. For the purposes of this paragraph (g)(A)(2),
(x)"Market Day" means a day on which the Nasdaq National Market (or the
principal national securities market or exchange on which the Class A Common
Stock is then listed or admitted for trading) is open for the transaction of
business and (y) the "closing price" with respect to the Class A Common Stock
on any Market Day means the last sale price on such Market Day or, if no such
sale takes pace on such Market Day, the average of the reported high bid and
low ask prices on such Market Day, in each case on the Nasdaq National Market
(or the principal national securities market or exchange on which the Class A
Common Stock is then listed or admitted for trading).
(3) The price at which Class A Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially
$[________] per share of Class A Common Stock. The Conversion Price shall be
adjusted in certain instances as provided in paragraph (g)(D) or paragraph
(g)(H).
(B) In order to exercise the conversion privilege provided for in
paragraph (g)(A)(1), the Holder of any share of Series A Preferred Stock to
be converted shall surrender the certificate for such share of Series A
Preferred Stock, duly endorsed or assigned to the Company or in blank, at the
office of the Transfer Agent or at any office or
12
<PAGE>
agency of the Company maintained for that purpose, accompanied by written
notice to the Company in the form of Exhibit B that the Holder elects to
convert such share of Series A Preferred Stock or, if fewer than all the
shares of Series A Preferred Stock represented by a single share certificate
are to be converted, the number of shares represented thereby to be
converted. Such notice shall also contain the office or the address to which
the Company should deliver shares of Class A Common Stock issuable upon
conversion (and any other payments or certificates related thereto). Upon any
conversion of Series A Preferred Stock pursuant to paragraph (g)(A)(2), the
Company will promptly notify the Holders thereof and will deliver shares of
Class A Common Stock issuable upon such conversion to the office or address
specified by such Holders.
Holders of shares of Series A Preferred Stock at the close of business
on a Record Date will be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such Record Date and prior to such
Dividend Payment Date. However, shares of Series A Preferred Stock
surrendered for conversion during the period between the close of business on
any Record Date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of a notice of
redemption with respect to a redemption date during such period, which will
be entitled to such dividend) must be accompanied by payment of an amount
equal to the dividend payable on such shares on such Dividend Payment Date.
A Holder of shares of Series A Preferred Stock on a Record Date who (or whose
transferee) tenders any such shares for conversion into shares of Class A
Common Stock on such Dividend Payment Date (or where shares of Series A
Preferred Stock are automatically converted during such period) will receive
the dividend payable by the Company on such shares of Series A Preferred
Stock on such date, and the converting Holder need not include payment of the
amount of such dividend upon surrender of shares of Series A Preferred Stock
for conversion. Except as provided above, the Company will make no payment
or allowance for unpaid dividends, whether or not in arrears, on converted
shares or the dividends on the shares of Class A Common Stock issued upon
such conversion.
Shares of Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day (x) of
surrender of such shares of Series A Preferred Stock for conversion in
accordance with the foregoing provisions or (y) in the case of an automatic
conversion, the Transfer Agent receives the appropriate notice from the
Company, and at such time the rights of the Holders of such shares of Series
A Preferred Stock as Holders shall cease, and the person or persons entitled
to receive the Class A Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Class A Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver to such office or agency as the
converting Holder shall have designated in its written notice to the Company
a certificate or certificates for the number of full shares of Class A Common
Stock issuable upon conversion, together with payment in lieu of any fraction
of a share, as provided in paragraph (g)(C) hereof.
13
<PAGE>
In the case of any conversion of fewer than all the shares of Series A
Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Transfer Agent shall authenticate and deliver to the
Holder thereof (at the address designated by such Holder), at the expense of
the Company, a new certificate or certificates representing the number of
unconverted shares of Series A Preferred Stock.
(C) No fractional shares of Class A Common Stock shall be issued upon
the conversion of a share of Series A Preferred Stock. If more than one
share of Series A Preferred Stock shall be surrendered for conversion at one
time by the same Holder, the number of full shares of Class A Common Stock
which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate shares of Series A Preferred Stock so surrendered.
Instead of any fractional share of Class A Common Stock which would otherwise
be issuable upon conversion of any share of Series A Preferred Stock, the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the last sales price of a share of Class A
Common Stock on the Nasdaq National Market (or the principal national
securities exchange or other securities market on which the Class A Common
Stock is then being traded) on the last Trading Day immediately preceding the
day of conversion.
(D) The Conversion Price shall be adjusted from time to time by the
Company as follows, each a "Conversion Price Adjustment Event" (the variables
have the definitions set forth in paragraph (g)(D)(7) below):
(1) If the Company shall make any redemption payment or payment of a
dividend or other distribution payable in shares of Class A Common Stock to
all holders of any class of Capital Stock of the Company, other than the
issuance of shares of Class A Common Stock in connection with the payment (1)
in redemption for, of dividends on, or the conversion of, the Series A
Preferred Stock or (2) to all Holders of the Series A Preferred Stock based
upon the number of shares of Class A Common Stock into which the Series A
Preferred Stock is then convertible. The Conversion Price in effect
immediately prior to such event shall be adjusted pursuant to the formula:
X/Y multiplied by CP=ACP.
(2) If the Company shall make any issuance to all holders of shares
of Class A Common Stock of rights, options or warrants entitling them to
subscribe for or purchase shares of Class A Common Stock or securities
convertible into or exchangeable for shares of Class A Common Stock at an
exercise price that is less than the closing price of a share of Class A
Common Stock on the Nasdaq National Market (or the principal national
securities exchange or other securities market on which the Class A Common
Stock is then being traded) on the last Trading Day immediately preceding the
date of issuance of such rights, options or warrants; provided, however, that
no adjustment will be made with respect to such a distribution if the Holder
of shares of the Series A Preferred Stock would be entitled to receive such
rights, options or warrants upon conversion at any time of shares of the
Series A Preferred Stock into Class A Common Stock and provided, further,
that if such rights, options or warrants are only exercisable upon the
occurrence of certain triggering
14
<PAGE>
events, then the Conversion Price will not be adjusted until such triggering
events occur. The Conversion Price in effect immediately prior to such event
shall be adjusted pursuant to the formula: X/(X+U((ClosePrice-
EP)/ClosePrice)) multiplied by CP=ACP. If any options, warrants or other
rights of the nature described in this paragraph (g)(D)(2) ("Rights") expire
without exercise or conversion, the Conversion Price will be readjusted to
the Conversion Price which would otherwise be in effect had the adjustment
made upon the issuance of such Rights been made on the basis of delivery of
only the number of shares of Class A Common Stock actually delivered upon the
exercise or conversion of such Rights.
(3) In the case of any subdivision, combination or reclassification
of the Class A Common Stock. The Conversion Price in effect immediately
prior to such event shall be adjusted pursuant to the formula: X/Y multiplied
by CP=ACP.
(4) If the Company shall make any distribution consisting exclusively
of cash excluding any cash distributed in a transaction for which paragraph
(g)(D)(12) below is applicable (which specifies that no anti-dilution
adjustment shall be made) to all holders of shares of Class A Common Stock
(which distribution is not also being made to the Holders of Series A
Preferred Stock based on the number of shares of Class A Common Stock into
which the Series A Preferred Stock is then convertible) in an aggregate
amount that, combined together with (1) all other such cash distributions
made within the then-preceding 12 months in respect of which no adjustment
has been made and (2) any cash and the fair market value of other
consideration paid or payable in respect of any tender offer by the Company
or any of its subsidiaries for shares of Class A Common Stock concluded
within the then-preceding 12 months in respect of which no adjustment has
been made, exceeds 15% of the Company's Pre-Distribution Market
Capitalization (as defined in paragraph (g)(D)(7) below). The Conversion
Price in effect immediately prior to such event shall be adjusted pursuant to
the formula: CP- (CP multiplied by ((Cash-15% PDMC)/PDMC))=ACP. There will
be no adjustment to the Conversion Price if (Cash-15% PDMC) is less than or
equal to zero.
(5) In the case of the completion of a tender or exchange offer made
by the Company or any of its subsidiaries for shares of Class A Common Stock
that involves an aggregate consideration that, together with (1) any cash and
other consideration payable in a tender or exchange offer by the Company or
any of its subsidiaries for shares of Class A Common Stock expiring within
the then-preceding 12 months in respect of which no adjustment has been made
and (2) the aggregate amount of any such cash distributions referred to in
paragraph (g)(D)(4) above to all holders of shares of Class A Common Stock
within the then-preceding 12 months in respect of which no adjustments have
been made, exceeds 15% of the Company's Post-Tender Market Capitalization (as
defined in paragraph (g)(D)(7) below). If the foregoing event occurs and if
the tender offer price or exchange offer price per share of Class A Common
Stock is greater than the closing price of the Class A Common Stock on the
Trading Day immediately succeeding the Expiration Time, the Conversion Price
in effect immediately prior to such event shall be adjusted pursuant to the
formula: CP multiplied by ((EX multiplied by TotSh)/(TPur + (NetSh
15
<PAGE>
multiplied by EX))) = ACP. There will be no adjustment to the Conversion
Price if the tender offer price or exchange offer price per share of Class A
Common Stock is less than or equal to EX or if TOff is not greater than 15%
of PTMC.
(6) If the Company shall make a distribution to all holders of Class A
Common Stock (which distribution is not also being made to the Holders of the
Series A Preferred Stock based on the number of shares of Class A Common
Stock into which the Series A Preferred Stock is then convertible) consisting
of evidences of indebtedness, shares of Capital Stock of the Company other
than Class A Common Stock or assets, including securities, but excluding
those dividends and those issuances of rights, options, warrants and other
distributions for which an adjustment to the Conversion Price as referred to
above is applicable (other than in connection with a merger effected solely
to reflect a change in the jurisdiction of incorporation of the Company).
The Conversion Price in effect immediately prior to such event shall be
adjusted pursuant to the formula: CP-(Value/#Sh)=ACP.
(7) Variables. In the preceding descriptions, the variables have the
---------
following definitions:
"U" equals the number of shares of Class A Common Stock underlying all
rights, options or warrants issued to holders of Class A Common Stock
pursuant to paragraph (g)(D)(2) above entitling such holders to subscribe for
or purchase shares of Class A Common Stock or securities convertible into or
exchangeable for shares of Class A Common Stock issued in the Conversion
Price Adjustment Event;
"X" equals the total number of shares of Class A Common Stock
outstanding immediately prior to the Conversion Price Adjustment Event
(excluding unexercised options, warrants or rights);
"Y" equals the total number of shares of Class A Common Stock
outstanding immediately after the Conversion Price Adjustment Event
(excluding unexercised options, warrants or rights);
"Cash" equals the sum of (a) any distribution consisting exclusively
of cash (excluding any cash distributed upon a merger or consolidation to
which paragraph (g)(D)(12) below applies) to all holders of shares of Class A
Common Stock (which distribution is not also being made to the Holders of
Series A Preferred Stock based upon the number of shares of Class A Common
Stock into which the Series A Preferred Stock is then convertible) and (b)
all other such all-cash distributions made within the then-preceding 12
months in respect of which no adjustment has been made and (c) any cash and
the fair market value of other consideration (as determined by the Board of
Directors in good faith an pursuant to a resolution) paid or payable in
respect of any tender offer by the Company or any of its subsidiaries for
shares of any class of Common Stock concluded
16
<PAGE>
within the then-preceding 12 months in respect of which no adjustment has
been made pursuant to paragraph (g)(D)(4);
"ClosePrice" means, with respect to any date, the last sales price of
a share of Class A Common Stock on the Nasdaq National Market (or the
principal national securities exchange or other securities market on which
the Class A Common Stock is then being traded) on the last Trading Day
immediately preceding such date;
"EP" equals the exercise price or other consideration to be paid by
the holder upon the conversion or exchange of "U";
"EX" equals the closing price of the Class A Common Stock on the
Trading Day immediately succeeding the Expiration Time;
"Expiration Time" means, with respect to a tender or exchange offer
giving rise to a Conversion Price Adjustment Event pursuant to paragraph
(g)(D)(5), the last time that tenders of shares of Class A Common Stock could
have been made pursuant to the terms of such tender or exchange offer (as the
same may be amended);
"Market Value" means, as of any date, the average of the daily closing
prices of the Class A Common Stock for the five consecutive Trading Days
ending on the last Trading Day immediately prior to such date. The closing
price for each Trading Day shall be the last sales price on the Nasdaq
National Market (or the principal national securities exchange or other
securities market on which the Class A Common Stock is then being traded);
"NetSh" means a number of shares of Class A Common Stock equal to (a)
TotSh minus (b) Purchased Shares;
"PDMC" or "Pre-Distribution Market Capitalization" means, with respect
to a Conversion Price Adjustment Event pursuant to paragraph (g)(D)(4), an
amount equal to the product of (a) the ClosePrice of the Class A Common Stock
as of the record date with respect to the distribution constituting such
Conversion Price Adjustment Event multiplied by (b) the number of shares of
Class A Common Stock outstanding at the close of business on the record date
for such distribution;
"PTMC" or "Post-Tender Market Capitalization" means, with respect to a
Conversion Price Adjustment Event pursuant to paragraph (g)(D)(5), an amount
equal to the product of (a) EX multiplied by (b) TotSh;
"Purchased Shares" means, in connection with a tender or exchange
offer giving rise to a Conversion Price Adjustment Event pursuant to
paragraph (g)(D)(5), the number of shares of Class A Common Stock accepted
(up to any maximum number of such shares
17
<PAGE>
specified in the terms of such tender or exchange offer) and validly tendered
and not withdrawn as of the Expiration Time;
"#Sh" equals the number of shares of Class A Common Stock receiving
the distribution contemplated in paragraph (g)(D)(6);
"TOff" equals the sum of (a) the aggregate consideration paid by the
Company or any of its subsidiaries for shares of Class A Common Stock in a
tender or exchange offer made by the Company or any of its subsidiaries for
shares of Class A Common Stock and (b) any cash or other consideration
payable in a tender or exchange offer by the Company or any of its
subsidiaries for shares of Class A Common Stock expiring within the then-
preceding 12 months in respect of which no adjustment has been made and (c)
the aggregate amount of any such all-cash distributions referred to in
paragraph (g)(D)(4) to all holders of shares of Class A Common Stock within
the then-preceding 12 months in respect of which no adjustments have been
made;
"TotSh" equals the total number of shares of Class A Common Stock
outstanding (including any shares tendered in the tender or exchange offer)
at the Expiration Time;
"TPur" equals the product of (a) the fair market value (as determined
by the Board of Directors in good faith pursuant to a resolution) of the
consideration payable for one share of Class A Common Stock under the terms
of the tender or exchange offer giving rise to a Conversion Price Adjustment
Event pursuant to paragraph (g)(D)(5) multiplied by (b) the number of
Purchased Shares;
"Value" equals the aggregate fair market value of the distribution
described in paragraph (g)(D)(6), as determined in good faith by the Board of
Directors of the Company;
"CP" equals the Conversion Price immediately prior to the Conversion
Price Adjustment Event;
"ACP" equals the Conversion Price immediately after the Conversion
Price Adjustment Event.
An adjustment made pursuant to paragraph (g)(D) shall become
effective: (A) in the case of a Conversion Price Adjustment Event described
in paragraph (g)(D)(1), (2), (4) or (6), immediately following the close of
business on the record date for the determination of holders of Class A
Common Stock entitled to participate in such event; or (B) in the case of a
Conversion Price Adjustment Event described in paragraph (g)(D)(3), the close
of business on the day upon which such corporate action becomes effective; or
(C) in the case of a Conversion Price Adjustment Event described in paragraph
(g)(D)(5), the close of business on the Trading Day immediately succeeding
the Expiration Time of such tender offer or exchange offer.
18
<PAGE>
(8) De Minimis Adjustments. No adjustment in the Conversion Price
----------------------
shall be required (a) unless such adjustment would require an increase or
decrease of at least 1% in such price or (b) with respect to rights, options
or warrants issued pursuant to the Company's employee benefit plans;
provided, however, that any adjustments which by reason of paragraph
(g)(D)(8)(a) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
paragraph (g)(D)(8) shall be made by the Company and shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a change in the par value or no par value of
the Class A Common Stock.
(9) Reductions in Conversion Price. The Company shall be entitled to
------------------------------
make such reductions in the Conversion Price, in addition to those required
by this paragraph (g)(D), as the Company in its discretion shall determine to
be advisable in order that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities or distribution of
securities convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable to the recipients. In the
event the Company elects to make such a reduction in the Conversion Price,
the Company will comply with the requirements of Rule 14e-1 under the
Exchange Act, and any other securities laws and regulations thereunder if and
to the extent that such laws and regulations are applicable in connection
with the reduction of the Conversion Price. Whenever the Conversion Price is
so decreased, the Company shall mail to Holders of record of shares of Series
A Preferred Stock a notice of the decrease at least 15 days before the date
the decreased Conversion Price takes effect, and such notice shall state the
decreased Conversion Price.
(10) Decreases in Conversion Price. The Company from time to time may
-----------------------------
decrease the Conversion Price by an amount determined by the Board of
Directors and described in a notice as hereinafter provided for any period of
time if the period is at least 20 days and if the decrease is irrevocable
during such period. Whenever the Conversion Price is so decreased, the
Company shall mail to Holders of record of shares of Series A Preferred Stock
a notice of the decrease at least 15 days before the date the decreased
Conversion Price takes effect, and such notice shall state the decreased
Conversion Price and the period it will be in effect.
(11) Distribution of Rights, Options or Warrants. In the event that,
-------------------------------------------
after the issuance of the Series A Preferred Stock, the Company distributes
rights, options or warrants (other than those referred to in paragraph
(g)(D)(2) above) pro rata to all holders of shares of Class A Common Stock,
so long as any such rights, options or warrants have not expired or been
redeemed by the Company, the Holder of any shares of Series A Preferred Stock
surrendered for conversion will be entitled to receive upon such conversion,
in addition to the shares of Class A Common Stock then issuable upon such
conversion (the "Conversion Shares"), a number of rights, options or warrants
to be determined as follows:
19
<PAGE>
(a) if such conversion occurs on or prior to the date (a "Distribution
Date") for the distribution to the holders of rights, options or warrants of
separate certificates evidencing such rights, options or warrants, the same
number of rights, options or warrants to which a holder of a number of shares
of Class A Common Stock equal to the number of Conversion Shares is entitled
at the time of such conversion in accordance with the terms and provisions
applicable to the rights, options or warrants; and
(b) if such conversion occurs after such Distribution Date, the same
number of rights, options or warrants to which a holder of the number of
shares of Class A Common Stock into which such Series A Preferred Stock was
convertible immediately prior to such Distribution Date would have been
entitled on such Distribution Date in accordance with the terms and
provisions of and applicable to the rights, options or warrants.
(12) Merger or Consolidation. (a) In case of:
-----------------------
(i) any merger or consolidation of the Company with or into another
Person (other than a consolidation or merger in which the Company is the
resulting or continuing Person and which does not result in any
reclassification or exchange of Class A Common Stock outstanding immediately
prior to the merger or consolidation for cash, securities or other property
of another Person); or
(ii) any sale, transfer or other disposition to another Person of all
or substantially all of the assets of the Company (other than the sale,
transfer, assignment or distribution of shares of Capital Stock or assets to
a subsidiary of the Company) computed on a consolidated basis; or
(iii) any statutory exchange of securities with another Person,
other than in connection with a merger or acquisition,
(any of the events described in this paragraph (g)(D)(12)(a) being referred
to as a "Transaction"), there will be no adjustment to the Conversion Price
and each share of Series A Preferred Stock then outstanding shall, without
the consent of any Holder of Series A Preferred Stock (except as expressly
required by applicable law), become convertible only into the kind and amount
of shares of stock or other securities (of the Company or another issuer),
cash or other property receivable upon such Transaction by a holder of the
number of shares of Class A Common Stock into which such share of Series A
Preferred Stock could have been converted immediately prior to the effective
date of such Transaction, assuming such holder of Class A Common Stock failed
to exercise his rights of election, if any, as to the kind of amount of
securities, cash or other property receivable upon such Transaction.
(b) The provisions of this paragraph (g)(D)(12) similarly shall apply
to successive Transactions. The provisions of this paragraph (g)(D)(12)
shall be the sole right of Holders of Series A Preferred Stock in connection
with any Transaction (and the
20
<PAGE>
provisions of paragraph (g)(H) to the extent applicable) and, except as
expressly provided by applicable law and paragraph (f), such Holders shall
have no separate vote thereon.
(13) Notice of Adjustment. Whenever the Conversion Price is adjusted
--------------------
as provided in this paragraph (g)(D) or paragraph (g)(H), the Company shall
promptly file with the Transfer Agent an Officers' Certificate setting of the
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to each Holder of Series A Preferred Stock
as such Holder's last address appearing on the register of holders maintained
for that purpose within 20 days of the effective date of such adjustment.
Failure to deliver such notice shall not affect the legality or validity of
any such adjustment.
(14) Deferred Issuance. In any case in which this paragraph (g)(D)
-----------------
provides that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event
issuing to the Holder of any share of Series A Preferred Stock converted
after such record date and before the occurrence of such event the additional
Class A Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and about the Class A Common Stock
issuable upon such conversion before giving effect to such adjustment.
(15) Treasury Stock. For purposes of this paragraph (g)(D), the
--------------
number of share of Class A Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of
Class A Common Stock. The Company shall not pay any dividend or make any
distribution on Class A Common Stock held in the treasury of the Company.
(E) In case:
(1) the Company shall declare a dividend (or any other distribution)
on its Class A Common Stock payable otherwise than in cash out of its earned
surplus; or
(2) the Company shall authorize the granting to all holders of its
Class A Common Stock of rights or warrants to subscribe for or purchase any
shares of Capital Stock of any class or of any other rights; or
(3) of any reclassification of the Class A Common Stock of the Company
(other than a subdivision or combination of its outstanding Class A Common
Stock), or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or the
sale or transfer of all or substantially all the assets of the Company; or
21
<PAGE>
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Transfer Agent and at each
office or agency maintained for the purpose of conversion of the Series A
Preferred Stock, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Series A Preferred Stock Register, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Class A Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Class A
Common Stock of record shall be entitled to exchange their Class A Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give the notice required by this
paragraph (g)(E) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up, or the vote upon any such action.
(F) The company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Class A
Common Stock (or out of its authorized shares of Class A Common Stock held in
the treasury of the Company), for the purpose of effecting the conversion of
the Series A Preferred Stock, the full number of shares of Class A Common
Stock then issuable upon the conversion of all outstanding shares of Series A
Preferred Stock.
(G) The Company will pay any and all document, stamp or similar issue
or transfer taxes that may be payable in respect of the issue or delivery of
Class A Common Stock on conversion of the Series A Preferred Stock pursuant
hereto. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
shares of Class A Common Stock in a name other than that of the Holder of the
share of Series A Preferred Stock or the shares of Series A Preferred Stock
to be converted, and no such issue or delivery shall be made unless and until
the Person requesting such issue has paid to the Company the amount of any
such tax, or has established to the satisfaction of the Company that such tax
has been paid.
(H) (1) Notwithstanding any other provision in the preceding
paragraphs to the contrary, if any Change in Control occurs then the
Conversion Price in effect shall be adjusted immediately after such Change in
Control as described below. In addition, in the event of a Common Stock
Change in Control (as defined in this paragraph (g)(H)), each share of the
Series A Preferred Stock shall be convertible solely into common stock of the
kind received by holders of Class A Common Stock as the result of such Common
Stock
22
<PAGE>
Change in Control. For purposes of calculating any adjustment to be made
pursuant to this paragraph in the event of a Change in Control, immediately
after such Change in Control:
(A) in the case of a Non-Stock Change in Control (as defined in this
paragraph (g)(H)), the Conversion Price, subject to the provisions of
paragraph (g)(I), shall thereupon become the lower of (x) the Conversion
Price in effect immediately prior to such Non-Stock Change in Control, but
after giving effect to any other prior adjustments, and (y) the result
obtained by multiplying the greater of the Applicable Price (as defined in
this paragraph (g)(H)) or the then applicable Reference Market Price (as
defined in this paragraph (g)(H)) by a fraction of which the numerator shall
be $[____] and the denominator shall be the then current Optional Redemption
Price per share; or, prior to [________ __], 2002, an amount per share
determined by the Company in its sole discretion, after consultation with an
investment banking firm, to be the equivalent of the hypothetical Optional
Redemption Price that would have been applicable if the Series A Preferred
Stock had been redeemable during such period; and
(B) in the case of a Common Stock Change in Control, the Conversion
Price in effect immediately prior to such Common Stock Change in Control, but
after giving effect to any prior adjustments, shall thereupon be adjusted by
multiplying such Conversion Price by a fraction, of which the numerator shall
be the Purchaser Stock Price (as defined in this paragraph (g)(H)) and the
denominator shall be the Applicable Price; provided, however, that in the
-------- -------
event of a Common Stock Change in Control in which (x) 100% of the value of
the consideration received by a holder of Class A Common Stock is common
stock of the successor, acquiror, or other third party (and cash, if any, is
paid with respect to any fractional interest in such common stock resulting
from such Common Stock Change in Control) and (y) all of the Class A Common
Stock will have been exchanged for, converted into, or acquired for, common
stock (and cash with respect to fractional interests) of the successor,
acquiror or other third party, the Conversion Price in effect immediately
prior to such Common Stock Change in Control shall thereupon be adjusted by
multiplying such Conversion Price by a fraction, of which the numerator shall
be one (1) and the denominator shall be the number of shares of common stock
of the successor, acquiror, or other third party received by a holder of one
share of Class A Common Stock as a result of such Common Stock Change in
Control.
(2) For purposes of this paragraph (H), the following terms shall have
the meanings indicated:
"Applicable Price" means (i) in the event of a Non-Stock Change in
Control in which the holders of the Class A Common Stock receive only cash,
the amount of cash received by the holder of one share of Class A Common
Stock and (ii) in the event of any other Non-Stock Change in Control or any
Common Stock Change in Control, the average of the closing bid prices for the
Class A Common Stock during the ten Trading Days prior to and including the
Record Date for the determination of the holders of Class A Common Stock
entitled to receive cash, securities, property or other assets in connection
with such
23
<PAGE>
Non-Stock Change in Control or Common Stock Change in Control or, if there is
no such Record Date, the date upon which the holders of the Class A Common
Stock shall have the right to receive such cash, securities, property or
other assets, in each case, as adjusted in good faith by the Board of
Directors to appropriately reflect any of the events referred to in paragraph
(g)(D)(1) through (6).
"Common Stock Change in Control" means any Change in Control in which
more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Class A
Common Stock consists of common stock that for each of the ten consecutive
Trading Days referred to in the definition of "Applicable Price" has been
admitted for listing or admitted for listing subject to notice of issuance on
a national securities exchange or quoted on the Nasdaq National Market;
provided, however, that a Change in Control shall not be a Common Stock
-------- -------
Change in Control unless either (i) the Company continues to exist after the
occurrence of such Change in Control and the outstanding shares of Series A
Preferred Stock continue to exist as outstanding shares of Series A Preferred
Stock, or (ii) not later than the occurrence of such Change in Control, the
outstanding shares of Series A Preferred Stock are converted into or
exchanged for shares of convertible preferred stock of a corporation
succeeding to the business of the Company, which convertible preferred stock
has powers, preferences and relative, participating, optional or other
rights, and qualifications, limitations and restrictions, substantially
similar to those of the Series A Preferred Stock.
"Non-Stock Change in Control" means any Change in Control other than a
Common Stock Change in Control.
"Purchaser Stock Price" means, with respect to any Common Stock Change
in Control, the product of (i) the number of shares of common stock received
in such Common Stock Change of Control for each share of Class A Common
Stock, and (ii) the average of the per share closing bid prices for the
common stock received in such Common Stock Change in Control for the ten
consecutive Trading Days prior to and including the Record Date for the
determination of the holders of Class A Common Stock entitled to receive such
common stock, or if there is no such Record Date, the date upon which the
holders of the Class A Common Stock shall have the right to receive such
common stock, in each case, as adjusted in good faith by the Board of
Directors to appropriately reflect any of the events referred to in paragraph
(g)(D)(1) through (6); provided, however, that if no such closing bid prices
-------- -------
exist, then the Purchaser Stock Price shall be set at a price determined in
good faith by the Board of Directors of the Company.
"Reference Market Price" shall initially mean $[________] (which is an
amount equal to 66-2/3% of the reported last sale price of the Class A Common
Stock on the Nasdaq National Market on [________ __], 1999), and in the event
of any adjustment to the Conversion Price other than as a result of a Change
in Control, the Reference Market Price shall also be adjusted so that the
ratio of the Reference Market Price to the Conversion
24
<PAGE>
Price after giving effect to any such adjustment shall always be the same as
the ratio of $[________] to the initial Conversion Price set forth in
paragraph (g)(A)(3).
(I) If, as a result of the operation of paragraph (g)(H)(1)(A), the
cumulative number of shares of Class A Common Stock issued or issuable upon
conversion of the Series A Preferred Stock, after giving effect to the
adjustments described in paragraph (g)(H)(1)(A) and all prior conversions of
Series A Preferred Stock, would exceed a number (the "Threshold Number")
equal to 20% of the outstanding shares of Class A Common Stock as of the
Issue Date, then until and unless the Company obtains the approval of its
common stockholders for the issuance of any shares of Class A Common Stock in
excess of the Threshold Number, the Conversion Price shall be adjusted
pursuant to paragraph (g)(H)(1)(A) to that price that would entitle the
Holders of Series A Preferred Stock to receive in the aggregate, upon
conversion of all the Series A Preferred Stock (including all prior
conversions of Series A Preferred Stock), no more than the Threshold Number
of shares of Class A Common Stock. If, as a result of the operation of the
preceding sentence, the adjustments required by operation of paragraph
(g)(H)(1)(A) in the Conversion Price is limited because appropriate
stockholder approval has not been obtained, the Company agrees for the
benefit of the Holders of Series A Preferred Stock to seek, as promptly as
reasonably practicable, the requisite approval of its common stockholders for
the full adjustment of the Conversion Price as required by operation of
paragraph (g)(H)(1)(A) (without giving effect to the preceding sentence).
(h) Reissuance of Series A Preferred Stock. Shares of Series A Preferred
--------------------------------------
Stock that have been issued and reacquired in any manner, including shares
purchased, redeemed, converted or exchanged, shall not be reissued as shares of
Series A Preferred Stock and shall (upon compliance with any applicable
provisions of the laws of Delaware) have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock; provided, however, that so
-------- -------
long as any shares of Series A Preferred Stock are outstanding, any issuance of
such shares may be in compliance with the terms hereof. Upon any such
reacquisitions, the number of shares of Series A Preferred Stock authorized
pursuant to this Certificate of Designations shall be reduced by the number of
shares so acquired.
(i) Business Day. If any payment, redemption or exchange shall be required
------------
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(j) Limitation on Mergers and Asset Sales. The Company may, without the
-------------------------------------
consent of any Holder of Series A Preferred Stock, consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
as an entirety to, any Person, provided that: (1) the successor, transferee or
lessee (if not the Company) is organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia and
the Series A Preferred Stock shall be converted into or exchanged for and shall
become shares of such successor, transferee or lessee, having in respect of such
successor, transferee, or lessee
25
<PAGE>
substantially the same powers, preference and relative participating, optional
or other special rights and the qualifications, limitations or restrictions
thereon, that the Series A Preferred Stock had immediately prior to such
transaction; and (2) the Company delivers to the Transfer Agent an Officers'
Certificate and an Opinion of Counsel stating that such consolidation, merger or
transfer complies with this Certificate of Designations. In the event of any
consolidation or merger or conveyance, transfer or lease of all or substantially
all of the assets of the Company that is permitted pursuant to this paragraph
(j), the successor resulting from such consolidation or into which the Company
is merged or the transferee or lessee to which such conveyance, transfer or
lease is made, will succeed to, and be substituted for, and may exercise every
right and power of, the Company with respect to the Series A Preferred Stock,
and thereafter, except in the case of a lease, the predecessor (if still in
existence) shall be released from its obligations and covenants with respect to
the Series A Preferred Stock.
(k) Certificates.
------------
(i) Form and Dating. The Series A Preferred Stock and the Transfer
---------------
Agent's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Certificate of Designations. The Series A Preferred Stock certificate may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the
Company). Each Series A Preferred Stock certificate shall be dated the date
of its authentication. The terms of the Series A Preferred Stock certificate
set forth in Exhibit A are part of the terms of this Certificate of
Designations.
(ii) Execution and Authentication. Two Officers shall sign the
----------------------------
Series A Preferred Stock certificates for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Series A Preferred Stock certificates and may be in
facsimile form.
If an Officer whose signature is on Series A Preferred Stock
certificate no longer holds that office at the time the Transfer Agent
authenticates the Series A Preferred Stock certificate, the Series A
Preferred Stock certificates shall be valid nevertheless.
A Series A Preferred Stock certificate shall not be valid until an
authorized signatory of the Transfer Agent manually signs the certificate of
authentication on the Series A Preferred Stock certificate. The signature
shall be conclusive evidence that the Series A Preferred Stock certificate
has been authenticated under this Certificate of Designations.
The Transfer Agent shall authenticate and deliver certificates for
[________] shares of Series A Preferred Stock for original issue upon a
written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the number of shares of Series A
26
<PAGE>
Preferred Stock to be authenticated and the date on which the original issue
of Series A Preferred Stock is to be authenticated.
The Transfer Agent may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the certificates for Series A
Preferred Stock. Unless limited by the terms of such appointment, an
authenticating agent may authenticate certificates for Series A Preferred
Stock whenever the Transfer Agent may do so. Each reference in this
Certificate of Designations to authentication by the Transfer Agent includes
authentication by such agent. An authenticating agent has the same rights as
the Transfer Agent or agent for service of notices and demands.
(iii) Transfer and Exchange of Shares of Series A Preferred Stock.
-----------------------------------------------------------
(A) When shares of Series A Preferred Stock are presented to the
Transfer Agent with a request to register the transfer of such shares of
Series A Preferred Stock or to exchange such shares of Series A Preferred
Stock for an equal number of shares of Series A Preferred Stock of other
authorized denominations, the Transfer Agent shall register the transfer or
make the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the certificate representing
-------- -------
such shares of Series A Preferred Stock surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company and the Transfer Agent, duly
executed by the Holder thereof or its attorney duly authorized in writing.
(B) Obligations with Respect to Transfers and Exchanges of Series A
---------------------------------------------------------------
Preferred Stock. (1) To permit registrations of transfers and exchanges,
---------------
the Company shall execute and the Transfer Agent shall authenticate
certificates representing shares of Series A Preferred Stock as required
pursuant to the provisions of this paragraph (k)(iii).
(2) All shares of Series A Preferred Stock issued upon any
registration of transfer or exchange of shares of Series A Preferred Stock
shall be the valid obligations of the Company, entitled to the same benefits
under this Certificate of Designations as the shares of Series A Preferred
Stock surrendered upon such registration of transfer or exchange.
(3) Prior to due presentment for registration of transfer of any
shares of Series A Preferred Stock, the Transfer Agent and the Company may
deem and treat the person in whose name such shares of Series A Preferred
Stock are registered as the absolute owner of such Series A Preferred Stock
and neither the Transfer Agent nor the Company shall be affected by notice to
the contrary.
(4) No service charge shall be made to a Holder for any registration
of transfer or exchange upon surrender of any certificate representing shares
of Series A Preferred Stock or shares of Class A Common Stock at the office
of the Transfer Agent maintained
27
<PAGE>
for that purpose. However, the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Series A
Preferred Stock certificates or Class A Common Stock certificates.
(C) No Obligation of the Transfer Agent. The Transfer Agent shall
-----------------------------------
have no obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Certificate of
Designations or under applicable law with respect to any transfer of any
interest in any Series A Preferred Stock other than to require delivery of
such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms of
this Certificate of Designations, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
(iv) Replacement Certificates. If a modified Series A Preferred
------------------------
Stock certificate is surrendered to the Transfer Agent or if the Holder of a
Series A Preferred Stock certificate claims that the Series A Preferred Stock
certificate has been lost, destroyed or wrongfully taken, the Company shall
issue and the Transfer Agent shall countersign a replacement Series A
Preferred Stock certificate if the reasonable requirements of the Transfer
Agent and of Section 8-405 of the Uniform Commercial Code as in effect in the
State of New York are met. If required by the Transfer Agent or the Company,
such Holder shall furnish an indemnity bond sufficient in the judgment of the
Company and the Transfer Agent to protect the Company and the Transfer Agent
from any loss which either of them may suffer if a Series A Preferred Stock
certificate is replaced. The Company and the Transfer Agent may charge the
Holder for their expenses in replacing a Series A Preferred Stock
certificate.
(v) Temporary Certificates. Until definitive Series A Preferred Stock
----------------------
certificates are ready for delivery, the Company may prepare and the Transfer
Agent shall countersign temporary Series A Preferred Stock certificates.
Temporary Series A Preferred Stock certificates shall be substantially in the
form of definitive Series A Preferred Stock certificates but may have
variations that the Company considers appropriate for temporary Series A
Preferred Stock certificates. Without unreasonable delay, the Company shall
prepare and the Transfer Agent shall countersign definitive Series A
Preferred Stock certificates and deliver them in exchange for temporary
Series A Preferred Stock certificates.
(vi) Cancellation. In the event the Company shall purchase or
------------
otherwise acquire shares of Series A Preferred Stock, the certificate(s)
representing the same shall thereupon be delivered to the Transfer Agent for
cancellation.
(A) The Transfer Agent and no one else shall cancel and destroy all
Series A Preferred Stock certificates surrendered for transfer, exchange,
replacement or cancellation and deliver a certificate of such destruction to
the Company unless the Company directs the
28
<PAGE>
Transfer Agent to deliver canceled Series A Preferred Stock certificates to
the Company. The Company may not issue new Series A Preferred Stock
certificates to replace Series A Preferred Stock certificates to the extent
they evidence Series A Preferred Stock which the Company has purchased or
otherwise acquired.
(l) Certain Definitions. As used in this Certificate of Designations, the
-------------------
following terms shall have the following meanings (and (1) terms defined in the
singular have comparable meanings when used in the plural and vice versa, (2)
"including" means including without limitation, (3) "or" is not exclusive and
(4) an accounting term not otherwise defined has the meaning assigned to it in
accordance with United States generally accepted accounting principles as in
effect on the Issue Date and all accounting calculations will be determined in
accordance with such principles), unless the content otherwise requires:
"Business Day" means each day which is not a Legal Holiday.
------------
"Capital Stock" means, with respect to any Person, any and all shares,
-------------
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Issue Date, including all Common Stock and Preferred Stock.
"Change in Control" or "Change of Control" means: (i) the sale, lease,
----------------- -----------------
transfer, conveyance other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act), (ii) the adoption of a plan relating to the liquidation,
dissolution or winding-up of the Company, (iii) the consummation of any
transaction (including any merger or consolidation) the result of which is
that any "person" (as defined above) other than any Permitted Holder (as
defined below), becomes the beneficial owner (as determined in accordance
with Rules 13d-3 and 13d-5 under the Exchange Act, except that a person will
be deemed to have beneficial ownership of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the Voting
Stock of the Company or (iv) the first day on which a majority of the members
of the Board of Directors (excluding the directors elected pursuant to
paragraph (f)) are not Continuing Directors. "Permitted Holders" means IES
Industries, Inc. and its successors and assigns, Clark E. McLeod, Mary E.
McLeod and Richard Lumpkin, and foundations and trusts controlled by any of
the foregoing individuals and entities and their affiliates (other than the
Company and its subsidiaries) of each of the foregoing.
"Class A Common Stock" means the Company's Class A common stock, par
--------------------
value $0.01 per share.
"Common Stock" means the Company's common stock, including but not
------------
limited to, the Class A Common Stock.
29
<PAGE>
"Continuing Directors" means, as of any date of determination,
--------------------
individuals who on the Issue Date constituted the Board of Directors
(together with any new directors whose election by the Board of Directors or
whose nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the members of the Board of Directors then in
office who either were members of the Board of Directors on the Issue Date or
whose election or nomination for election was previously so approved).
"Dividend Period" means such period between two consecutive Dividend
---------------
Payment Dates and the period from the Issue Date to the first Dividend
Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Holders" means the registered holders from time to time of the Series
-------
A Preferred Stock.
"Issue Date" means the date on which the Series A Preferred Stock is
----------
initially issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions are not required to be open in the State of New York.
"Officer" means the Chairman of the Board of Directors, the President,
-------
any Vice President, the Treasurer, the Secretary or any Assistant Secretary
of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
---------------------
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
acceptable to the Transfer Agent. The counsel may be an employee of or
counsel to the Company or the Transfer Agent.
"person" or "Person" means any individual, corporation, partnership,
------ ------
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, governmental or any agency or political
subdivision thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and all
---------------
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the Issue Date, including all series
and classes of such preferred or preference stock.
"SEC" or "Commission" means the Securities and Exchange Commission.
--- ----------
"Securities Act" means the Securities Act of 1933.
--------------
30
<PAGE>
"Subsidiary" means with respect to any Person, any corporation,
----------
association or other business entity of which Voting Stock representing more
than 50% of the voting power of shares of outstanding Voting Stock is owned,
directly or indirectly, by such Person, or one or more other Subsidiaries of
such Person.
"Transfer Agent" means the transfer agent for the Series A Preferred
--------------
Stock appointed by the Company, which initially shall be Norwest Bank
Minnesota, N.A.
"Voting Stock" of a corporation means all classes of Capital Stock of
------------
such corporation then outstanding and normally entitled to vote in the
election of directors.
(m) SEC Reports and Reports to Holders. So long as any shares of Series A
----------------------------------
Preferred Stock remain outstanding, the Company will file with the SEC (whether
or not the Company is required to do so) all such reports and other information
as the Company would be required to file with the SEC pursuant to Section 13(a)
or 15(d) of the Exchange Act. Upon the written request of a Holder of Series A
Preferred Stock, the Company will supply to such Holder, at no cost to such
Holder, copies of such reports or other information.
31
<PAGE>
IN WITNESS WHEREOF, said McLeodUSA Incorporated has caused this Certificate
of Designations to be signed by [________], its [________], this [____] day of
[_______], 1999.
McLEODUSA INCORPORATED
by
---------------------------
Name:
Title:
32
<PAGE>
EXHIBIT A
FORM OF SERIES A PREFERRED STOCK
FACE OF SECURITY
Certificate Number Number of Shares of Series A
Preferred Stock
[ ] [ ]
CUSIP NO.: 582266201
__% Series A Cumulative Convertible Preferred Stock (par value $0.01 per share)
(liquidation preference $[____] per share)
of
McLeodUSA Incorporated
McLeodUSA Incorporated, a Delaware corporation (the "Company"), hereby
certifies that [ ] (the "Holder") is the registered owner of fully paid and
non-assessable preferred securities of the Company designated the __% Series A
Cumulative Convertible Preferred Stock (par value $0.01 per share) (liquidation
preference $[____] per share) (the "Series A Preferred Stock"). The shares of
Series A Preferred Stock are transferable on the books and records of the
Registrar, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Series A Preferred Stock represented hereby are issued and shall in all
respects be subject to the provisions of the Certificate of Designations of the
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of ___% Series A Cumulative Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof dated August [__], 1999, as
the same may be amended from time to time (the "Certificate of Designations").
Capitalized terms used herein but not defined shall have the meaning given them
in the Certificate of Designations. The Company will provide a copy of the
Certificate of Designations to a Holder without charge upon written request to
the Company at its principal place of business.
A-1
<PAGE>
Reference is hereby made to select provisions of the Series A Preferred
Stock set forth on the reverse hereof, and to the Certificate of Designations,
which select provisions and the Certificate of Designations shall for all
purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Certificate of
Designations and is entitled to the benefits thereunder.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has executed this certificate this [ ]
day of [ ], [ ].
McLEODUSA INCORPORATED
By
----------------------------
Name:
Title:
[Seal]
By
----------------------------
Name:
Title:
A-3
<PAGE>
REVERSE OF SECURITY
Dividends on each share of Series A Preferred Stock shall be payable at a
rate per annum set forth in the face hereof or as provided in the Certificate of
Designations. Dividends may be paid in cash or in shares of Class A Common
Stock of the Company, at the option of the Company.
The shares of Series A Preferred Stock shall be redeemable as provided in
the Certificate of Designations and in the Restated Certificate of
Incorporation. The shares of Series A Preferred Stock shall be convertible into
the Company's Class A Common Stock in the manner and according to the terms set
forth in the Certificate of Designations.
As required under Delaware law, the Company shall furnish to any Holder
upon request and without charge, a full summary statement of the designations,
voting rights preferences, limitations and special rights of the shares of each
class or series authorized to be issued by the Company so far as they have been
fixed and determined and the authority of the Board of Directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the class and series of shares of the Company.
A-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares
of Series A Preferred Stock evidenced hereby to:
------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
agent to transfer the shares of Series A Preferred Stock evidenced hereby on the
books of the Transfer Agent and Registrar. The agent may substitute another to
act for him or her.
Date:_______________________
Signature:____________________________
(Sign exactly as your name appears on the other side of this Series A Preferred
Stock Certificate)
Signature
Guarantee:/1/
________________________________________________________________
_______________________
/1/(Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
A-5
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series A Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion") shares
of __% Series A Cumulative Convertible Preferred Stock (the "Series A Preferred
Stock"), represented by stock certificate No(s). _____ (the "Series A Preferred
Stock Certificates") into shares of Class A common stock ("Class A Common
Stock") of McLeodUSA Incorporated (the "Company") according to the conditions of
the Certificate of Designations, Preferences and Rights of the Series A
Preferred Stock (the "Certificate of Designations"), as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the holder for any conversion, except for transfer taxes, if any. A copy of
each Series A Preferred Stock Certificate is attached hereto (or evidence of
loss, theft or destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Class A Common Stock issuable to the undersigned
upon conversion of the Series A Preferred Stock shall be made pursuant to
registration of the Class A Common Stock under the Securities Act of 1933 (the
"Act"), or pursuant to any exemption from registration under the Act.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designations.
B-1
<PAGE>
Date of Conversion: ___________
Applicable Conversion Price: ________
Number of shares of Convertible
Preferred Stock to be Converted: ______
Number of shares of
Class A Common Stock to be Issued: _________
Signature: ________________
Name: ___________________
Address:** _______________
Fax No.: _________________
*The Company is not required to issue shares of Class A Common Stock until the
original Series A Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company or its Transfer
Agent. The Company shall issue and deliver shares of Class A Common Stock to an
overnight courier not later than three business days following receipt of the
original Series A Preferred Stock Certificate(s) to be converted.
**Address where shares of Class A Common Stock and any other payments or
certificates shall be sent by the Company.
B-2
<PAGE>
Exhibit 5.1
[HOGAN AND HARTSON LETTERHEAD]
August 4, 1999
Board of Directors
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Ladies and Gentlemen:
We are acting as special counsel to McLeodUSA Incorporated, a Delaware
corporation (the "Company"), in connection with its registration statement on
Form S-3, as amended (File No. 333-82851) (the "Registration Statement"), filed
with the Securities and Exchange Commission relating to the proposed public
offering of up to $1,750,000,000 in aggregate amount of one or more classes or
series of the Company's securities, which securities may include any or all of
the Corporation's:
(i) shares of Class A common stock, par value $.01 per share (the
"Class A Common Stock");
(ii) shares of preferred stock (the "Preferred Stock");
(iii) Preferred Stock represented by depositary shares (the
"Depositary Shares");
(iv) debt securities (the "Debt Securities");
(v) warrants to purchase Debt Securities, Class A Common Stock,
Preferred Stock or Depositary Shares (the "Warrants");
(vi) subscription rights to purchase any of the above securities
(the "Subscription Rights");
(vii) stock purchase contracts to purchase Class A Common Stock or
Preferred Stock (the "Stock Purchase Contracts"); and
<PAGE>
(viii) stock purchase units (the "Stock Purchase Units" and, together
with the Class A Common Stock, Preferred Stock, Depositary
Shares, Debt Securities, Warrants, Subscription Rights and
Stock Purchase Contracts, the "Securities"),
all of which Securities may be offered and sold by the Company from time to time
as set forth in the prospectus which forms a part of the Registration Statement
(the "Prospectus"), and as set forth in one or more supplements to the
Prospectus (each, a "Prospectus Supplement"). This opinion letter is furnished
to you at your request to enable you to fulfill the requirements of Item
601(b)(5) of Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection with
the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Amended and Restated Certificate of Incorporation of the
Company, as certified by the Secretary of State of the State of
Delaware on May 13, 1999 (the "Amended and Restated
Certificate"), the Certificate of Amendment of Amended and
Restated Certificate of Incorporation of the Company, as
certified by the Secretary of State of the State of Delaware on
May 13, 1999 (the "Certificate of Amendment"), the Certificate of
Change of Registered Agent and Registered Office of the Company,
as certified by the Secretary of State of the State of Delaware
on May 13, 1999 (together with the Amended and Restated
Certificate and the Certificate of Amendment, the "Certificate of
Incorporation") as certified by the Secretary of the Company on
the date hereof as being complete, accurate and in effect.
3. The Amended and Restated Bylaws of the Company, as certified by
the Secretary of the Company on the date hereof as being
complete, accurate and in effect (the "Bylaws").
4. The proposed forms of Senior Debt Securities Indenture and
Subordinated Debt Securities Indenture, each between the Company
and United States Trust Company of New York, as Trustee, filed as
Exhibits 4.21 and 4.22 to the Registration Statement (each an
"Indenture" and collectively, the "Indentures").
<PAGE>
5. Resolutions of the Board of Directors of the Company adopted by
unanimous written consent on August 3, 1999, as certified by the
Secretary of the Company on the date hereof as being complete,
accurate, and in effect, relating to the issuance and sale of the
Securities and arrangements in connection therewith.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
accuracy and completeness of all documents submitted to us, the authenticity of
all original documents, and the conformity to authentic original documents of
all documents submitted to us as copies (including telecopies). This opinion
letter is given, and all statements herein are made, in the context of the
foregoing.
This opinion letter is based as to matters of law solely on Delaware
corporate law. We express no opinion herein as to any other laws, statutes,
ordinances, rules or regulations.
For purposes of this opinion letter, we have assumed that:
(i) the issuance, sale, amount and terms of the Securities to be
offered from time to time will be duly authorized and
established by proper action of the Board of Directors of the
Company (each, a "Board Action") and in accordance with the
Certificate of Incorporation, Bylaws and applicable Delaware
law;
(ii) prior to any issuance of shares of Preferred Stock or
Depositary Shares, an appropriate Certificate of Designation
relating to a class or series of the Preferred Stock or
Depositary Shares to be sold under the Registration Statement
will have been duly authorized and adopted and filed with the
Secretary of State of the State of Delaware (the "Certificate
of Designation");
(iii) any Depositary Shares will be issued by the Depositary (as
defined below) under one or more deposit agreements (each, a
"Deposit Agreement"), each to be between the Company and a
financial institution identified therein as the depositary
(each, a "Depositary");
(iv) any Debt Securities will be issued pursuant to an Indenture;
and
(v) any Warrants will be issued under one or more warrant
agreements (each, a "Warrant Agreement"), each to be between
<PAGE>
the Company and a financial institution identified therein as
a warrant agent (each, a "Warrant Agent").
Based upon, subject to and limited by the foregoing, we are of the
opinion that:
(a) following (i) final action of the Board of Directors of the
Company authorizing an issuance of Class A Common Stock, (ii) effectiveness of
the Registration Statement, (iii) issuance and delivery of certificates for
Class A Common Stock against payment therefor in accordance with the terms of
such Board Action and any applicable underwriting agreement or purchase
agreement, and as contemplated by the Registration Statement and/or the
applicable Prospectus Supplement or upon the exercise of any Warrants for Class
A Common Stock in accordance with the terms thereof, or conversion or exchange
of Preferred Stock that, by their terms, are convertible into or exchangeable
for Class A Common Stock, the Class A Common Stock will be validly issued, fully
paid, and nonassessable;
(b) following (i) final action of the Board of Directors of the
Company authorizing and establishing a series of the Preferred Stock, in
accordance with the terms of the Certificate of Incorporation, the Bylaws and
applicable law, (ii) filing of an appropriate Certificate of Designation with
respect to such Preferred Stock, (iii) effectiveness of the Registration
Statement, (iv) final action of the Board of Directors authorizing issuance of
such shares of Preferred Stock, and (v) receipt by the Company of the
consideration for the Preferred Stock specified in the resolutions of the Board
of Directors, the Preferred Stock will be validly issued, fully paid, and
nonassessable.
(c) following (i) final action of the Board of Directors classifying
a series of Preferred Stock underlying a series of Depositary Shares, in
accordance with the terms of the Certificate of Incorporation, Bylaws and
applicable law, (ii) filing of an appropriate Certificate of Designation with
respect to such Preferred Stock, (iii) effectiveness of the Registration
Statement, (iv) final action of the Board of Directors authorizing issuance of
such shares of Preferred Stock, (v) final action of the Board of Directors
authorizing execution and delivery of a Deposit Agreement, and (vi) receipt by
the Company of the consideration for the Depositary Shares specified in the
resolutions of the Board of Directors, the Depositary Shares will be validly
issued, fully paid, and nonassessable.
(d) following (i) effectiveness of the Registration Statement,
(ii) due execution and delivery of an applicable Indenture by the Company and
the Trustee named therein, (iii) final action of the Board of Directors duly
authorizing the issuance of any series of Debt Securities, the terms of which
have been duly established in accordance with the provisions of the Indenture,
(iv) due
<PAGE>
authentication by the Trustee, and (v) due execution and delivery of such Debt
Securities on behalf of the Company against payment therefor in accordance with
the terms of such Board Action, any applicable underwriting agreement or
purchase agreement, the Indenture and any applicable supplemental indenture, and
as contemplated by the Registration Statement and/or the applicable Prospectus
Supplement, the Debt Securities will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights (including,
without limitation, the effect of statutory and other law regarding fraudulent
conveyances, fraudulent transfers and preferential transfers) and as may be
limited by the exercise of judicial discretion and the application of principles
of equity, including, without limitation, requirements of good faith, fair
dealing, conscionability and materiality (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(e) following (i) effectiveness of the Registration Statement,
(ii) due authorization by the Board of Directors of the Company of a Warrant
Agreement and the specific terms of the underlying Warrants conforming to the
description thereof in the Registration Statement and/or the applicable
Prospectus Supplement and delivery of such Warrant Agreement by the Company and
the Warrant Agent named therein, (iii) authentication by the Warrant Agent of
Warrants conforming to the requirements of the related Warrant Agreement, and
(iv) due execution and delivery on behalf of the Company of such Warrants
against payment therefor in accordance with the terms of such Board Action, any
applicable underwriting agreement or purchase agreement and the applicable
Warrant Agreement and as contemplated by the Registration Statement and/or the
applicable Prospectus Supplement, and assuming that the terms of the Warrants as
set forth in the Warrant Agreement do not violate any law applicable to the
Company or result in a default under or breach of any agreement or instrument
binding upon the Company, the Warrants will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights (including, without limitation, the effect of
statutory and other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers) and as may be limited by the exercise of judicial
discretion and the application of principles of equity, including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(f) following (i) effectiveness of the Registration Statement,
(ii) due establishment of the specific terms of Subscription Rights, and
(iii) due execution and delivery of a certificate bearing such terms (the
"Subscription Right Certificate") by or on behalf of the Company as contemplated
in the Registration
<PAGE>
Statement and/or the related Prospectus Supplement, and assuming (A) that the
terms of the Subscription Rights as set forth in the Subscription Right
Certificate are as described in the Registration Statement and/or the applicable
Prospectus Supplement, (B) that the terms of the Subscription Rights as set
forth in the Subscription Right Certificate do not violate any law applicable to
the Company or result in a default under or breach of any agreement or
instrument binding upon the Company, and (C) that the Subscription Rights are
then issued as contemplated in the Registration Statement and/or the applicable
Prospectus Supplement, the Subscription Rights will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights (including, without limitation, the effect of
statutory and other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers) and as may be limited by the exercise of judicial
discretion and the application of principles of equity, including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(g) following (i) effectiveness of the Registration Statement,
(ii) due authorization, execution and delivery of the Purchase Contract
Agreement relating to the Stock Purchase Contracts, (iii) due establishment of
the terms of the Stock Purchase Contracts and of their issuance and sale in
conformity with the Purchase Contract Agreement, assuming such terms, issuance
and sale do not violate any applicable law or result in a default under or
breach of any agreement or instrument binding upon the Company and comply with
any requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company, (iv) due execution and countersigning of the
Stock Purchase Contracts in accordance with the Purchase Contract Agreement, and
(v) issuance and sale of the Stock Purchase Contracts as contemplated by the
Registration Statement, the Stock Purchase Contracts will constitute valid and
binding obligations of the Company, enforceable in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights (including, without limitation, the
effect of statutory and other law regarding fraudulent conveyances, fraudulent
transfers and preferential transfers) and as may be limited by the exercise of
judicial discretion and the application of principles of equity, including,
without limitation, requirements of good faith, fair dealing, conscionability
and materiality (regardless of whether enforcement is considered in a proceeding
in equity or at law).
To the extent that the obligations of the Company under any Warrant
Agreement may be dependent upon such matters, we assume for purposes of this
opinion that the applicable Warrant Agent is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; that
the Warrant Agent is duly qualified to engage in the activities contemplated by
the Warrant
<PAGE>
Agreement; that the Warrant Agreement has been duly authorized, executed and
delivered by the Warrant Agent and constitutes the valid and binding obligation
of the Warrant Agent enforceable against the Warrant Agent in accordance with
its terms; that the Warrant Agent is in compliance, with respect to acting as a
Warrant Agent under the Warrant Agreement, with all applicable laws and
regulations; and that the Warrant Agent has the requisite organizational and
legal power and authority to perform its obligations under the Warrant
Agreement.
To the extent that the obligations of the Company and the rights of
any holder of Depositary Shares under any Deposit Agreement may be dependent
upon such matters, we assume for purposes of this opinion that the applicable
Depositary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Depositary is duly qualified
to engage in the activities contemplated by the Deposit Agreement; that the
Deposit Agreement has been duly authorized, executed and delivered by the
Depositary and constitutes a valid and binding obligation of the Depositary
enforceable against the Depositary and the Company in accordance with its terms;
that the Depositary is in compliance, with respect to acting as a Depositary
under the Deposit Agreement, with all applicable laws and regulations; and that
the Depositary has the requisite organizational and legal power and authority to
perform its obligations under the Deposit Agreement.
To the extent that the obligations of the Company under any Indenture
may be dependent upon such matters, we assume for purposes of this opinion that
the Trustee is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Trustee is duly qualified to
engage in the activities contemplated by the Indenture; that the Indenture has
been duly authorized, executed and delivered by the Trustee and constitutes the
valid and binding obligation of the Trustee enforceable against the Trustee in
accordance with its terms; that the Trustee is in compliance, with respect to
acting as a trustee under the Indenture, with all applicable laws and
regulations; and that the Trustee has the requisite organizational and legal
power and authority to perform its obligations under the Indenture.
The opinions expressed in Paragraphs (d), (e), (f) and (g) above shall
be understood to mean only that if there is a default in performance of an
obligation, (i) if a failure to pay or other damage can be shown and (ii) if the
defaulting party can be brought into a court which will hear the case and apply
the governing law, then, subject to the availability of defenses, and to the
exceptions set forth in Paragraphs (d), (e), (f) and (g) the court will provide
a money damage (or perhaps injunctive or specific performance) remedy.
This opinion letter has been prepared for your use in connection with
the Registration Statement and speaks as of the date hereof. We assume no
<PAGE>
obligation to advise you of any changes in the foregoing subsequent to the
delivery of this opinion letter.
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE>
Exhibit 5.2
[HOGAN AND HARTSON LETTERHEAD]
August 4, 1999
Board of Directors
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Ladies and Gentlemen:
We are acting as special counsel to McLeodUSA Incorporated, a Delaware
corporation (the "Company"), in connection with its registration statement on
Form S-3, as amended (File No. 333-82851) (the "Registration Statement"), filed
with the Securities and Exchange Commission relating to the proposed public
offering of up to $1,750,000,000 in aggregate amount of one or more classes or
series of the Company's securities, which securities may be offered and sold by
the Company from time to time as set forth in a prospectus and one or more
supplements thereto, all of which form a part of the Registration Statement.
This opinion letter is rendered in connection with the proposed public
offering of up to 400,000 shares (the "Shares") of the Company's Series A
cumulative convertible preferred stock, par value $.01 (the "Series A Preferred
Stock"), as described in the Registration Statement. This opinion letter is
furnished to you at your request to enable you to fulfill the requirements of
Item 601(b)(5) of Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection
with the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Amended and Restated Certificate of Incorporation of the
Company, as certified by the Secretary of State of the State of
Delaware on May 13, 1999 (the "Amended and Restated
Certificate"), the Certificate of Amendment of Amended and
Restated Certificate of Incorporation of the Company, as
certified by the Secretary of State of the State of Delaware on
<PAGE>
May 13, 1999 (the "Certificate of Amendment"), the Certificate of
Change of Registered Agent and Registered Office of the Company,
as certified by the Secretary of State of the State of Delaware
on May 13, 1999 (together with the Amended and Restated
Certificate and the Certificate of Amendment, the "Certificate of
Incorporation") as certified by the Secretary of the Company on
the date hereof as being complete, accurate and in effect).
3. The Amended and Restated Bylaws of the Company, as certified by
the Secretary of the Company on the date hereof as being
complete, accurate and in effect (the "Bylaws").
4. The proposed form of the Certificate of Designation relating to
the Series A Preferred Stock (the "Certificate of Designation"),
filed as Exhibit 4.24 to the Registration Statement.
6. The proposed form of Underwriting Agreement among the Company and
the several Underwriters to be named therein, for whom Salomon
Smith Barney Inc., Goldman, Sachs & Co., and Morgan Stanley & Co.
Incorporated will act as representatives, filed as Exhibit 1.8 to
the Registration Statement (the "Underwriting Agreement").
7. Resolutions of the Board of Directors of the Company adopted by
unanimous written consent on August 3, 1999, as certified by the
Secretary of the Company on the date hereof as being complete,
accurate, and in effect, relating to the issuance and sale of the
Shares and arrangements in connection therewith.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
accuracy and completeness of all documents submitted to us, the authenticity of
all original documents, and the conformity to authentic original documents of
all documents submitted to us as copies (including telecopies). This opinion
letter is given, and all statements herein are made, in the context of the
foregoing.
This opinion letter is based as to matters of law solely on Delaware
corporate law. We express no opinion herein as to any other laws, statutes,
regulations or ordinances.
Based upon, subject to and limited by the foregoing, we are of the
opinion that following (i) final action of the Board of Directors of the Company
approving the Underwriting Agreement and authorizing and establishing the Series
A Preferred Stock (including any action of the a duly appointed pricing
committee of
<PAGE>
the Board of Directors approving the pricing terms of the Series A
Preferred Stock), in accordance with the terms of the Certificate of
Incorporation, the Bylaws, the Certificate of Designation and applicable law,
(ii) execution and delivery by the Company of the Underwriting Agreement, (iii)
filing of the Certificate of Designation, (iv) effectiveness of the Registration
Statement, and (v) receipt by the Company of the consideration for the Shares
specified in the resolutions of the Board of Directors of the Company and the
Underwriting Agreement, the Shares will be validly issued, fully paid, and
nonassessable.
This opinion letter has been prepared for your use in connection with
the Registration Statement and speaks as of the date hereof. We assume no
obligation to advise you of any changes in the foregoing subsequent to the
delivery of this opinion letter.
We hereby consent to the filing of this opinion letter as Exhibit 5.2
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE>
Exhibit 12.1
RATIO OF EARNING TO FIXED CHARGES
(dollars in thousands)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense on indebtedness (including
amortization of debt expense and capitalized
interest) 218 972 869 40,304 91,626
--------------------------------------------------------------------------------
Interest on portion of rent expense
representative of interest 205 514 1,201 2,660 6,542
--------------------------------------------------------------------------------
Total fixed charges 423 1,486 2,070 42,964 98,168
================================================================================
Earnings (Loss):
Net loss before income taxes $ (11,416) $ (11,329) $ (22,346) $ (79,910) $ (124,912)
Fixed charges per above 423 1,486 2,070 42,964 98,168
Less Interest Capitalized - (62) (204) (4,440) (10,616)
--------------------------------------------------------------------------------
Total Earnings (Loss) $ (10,993) $ (9,905) $ (20,480) $ (41,386) $ (37,360)
================================================================================
Ratio of Earnings to Fixed Charge - - - - -
================================================================================
Coverage deficiency $ (11,416) $ (11,391) $ (22,550) $ (84,350) $ (135,528)
================================================================================
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------
Pro Forma Pro Forma
1998 1998 1999 1999
----------------- -----------------------------------------------
<S> <C> <C> <C> <C>
Fixed charges:
Interest expense on indebtedness (including
amortization of debt expense and capitalized
interest) 125,772 16,966 34,778 37,373
----------------- -----------------------------------------------
Interest on portion of rent expense
representative of interest 6,542 665 1,635 1,635
----------------- -----------------------------------------------
Total fixed charges 132,314 17,631 36,413 39,008
================= ===============================================
Earnings (Loss):
Net loss before income taxes $ (177,962) $ (30,267) $ (47,476) $ (57,438)
Fixed charges per above 132,314 17,631 36,413 39,008
Less Interest Capitalized (10,616) (1,690) (4,247) (4,247)
----------------- -----------------------------------------------
Total Earnings (Loss) $ (56,264) $ (14,326) $ (15,310) $ (22,677)
================= ===============================================
Ratio of Earnings to Fixed Charge - - - -
================= ===============================================
Coverage deficiency $ (188,578) $ (31,957) $ (51,723) $ (61,685)
================= ===============================================
</TABLE>
<PAGE>
EXHIBIT 12.2
RATIO OF EARNINGS TO COMBINED CHARGES AND PREFERENCE DIVIDENDS
(dollars in thousands)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense on indebtedness (including
amortization of debt expense and capitalized
interest) 218 972 869 40,304 91,626
Interest on portion of rent expense
representative of interest 205 514 1,201 2,660 6,542
Preference Dividends - - - - -
================================================================================
Total fixed charges 423 1,486 2,070 42,964 98,168
================================================================================
Earnings (Loss):
Net loss before income taxes $ (11,416) $ (11,329) $ (22,346) $ (79,910) $ (124,912)
Fixed charges per above 423 1,486 2,070 42,964 98,168
Less Capitalized Interest - (62) (204) (4,440) (10,616)
--------------------------------------------------------------------------------
Total Earnings (Loss) $ (10,993) $ (9,905) $ (20,480) $ (41,386) $ (37,360)
================================================================================
Ratio of Earnings to Fixed Charge - - - - -
================================================================================
Coverage deficiency $ (11,416) $ (11,391) $ (22,550) $ (84,350) $ (135,528)
================================================================================
<CAPTION>
Three Months Ended March 31,
---------------------------------------------
Pro Forma Pro Forma
1998 1998 1999 1999
----------------- ---------------------------------------------
<S> <C> <C> <C> <C>
Fixed charges:
Interest expense on indebtedness (including
amortization of debt expense and capitalized
interest) 125,772 16,966 34,778 37,373
Interest on portion of rent expense
representative of interest 6,542 665 1,635 1,635
Preference Dividends - - - -
================= =============================================
Total fixed charges 132,314 17,631 36,413 39,008
================= =============================================
Earnings (Loss):
Net loss before income taxes $ (177,962) $ (30,267) $ (47,476) $ (57,438)
Fixed charges per above 132,314 17,631 36,413 39,008
Less Capitalized Interest (10,616) (1,690) (4,247) (4,247)
----------------- ---------------------------------------------
Total Earnings (Loss) $ (56,264) $ (14,326) $ (15,310) $ (22,677)
================= =============================================
Ratio of Earnings to Fixed Charge - - - -
================= =============================================
Coverage deficiency $ (188,578) $ (31,957) $ (51,723) $ (61,685)
================= =============================================
</TABLE>
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 2 to the Form S-3 Registration Statement of our
McLeodUSA Incorporated reports dated January 27, 1999 (except with respect to
the matter discussed in Note 16, as to which the date is March 5, 1999) and to
all references to our Firm included in or made a part of this Registration
Statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
August 3, 1999
<PAGE>
Exhibit 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" included in
Amendment No. 2 to Registration Statement (Form S-3) and related Prospectus of
McLeodUSA Incorporated and to the incorporation by reference therein of our
report dated February 26, 1999, with respect to the consolidated financial
statements of Ovation Communications, Inc. as of December 31, 1998 and 1997 and
for the period from March 27, 1997 (inception) to December 31, 1997 and the year
ended December 31, 1998, included in the Registration Statement on Form S-4 (No.
333-71811) of McLeodUSA Incorporated filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
-------------------------
Minneapolis, Minnesota
August 4, 1999
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
McLeodUSA Incorporated
(Exact name of obligor as specified in its charter)
Delaware 42-1407240
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
McLeodUSA Technology Park 52406-3177
6400 C Street, SW. P. O. Box 3177 (Zip code)
Cedar Rapids, IA
(Address of principal executive offices)
__________________________
Senior Debt Securities Due ______________
(Title of the indenture securities)
================================================================================
<PAGE>
- 2 -
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The obligor currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No. 33-
97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. List of Exhibits
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of August 31, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 3rd day
of August 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ James E. Logan
------------------
James E. Logan
Vice President
JEL/pg
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /S/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1999
-----------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 139,755
Short-Term Investments 85,326
Securities, Available for Sale 528,160
Loans 2,081,103
Less: Allowance for Credit Losses 17,114
----------
Net Loans 2,063,989
Premises and Equipment 57,765
Other Assets 125,780
----------
Total Assets $3,000,775
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 623,046
Interest Bearing 1,875,364
----------
Total Deposits 2,498,410
Short-Term Credit Facilities 184,281
Accounts Payable and Accrued Liabilities 126,652
----------
Total Liabilities $2,809,343
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,759
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 1,637
----------
Total Stockholder's Equity 191,432
----------
Total Liabilities and
Stockholder's Equity $3,000,775
==========
</TABLE>
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
May 18, 1999
<PAGE>
Exhibit 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
_______________
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Ave, Suite 2700 75201
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Ave, Suite 2700
Dallas, Texas 75201
(214) 754-1200
(Name, address and telephone number of agent for service)
_______________
McLeodUSA Incorporated
(Exact name of obligor as specified in its charter)
Delaware 42-1407240
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
McLeodUSA Technology Park 52406-3177
6400 C Street, S.W. P.O. Box 3177 (Zip Code)
Cedar Rapids, IA
(Address of principal executive offices)
_______________
Subordinated Debt Securities due
(Title of the indenture securities)
<PAGE>
GENERAL
1. General Information.
--------------------
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Dallas (11th District), Dallas, Texas
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Dallas, Texas
The Office of the Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
-------------------------------------------
If the obligor or any underwriter for the obligor is an affiliate of the
Trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
---------------------------------
Furnish the following information as to each class of voting securities of
the Trustee:
As of April 28, 1999
- ------------------------------------------------------------------------------
Col A. Col B.
- ------------------------------------------------------------------------------
Title of Class Amount Outstanding
- ------------------------------------------------------------------------------
Capital Stock - par value $100 per share 5,000 shares
4. Trusteeships under Other Indentures.
------------------------------------
Not Applicable
5. Interlocking Directorates and Similar Relationships with the Obligor or
-----------------------------------------------------------------------
Underwriters.
-------------
Not Applicable
<PAGE>
6. Voting Securities of the Trustee Owned by the Obligor or its Officials.
-----------------------------------------------------------------------
Not Applicable
7. Voting Securities of the Trustee Owned by Underwriters or their Officials.
--------------------------------------------------------------------------
Not Applicable
8. Securities of the Obligor Owned or Held by the Trustee.
-------------------------------------------------------
Not Applicable
9. Securities of Underwriters Owned or Held by the Trustee.
--------------------------------------------------------
Not Applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
--------------------------------------------------------------------
Affiliates or Security Holders of the Obligor.
----------------------------------------------
Not Applicable
11. Ownership or Holdings by the Trustee of any Securities of a Person Owning
-------------------------------------------------------------------------
50 Percent or More of the Voting Securities of the Obligor.
-----------------------------------------------------------
Not Applicable
12. Indebtedness of the Obligor to the Trustee.
-------------------------------------------
Not Applicable
13. Defaults by the Obligor.
------------------------
Not Applicable
14. Affiliations with the Underwriters.
-----------------------------------
Not Applicable
15. Foreign Trustee.
----------------
Not Applicable
16. List of Exhibits.
-----------------
T-1.1 - A copy of the Articles of Association of U.S. Trust Company of
Texas, N.A.; incorporated herein by reference to Exhibit T-1.1
filed with Form T-1 Statement, Registration No. 22-21897.
<PAGE>
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee to commence
business; incorporated herein by reference to Exhibit T-1.2 filed
with Form T-1 Statement, Registration No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise corporate
trust powers; incorporated herein by reference to Exhibit T-1.3
filed with Form T-1 Statement, Registration No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas, N.A.,
as amended to date; incorporated herein by reference to Exhibit
T-1.4 filed with Form T-1 Statement, Registration No. 22-21897.
T-1.6 - The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
T-1.7 - A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of August 3, 1999, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp. As of August 3, 1999, U.S.
T.L.P.O. Corp. had 35 shares of Capital Stock outstanding, all of which are
owned by U.S. Trust Corporation. U.S. Trust Corporation had outstanding
18,413,853 shares of $1 par value Common Stock as of August 3, 1999.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
In as much as this Form T-1 is filed prior to the ascertainment by the Trustee
of all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information. Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the Trustee
disclaims responsibility for the accuracy or completeness of such information.
_______________
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, U.S
Trust Company of Texas, N.A., a national banking association organized under the
laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
3rd day of August, 1999.
U.S. Trust Company
of Texas, N.A., Trustee
By: /s/ James E. Logan
------------------
James E. Logan
Authorized Officer
<PAGE>
Exhibit T-1.6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of McLeodUSA Incorporated
Subordinated Debt Securities due ____, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefore.
U.S. Trust Company of Texas, N.A.
By: /s/
------------------------------
Gerard F. Ganey
Authorized Officer
<PAGE>
Board of Governors of the Federal Reserve SystemCarrie OatesFinancial
Printing Group
Federal Financial Institutions Examination Council
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-005
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 2001
- -------------------------------------------------------------------------------
(1)
Please Refer to Page I,
(LOGO) Table of Contents, for
the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC OFFICES
ONLY AND TOTAL ASSETS OF LESS THAN $100 MILLION OR MORE BUT LESS THAN $300
MILLION -- FFIEC 033
REPORT AT THE CLOSE OF BUSINESS March 31, 1999
This report is required by law: 12 U.S.C. Section (S) 324 (State member banks);
12 U.S.C. Section (S) 1817 (State nonmember banks); and 12 U.S.C. Section (S)
161 (National banks).
(19990331)
- ---------
(RCRI 9999)
This report form is to be filed by banks with domestic offices only. Banks with
branches and consolidated subsidiaries in U.S. territories and possessions, Edge
or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries,
or International Banking Facilities must file FFIEC 031.
- -------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Alfred B. Childs, Managing Director
-------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and belief.
/s/ Alfred B. Childs
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
April 21, 1999
- ----------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: these instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate
Federal regulatory authority and is true and correct.
/s/ Stuart M. Pearman
- ----------------------------------------------
Director (Trustee)
/s/. J. T. More, Jr.
- ----------------------------------------------
Director (Trustee)
/s/. Arthur White
- ----------------------------------------------
Director (Trustee)
- -------------------------------------------------------------------------------
Submission of Reports
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file
directly with the banking agencies' collection agent, Electronic
Data Systems Corporation (EDS), by modem or on computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to
convert the paper report to electronic form. That party (if other
than EDS) must transmit the bank's computer data file to EDS.
For electronic filing assistance, contact EDS Call Report Services,
2150 North Prospect Avenue, Milwaukee, WI 53202, telephone (800)
255-1571.
To fulfill the signature and attestation requirement for the Reports
of Condition and Income for this report date, attach this signature
page to the hard-copy record of the completed report that the bank
places in its files.
- -------------------------------------------------------------------------------
FDIC Certificate Number 33217
-------
(RCRI 9050)
US Trust Company of Texas, National Association
- --------------------------------------------------
Legal Title of Bank (TEXT 9010)
Dallas
- -------------------------------------------------
City (TEXT 9130)
TX 75201
- -------------------------------------------------
State Abbrev. (TEXT 9200) Zip Code. (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue, Suite 2700
Dallas, TX 75201
Call Date: 3/31/1999 State #: 48-6797 FFIEC 033
Vendor ID: D Cert #: 33217 RC-1
Transit #: 11101765
--------
9
--------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR March 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions: RCON
---- _______
a. Noninterest-bearing balances and currency and coin (1,2)__________________ ______ _______ 0081 1,297 1.a
_______
b. Interest bearing balances (3)_____________________________________________ ______ _______ 0071 696 1.b
_______
2. Securities:
_______
a. Held-to-maturity securities (from Schedule RC-B, column A)________________ ______ _______ 1754 0 2.a
_______
b. Available-for-sale securities (from Schedule RC-B, column D)______________ ______ _______ 1773 131,683 2.b
_______
3. Federal funds sold (4) and securities purchased under agreements to resell: 1350 6,000 3
_______
4. Loans and lease financing receivables: RCON
---- _______
a. Loans and leases, net of unearned income (from Schedule RC-C)____________ 2122 22,709 4.a
_______
b. LESS: Allowance for loan and lease losses_______________________________ 3123 260 4.b
_______
c. LESS: Allocated transfer risk reserve___________________________________ 3128 0 4.c
_______
d. Loans and leases, net of unearned income, allowance, and reserve RCON
____ _______
(item 4.a minus 4.b and 4.c)______________________________________________ ______ _______ 2125 22,249 4.d
_______
5. Trading assets_______________________________________________________________ ______ _______ 3545 0 5.
_______
6. Premises and fixed assets (including capitalized leases)_____________________ ______ _______ 2145 917 6.
_______
7. Other real estate owned (from Schedule RC-M)_________________________________ ______ _______ 2150 0 7.
_______
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)______________________________________________________ ______ _______ 2130 0 8.
_______
9. Customers' liability to this bank on acceptances outstanding_________________ ______ _______ 2155 0 9.
_______
10. Intangible assets (from Schedule RC-M)______________________________________ ______ _______ 2143 1,950 10.
_______
11. Other assets (from Schedule RC-F)___________________________________________ ______ _______ 2160 2,527 11.
_______
12. Total assets (sum of items 1 through 11)____________________________________ ______ _______ 2170 167,519 12.
_______
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Included time certificates of deposit not held for trading.
<PAGE>
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue, Suite 2700
Dallas, TX 75201
Call Date: 03/31/1999 State #: 48-6797 FFIEC 033
Vendor ID: D Cert #: 33217 RC-2
Transit #: 11101765
---------
10
---------
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
RCON
a. In domestic offices (sum of totals of ---- ________
columns A and C from Schedule RC-E)______________________________________ RCON 2200 141,618 13.a
---- ________ ________
(1) Noninterest-bearing (1)_____________________________________________ 6631 8,794 13.a.1
________
(2) Interest-bearing ___________________________________________________ 6636 132,824 13.a.2
________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing________________________________________________
(2) Interest-bearing___________________________________________________ ________
RCON 0 14
14. Federal funds purchased(2) and securities sold under agreements to repurchase: ----
2800
________
15. a. Demand notes issued to the U.S. Treasury____________________________ ______ _______ 2840 0 15.a
________
b. Trading liabilities_________________________________________________ ______ ______ 3548 0 15.b
________
16. Other borrowed money:
a. With a remaining maturity of one year or less________________________ ______ ______ 2332 0 16.a
________
b. With a remaining maturity of more than one year through three years___ ______ ______ A547 2,000 16.b
________
c. With a remaining maturity of more than three years____________________ ______ ______ A548 1,000 16.c
________
17. Not applicable
18. Bank's liability on acceptances executed and outstanding_________________ ______ ______ 2920 0 18.
________
19. Subordinated notes and debentures________________________________________ ______ ______ 3200 0 19.
________
20. Other liabilities (from Schedule RC-G)___________________________________ ______ ______ 2930 2,317 20.
________
21. Total liabilities (sum of items 13 through 20)___________________________ ______ ______ 2948 146,935 21.
________
22. Not applicable
EQUITY CAPITAL
RCON
---- ________
23. Perpetual preferred stock and related surplus______________________________ ______ ______ 3838 7,000 23.
________
24. Common stock_______________________________________________________________ ______ ______ 3230 500 24.
________
25. Surplus (exclude all surplus related to preferred stock)___________________ ______ ______ 3839 8,384 25.
________
26. a. Undivided profits and capital reserves_________________________________ ______ ______ 3632 4,406 26.a
________
b. Net unrealized holding gains (losses) on available-for-sale securities_ ______ ______ 8434 294 26.b
________
27. Cumulative foreign currency translation adjustments________________________
28. Total equity capital (sum of items 23 through 27)__________________________ ______ ______ 3210 20,584 28.
________
29. Total liabilities and equity capital (sum of items 21 and 28)______________ ______ ______ 2257 167,519 29.
________
Memorandum
To be reported only with the March Report of Condition. Number
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external auditors as
of any date during 1998_________________________________________________________________________ 6724 1 M.1
________
</TABLE>
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
4 = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external
auditors
6 = Compilation of the bank's financial statements by
external auditors
7 = Other audit procedures (excluding tax preparation
work)
8 = No external audit work
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
