Exhibit 4.3
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ALEC HOLDINGS, INC.
Senior Discount Debentures due 2011
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INDENTURE
Dated as of May 14, 1999
THE BANK OF NEW YORK
Trustee
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TABLE OF CONTENTS
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ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions .................................................1
SECTION 1.02. Other Definitions ..........................................25
SECTION 1.03. Incorporation by Reference of Trust Indenture Act ..........25
SECTION 1.04. Rules of Construction ......................................26
ARTICLE II
The Securities
SECTION 2.01. Form and Dating ............................................27
SECTION 2.02. Execution and Authentication ...............................27
SECTION 2.03. Registrar and Paying Agent .................................27
SECTION 2.04. Paying Agent To Hold Money in Trust ........................28
SECTION 2.05. Securityholder Lists .......................................29
SECTION 2.06. Transfer and Exchange ......................................29
SECTION 2.07. Replacement Securities .....................................30
SECTION 2.08. Outstanding Securities .....................................30
SECTION 2.09. Temporary Securities .......................................31
SECTION 2.10. Cancellation ...............................................31
SECTION 2.11. Defaulted Interest .........................................31
SECTION 2.12. CUSIP Numbers ..............................................31
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee .........................................32
SECTION 3.02. Selection of Securities To Be Redeemed .....................32
SECTION 3.03. Notice of Redemption .......................................32
SECTION 3.04. Effect of Notice of Redemption .............................33
SECTION 3.05. Deposit of Redemption Price ................................34
SECTION 3.06. Securities Redeemed in Part ................................34
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ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities ......................................34
SECTION 4.02. SEC Reports ................................................34
SECTION 4.03. Limitation on Indebtedness .................................35
SECTION 4.04. Limitation on Restricted Payments ..........................37
SECTION 4.05. Limitation on Restrictions on Distributions
from Restricted Subsidiaries .............................41
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock .........43
SECTION 4.07. Limitation on Transactions with Affiliates .................47
SECTION 4.08. Change of Control ..........................................49
SECTION 4.09. Compliance Certificate .....................................51
SECTION 4.10. Further Instruments and Acts ...............................51
SECTION 4.11. Limitation on Lines of Business ............................51
SECTION 4.12. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries .........................51
SECTION 4.13. Calculation of Original Issue Discount .....................52
ARTICLE V
Successor Company
SECTION 5.01. When Holdings May Merge or Transfer Assets .................52
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default ..........................................53
SECTION 6.02. Acceleration ...............................................55
SECTION 6.03. Other Remedies .............................................56
SECTION 6.04. Waiver of Past Defaults ....................................56
SECTION 6.05. Control by Majority ........................................56
SECTION 6.06. Limitation on Suits ........................................56
SECTION 6.07. Rights of Holders to Receive Payment .......................57
SECTION 6.08. Collection Suit by Trustee .................................57
SECTION 6.09. Trustee May File Proofs of Claim ...........................57
SECTION 6.10. Priorities .................................................58
SECTION 6.11. Undertaking for Costs ......................................58
SECTION 6.12. Waiver of Stay or Extension Laws ...........................58
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee ..........................................59
SECTION 7.02. Rights of Trustee ..........................................60
SECTION 7.03. Individual Rights of Trustee ...............................61
SECTION 7.04. Trustee's Disclaimer .......................................61
SECTION 7.05. Notice of Defaults .........................................61
SECTION 7.06. Reports by Trustee to Holders ..............................62
SECTION 7.07. Compensation and Indemnity .................................62
SECTION 7.08. Replacement of Trustee .....................................63
SECTION 7.09. Successor Trustee by Merger ................................64
SECTION 7.10. Eligibility; Disqualification ..............................64
SECTION 7.11. Preferential Collection of Claims Against Holdings .........65
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance ...........65
SECTION 8.02. Conditions to Defeasance ...................................66
SECTION 8.03. Application of Trust Money .................................67
SECTION 8.04. Repayment to Holdings ......................................67
SECTION 8.05. Indemnity for Government Obligations .......................67
SECTION 8.06. Reinstatement ..............................................67
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders .................................68
SECTION 9.02. With Consent of Holders ....................................69
SECTION 9.03. Compliance with Trust Indenture Act ........................70
SECTION 9.04. Revocation and Effect of Consents and Waivers ..............70
SECTION 9.05. Notation on or Exchange of Securities ......................70
SECTION 9.06. Trustee To Sign Amendments .................................70
SECTION 9.07. Payment for Consent ........................................71
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ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls ...............................71
SECTION 10.02. Notices ....................................................71
SECTION 10.03. Communication by Holders with Other Holders ................72
SECTION 10.04. Certificate and Opinion as to Conditions Precedent .........72
SECTION 10.05. Statements Required in Certificate or Opinion ..............72
SECTION 10.06. When Securities Disregarded ................................73
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar ...............73
SECTION 10.08. Legal Holidays .............................................73
SECTION 10.09. GOVERNING LAW ..............................................73
SECTION 10.10. No Recourse Against Others .................................73
SECTION 10.11. Successors .................................................74
SECTION 10.12. Multiple Originals .........................................74
SECTION 10.13. Table of Contents; Headings ................................74
Appendix A -- Provisions Relating to Original Securities, Private
Exchange Securities and Exchange Securities
Exhibit A -- Form of Face of Original
Exhibit B -- Form of Face of Exchange Security
Exhibit C -- Form of Transferee Letter of Representation
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INDENTURE dated as of May 14, 1999, between ALEC
HOLDINGS, INC., a Delaware corporation ("Holdings") and THE
BANK OF NEW YORK, a New York banking corporation, as trustee
(the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (i) Holdings' Senior
Discount Debentures due 2011 issued on the date hereof (the "Original
Securities"), (ii) if and when issued as provided in the Registration Agreement
(as defined in Appendix A hereto (the "Appendix")), Holdings' Senior Discount
Debentures due 2011 issued in the Registered Exchange Offer (as defined in the
Appendix) in exchange for any Original Securities (the "Exchange Securities")
and (iii) if and when issued as provided in the Registration Agreement, the
Private Exchange Securities (as defined in the Appendix, and together with the
Original Securities and any Exchange Securities issued hereunder, the
"Securities") issued in the Private Exchange (as defined in the Appendix).
Except as otherwise provided herein, the Securities will be limited to
$46,928,435.00 in aggregate principal amount outstanding.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accreted Value" means, for each $1,000 face amount of Securities,
as of any date of determination prior to May 14, 2004 the sum of (i) the initial
offering price of each Security and (ii) that portion of the excess of the
principal amount of each Security over such initial offering price which shall
have been accreted thereon through such date, such amount to be so accreted on a
daily basis and compounded semi-annually on each May 15 and November 15 at the
rate of 13% per annum from the date of issuance of the Securities through the
date of determination. The Accreted Value will cease to accrete on and after May
14, 2004.
"Additional Amounts" means any liquidated damages payable pursuant
to any exchange agreement, registration rights agreement or similar agreement
entered into in connection with the Indenture.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock)
to be used by Holdings or a Restricted Subsidiary in a Related
Business;
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(2) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by Holdings or
another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clauses (2)
or (3) above is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of Holdings or the Company or of
rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
Holdings or any Restricted Subsidiary, including any disposition by means of a
merger, consolidation, or similar transaction (each referred to for the purposes
of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted
Subsidiary);
(2) all or substantially all the assets of any division or line of
business of Holdings or any Restricted Subsidiary; or
(3) any other assets of Holdings or any Restricted Subsidiary outside of
the ordinary course of business of Holdings or such Restricted
Subsidiary;
(other than, in the case of (1), (2) and (3) above:
(a) a disposition by a Restricted Subsidiary to Holdings or by
Holdings or a Restricted Subsidiary to a Wholly Owned
Subsidiary;
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(b) for purposes of Section 4.06 only, a disposition subject to
Section 4.04;
(c) a disposition of assets with a fair market value of less than
$100,000;
(d) a disposition of Temporary Cash Investments or goods held for
sale in the ordinary course of business or obsolete equipment
or other obsolete assets in the course of business consistent
with past practices of Holdings;
(e) the disposition of all or substantially all of the assets of
Holdings in a manner permitted under Section 5.01 or any
disposition that constitutes a Change of Control under the
Indenture; and
(f) the lease, assignment or sub-lease of any real or personal
property in the ordinary course of business).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such
payment by
(2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement, the notes issued pursuant thereto, the
guarantees thereof, the collateral documents relating thereto and any
Refinancing Indebtedness with respect thereto, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceedings), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof.
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"Board of Directors" means the Board of Directors of Holdings or any
committee thereof duly authorized to act on behalf of the Board of Directors of
Holdings.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be prepaid by the lessee
without payment of a penalty.
"Change of Control" means the occurrence of any of the following
events:
(1) prior to the first public offering of common stock of Holdings,
the Permitted Holders, taken together, cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of Holdings, whether as a result of issuance of
securities of Holdings, any merger, consolidation, liquidation or
dissolution of Holdings, any direct or indirect transfer of securities by
any Permitted Holder or otherwise (for purposes of this clause (1) and
clause (2) below, the Permitted Holders shall be deemed to beneficially
own any Voting Stock of an entity (the "specified entity") held by any
other entity (the "parent entity") so long as the Permitted Holders
beneficially own, directly or indirectly, in the aggregate a majority of
the voting power of the Voting Stock of the parent entity);
(2) (a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is
or becomes the beneficial owner (as defined in clause (1) above, except
that for purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of Holdings or the Company and (b) the
Permitted Holders beneficially own (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of Holdings or
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the Company than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of Holdings or the Company, as the case
may be (for the purposes of this clause (2), such other person shall be
deemed to beneficially own any Voting Stock of a specified entity held by
a parent entity, if such other person is the beneficial owner (as defined
in this clause (2)), directly or indirectly, of more than 35% of the
voting power of the Voting Stock of such parent entity and the Permitted
Holders beneficially own (as defined in clause (1) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent entity and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent entity);
(3) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of
Holdings or the Company, as the case may be (together with any new
directors (a) whose election by such Board of Directors of Holdings or the
Company, as the case may be, or whose nomination for election by the
shareholders of Holdings or the Company, as the case may be, was approved
by a majority vote of the directors of Holdings or the Company, as the
case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved or (b) who are designees of the Permitted Holders
or were nominated by the Permitted Holders) cease for any reason to
constitute a majority of the Board of Directors of Holdings or the
Company, as the case may be, then in office;
(4) the adoption of a plan relating to the liquidation or
dissolution of Holdings or the Company;
(5) the merger or consolidation of Holdings or the Company with or
into another Person or the merger of another Person with or into Holdings
or the Company, or the sale of all or substantially all the assets of
Holdings or the Company to another Person (other than a Person that is
controlled by the Permitted Holders), and, in the case of any such merger
or consolidation, the securities of Holdings or the Company that are
outstanding immediately prior to such transaction and that represent 100%
of the aggregate voting power of the Voting Stock of Holdings or the
Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving Person or transferee that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving Person or transferee; or
(6) the Company ceases to be a Wholly Owned Subsidiary of Holdings.
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"Closing Date" means the date of the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Alaska Communications Systems Holdings, Inc., a
Delaware corporation formerly known as ALEC Acquisition Corporation.
"Company Indenture" means the Indenture for the Company's 9 3/8%
Senior Subordinated Notes due 2009.
"Company Refinancing Indebtedness" means Refinancing Indebtedness as
defined in the Company Indenture as in effect on the date hereof.
"Consolidated Current Liabilities" as of the date of determination
means the aggregate amount of liabilities of Holdings and its Consolidated
Restricted Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a Consolidated basis, after
eliminating:
(1) all intercompany items between Holdings and any Restricted
Subsidiary; and
(2) all current maturities of long-term Indebtedness, all as determined
in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the total
interest expense of Holdings and its Consolidated Restricted Subsidiaries, plus,
to the extent Incurred by Holdings and its Consolidated Restricted Subsidiaries
in such period but not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance costs;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing;
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(6) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is guaranteed by Holdings or any Restricted
Subsidiary;
(7) amortization of net costs associated with Hedging Obligations
(including amortization of fees);
(8) dividends in respect of all Disqualified Stock of Holdings and all
Preferred Stock of any of the Subsidiaries of Holdings, to the
extent held by Persons other than Holdings or a Wholly Owned
Subsidiary;
(9) interest Incurred in connection with investments in discontinued
operations; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan
or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust.
"Consolidated Net Income" means, for any period, the net income of
Holdings and its Consolidated Subsidiaries for such period; provided, however,
that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than Holdings) if such Person is
not a Restricted Subsidiary, except that:
(a) subject to the limitations contained in clause (4) below,
Holdings' equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to
the aggregate amount of cash or other assets actually
distributed by such Person during such period to Holdings or a
Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution made
to a Restricted Subsidiary, to the limitations contained in
clause (3) below); and
(b) Holdings' equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by Holdings or a
Subsidiary of Holdings in a pooling of interests transaction for any
period prior to the date of such acquisition;
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(3) any net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of its net income is not, at the date of
determination, permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter, or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless
such restrictions with respect to the payment of dividends or
similar distributions have been legally waived; except that the net
loss of any such Restricted Subsidiary for such period shall be
included in determining such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other disposition
of any asset of Holdings or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or
otherwise disposed of in the ordinary course of business and any
gain (but not loss) realized upon the sale or other disposition of
any Capital Stock of any Person;
(5) any extraordinary or otherwise nonrecurring gain or loss; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to Holdings or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under clause
(1)(d)(iii)(E) of Section 4.04.
"Consolidated Net Tangible Assets" as of any date of determination,
means the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a consolidated balance
sheet of Holdings and its Consolidated Restricted Subsidiaries, determined on a
Consolidated basis in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, the amounts of:
(1) minority interests in Consolidated Subsidiaries held by Persons
other than Holdings or a Restricted Subsidiary:
(2) excess of cost over fair value of assets of businesses acquired as
determined in good faith by the Board of Directors;
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(3) any revaluation or other write-up in book value of assets subsequent
to the Closing Date as a result of a change in the method of
valuation in accordance with GAAP consistently applied;
(4) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental
expenses and other intangible items;
(5) treasury stock;
(6) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of
Capital Stock to the extent such obligation is not reflected in
Consolidated Current Liabilities; and
(7) Investments in and assets of Unrestricted Subsidiaries.
"Consolidation" means the consolidation of the amounts of each of
the Restricted Subsidiaries with those of Holdings in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of Holdings or any Restricted Subsidiary in an Unrestricted Subsidiary shall be
accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of May 14,
1999, among the Company, Holdings, the financial institutions named therein, The
Chase Manhattan Bank, as Administrative Agent, Canadian Imperial Bank of
Commerce, as Syndication Agent and Credit Suisse First Boston, as Documentation
Agent, as amended, waived or otherwise modified from time to time (except to the
extent that any such amendment, waiver or other modification thereto would be
prohibited by the terms of this Indenture, unless otherwise agreed to by the
Holders of at least a majority in aggregate principal amount of Securities at
the time outstanding), including any such amendments or modifications (or any
other credit agreement or credit agreements) that replace, refund or refinance
any or a portion of the commitments or loans thereunder, up to a maximum
principal amount not to exceed $585,000,000.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreements or other similar agreement or
arrangement to which such Person is a party or of which it is a beneficiary.
"Debt to EBITDA Ratio" as of any date of determination means the
ratio of:
(1) Total Consolidated Indebtedness as of the date of determination to
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(2) EBITDA for the period of the most recent four consecutive fiscal
quarters ending at the end of the most recent fiscal quarter for
which financial statements are publicly available; provided,
however, that:
(a) if Holdings or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period or if any Indebtedness is
to be repaid, repurchased, defeased or otherwise discharged
(in each case, other than Indebtedness Incurred under any
revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) on the date of
the transaction giving rise to the need to calculate the Debt
to EBITDA Ratio, EBITDA for such period shall be calculated on
a pro forma basis as if such discharge had occurred on the
first day of such period and as if Holdings or such Restricted
Subsidiary has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise
discharge such Indebtedness;
(b) if since the beginning of such period Holdings or any
Restricted Subsidiary shall have made any Asset Disposition,
the EBITDA for such period shall be reduced by an amount equal
to the EBITDA (if positive) directly attributable to the
assets that are the subject of such Asset Disposition for such
period or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period;
(c) if since the beginning of such period, Holdings or any
Restricted Subsidiary (by merger or otherwise) shall have made
an Investment in any Person that is merged with or into
Holdings or any Restricted Subsidiary (or any Person that
becomes a Restricted Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all of an operating
unit of a business, EBITDA for such period shall be calculated
after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period; any such
pro forma calculation may include adjustments appropriate to
reflect (x) any such acquisition to the extent such
adjustments may be reflected in the preparation of pro forma
financial information in accordance with the requirements of
GAAP and Article XI of Regulation S-X under the Exchange Act;
(y) the annualized amount of operating expense reductions
reasonably expected to be realized in the six months
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following any such acquisition made during any of the four
fiscal quarters constituting the four-quarter reference period
prior to the date of determination; and (z) the annualized
amount of operating expense reductions reasonably expected to
be realized in the six months following any such acquisition
made by Holdings during either of the two fiscal quarters
immediately preceding the four-quarter reference period prior
to the date of determination; provided that in either case
such adjustments are set forth in an Officers' Certificate
signed by Holdings' chief executive officer and chief
financial officer which states (i) the amount of such
adjustment or adjustments, (ii) that such adjustment or
adjustments are based on the reasonable good faith beliefs of
the officers executing such Officers' Certificate at the time
of such execution and (iii) that any related Incurrence of
Indebtedness is permitted pursuant to the Indenture; and
(d) if since the beginning of such period, any Person (that
subsequently became a Restricted Subsidiary or was merged with
or into Holdings or any Restricted Subsidiary since the
beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (b) or
(c) above if made by Holdings or a Restricted Subsidiary
during such period, EBITDA for such period shall be calculated
after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition of assets occurred on
the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets and the amount of income or earnings relating
thereto, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of Holdings. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the date
of determination in excess of 12 months).
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event:
-12-
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock; or
(3) is redeemable at the option of the holder thereof, in whole or in
part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of Sections 4.06 and 4.08.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) income tax expense of Holdings and its Consolidated Restricted
Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation expense of Holdings and its Consolidated Restricted
Subsidiaries;
(4) amortization expense of Holdings and its Consolidated Restricted
Subsidiaries (excluding amortization expense attributable to a
prepaid cash item that was paid in a prior period); and
(5) all other non-cash charges of Holdings and its Consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the
extent it represents an accrual of or reserve for cash expenditures
in any future period, but that will not be expensed in such future
periods),
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and non-cash charges
of, a Restricted Subsidiary of Holdings shall be added to Consolidated Net
Income to compute EBITDA only to
-13-
the extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to Holdings by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
"Equity Offering" means any public or private sale of Capital Stock
(other than Disqualified Stock) of Holdings, other than offerings of Holdings of
the type that can be registered on Form S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Foreign Subsidiary" means any Restricted Subsidiary of Holdings
that is not organized under the laws of the United States of America or any
state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in:
(1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards
Board;
(3) such other statements by such other entities as approved by a
significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of any Person:
-14-
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof
(in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning. The term "guarantor" shall mean any
Person guaranteeing any obligation.
"Guarantee" means each guarantee of the obligations with respect to
the Notes issued by a Guarantor pursuant to the terms of the Company Indenture.
"Guarantor" means each of Telephone Utilities of Alaska, Inc.,
Telephone Utilities of the Northland, Inc., PTI Communications of Alaska, Inc.,
Pacific Telecom Cellular of Alaska PCS, Inc., Pacific Telecom Cellular of
Alaska, Inc., ATU Communications, Inc., MACtel, Inc., ATU Long Distance, Inc.,
Peninsula Cellular Services, Inc., Prudhoe Communications, Inc., Alaska
Communications Systems, Inc., ALEC Acquisition Sub Corp., MACtel License Sub,
Inc. and MACtel Fairbanks License Sub, Inc., and any other Domestic Subsidiary
of the Company.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means ALEC Holdings, Inc., a Delaware corporation.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person is merged or consolidated with Holdings
or becomes a Subsidiary of Holdings (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Person at the
time of such merger or consolidation or at the time it becomes a Subsidiary of
Holdings. The term "Incurrence" when used as a noun shall have a correlative
meaning. The accretion of principal of a non-interest bearing or other discount
security shall not be deemed the Incurrence of Indebtedness.
-15-
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money;
(2) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with
respect thereto);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables and
contingent obligations to pay earn-outs), which purchase price is
due more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of
such services;
(5) all Capitalized Lease Obligations and all Attributable Debt of such
Person;
(6) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of such Person, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(7) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such
Person shall be the lesser of:
(A) the fair market value of such asset at such date of
determination and
(B) the amount of such Indebtedness of such other Persons;
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and
(9) all obligations of the type referred to in clauses (1) through (8)
above of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise,
including by means of any guarantee.
-16-
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 the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any, direct or indirect, advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04:
(1) "Investment" shall include the portion (proportionate to Holdings'
equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of Holdings at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that, upon a redesignation of such Subsidiary as a
Restricted Subsidiary, Holdings shall be deemed to continue to have
a permanent "Investment" in an Unrestricted Subsidiary in an amount
(if positive) equal to:
(a) Holdings' Investment in such Subsidiary at the time of such
redesignation less
(b) the portion (proportionate to Holdings' equity interest in
such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer, in
each case, as determined in good faith by the Board of Directors.
-17-
"Legal Holiday" means a Saturday, Sunday or other day on which
banking institutions in the State of New York are authorized or required by law
to close.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Group" means the group consisting of current and former
directors and executive officers of the Company.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other non-cash form) therefrom, in each
case net of:
(1) all legal fees and expenses, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal,
state, provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset
Disposition;
(2) all payments, including any prepayment premiums or penalties, made
on any Indebtedness that is secured by any assets subject to such
Asset Disposition in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or
which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition; and
(4) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and
retained by Holdings or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, un-
-18-
derwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees and expenses actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Notes" means the 9 3/8% Senior Subordinated Notes due 2009 of the
Company.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer or the Secretary of Holdings.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
Holdings or the Trustee.
"Pari Passu Indebtedness" of Holdings means the Securities,
Holdings' guarantee of the Bank Indebtedness, and any other Indebtedness of
Holdings that specifically provides that such Indebtedness is to rank pari passu
with the Securities, in right of payment and is not subordinated by its terms in
right of payment to any Indebtedness or other obligation of Holdings which is
not Pari Passu Indebtedness.
"Permitted Holders" means Fox Paine Capital Fund, L.P., and its
Affiliates, FPC Investors, L.P., ALEC Coinvestment Fund I, LLC, ALEC
Coinvestment Fund II, LLC, ALEC Coinvestment Fund III, LLC, ALEC Coinvestment
Fund IV, LLC, ALEC Coinvestment Fund V, LLC, ALEC Coinvestment Fund VI, LLC, the
Management Group and any Person acting in the capacity of an underwriter in
connection with a public or private offering of Holdings' Capital Stock.
"Permitted Investment" means an Investment by Holdings or any
Restricted Subsidiary in:
(1) Holdings, a Restricted Subsidiary or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is
a Related Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business
is a Related Business;
-19-
(3) Temporary Cash Investments;
(4) receivables owing to Holdings or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade
terms as Holdings or any such Restricted Subsidiary deems reasonable
under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) any loans or advances to employees made in the ordinary course of
business consistent with past practices of Holdings or such
Restricted Subsidiary and not exceeding $5,000,000 in the aggregate
outstanding at any one time;
(7) stock, obligations or securities received in settlement of (or
foreclosure with respect to) debts created in the ordinary course of
business and owing to Holdings or any Restricted Subsidiary or in
satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash or
deemed cash portion of the consideration received for an Asset
Disposition that was made pursuant to and in compliance with Section
4.06;
(9) any Investment existing on the Closing Date;
(10) Hedging Obligations permitted under paragraph (2)(g) of Section
4.03;
(11) guarantees of Indebtedness permitted under Section 4.03;
(12) Investments which are made exclusively with Capital Stock of
Holdings (other than Disqualified Stock); and
(13) additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause
(13) that are at the time outstanding, not to exceed $5,000,000 at
the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect
to subsequent changes in value).
"Permitted Joint Venture Interests" means equity interests
representing at least 35% of the Voting Stock of a Person engaged in a business
in which Holdings was engaged at the Closing Date or a Related Business.
-20-
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"principal" of a Security means, prior to May 14, 2004 the Accreted
Value and, from and after May 14, 2004, the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is
to become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(1) consisting of the deferred purchase price of an asset, conditional
sale obligations, obligations under any title retention agreement
and other purchase money obligations, in each case where the
maturity of such Indebtedness does not exceed the anticipated useful
life of the asset being financed; and
(2) incurred to finance the acquisition by Holdings or a Restricted
Subsidiary of such asset, including additions and improvements;
provided, however, that such Indebtedness is incurred within 180
days before or after the acquisition by Holdings or such Restricted
Subsidiary of such asset.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, replace, prepay, redeem, defease or retire, or to
issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, repay, redeem, retire, renew, repay or extend
(including pursuant to any defeasance or discharge mechanism) any Indebtedness
of Holdings or any Restricted Subsidiary existing on the Closing Date or
Incurred in compliance with this Indenture (including Indebtedness of the
Company that Refinances Refinancing Indebtedness); provided, however, that:
(1) other than with respect to Bank Indebtedness or the Notes, the
Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced;
(2) other than with respect to Bank Indebtedness or the Notes, the
Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is
-21-
Incurred that is equal to or greater than the Average Life of the
Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being
Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of
payment to the Securities, such Refinancing Indebtedness is
subordinated in right of payment to the Securities at least to the
same extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include:
(a) Indebtedness of a Restricted Subsidiary that Refinances
Indebtedness of Holdings; or
(b) Indebtedness of Holdings or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or
complementary to the businesses of Holdings and the Restricted Subsidiaries on
the Closing Date.
"Restricted Subsidiary" means any Subsidiary of Holdings other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by Holdings or a Restricted Subsidiary
whereby Holdings or a Restricted Subsidiary transfers such property to a Person
and Holdings or such Restricted Subsidiary leases it from such Person, other
than leases between Holdings and a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of Holdings secured by
a Lien.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of Holdings within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
-22-
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Holdings
(whether outstanding on the Closing Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity:
(1) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power
or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, controlled or
held; or
(2) that is, as of such date, otherwise controlled by the parent or one
or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Telecommunications Assets" means (1) assets used or useful in the
operating businesses of the Company at the Closing Date or in a Related Business
or (2) equity interests representing a majority of the Voting Stock of Persons
engaged in such businesses.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America
or any agency thereof or obligations guaranteed by the United States
of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United
-23-
States of America having capital, surplus and undivided profits
aggregating in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such
similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436
under the Securities Act);
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in
clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the
laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time
as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. ("S&P"); and
(5) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at
least "A" by S&P or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the Closing Date.
"Total Consolidated Indebtedness" means, as of any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
Holdings and its Restricted Subsidiaries, determined on a Consolidated basis,
outstanding as of such date of determination, after giving effect to any
Incurrence of Indebtedness and the application of the proceeds therefrom giving
rise to such determination.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
-24-
"Trust Officer" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officer, respectively, or
to whom any corporate trust matter is referred because of such persons knowledge
of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of Holdings that at the time of determination shall
be designated an Unrestricted Subsidiary by the Board of Directors
in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of Holdings (including any
newly acquired or newly formed Subsidiary of Holdings) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or owns or holds any Lien on any property of the
Company or any other Subsidiary of Holdings that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either:
(1) the Subsidiary to be so designated has total Consolidated assets of
$1,000 or less; or
(2) if such Subsidiary has Consolidated assets greater than $1,000, then
such designation would be permitted under Section 4.04.
The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation:
(1) Holdings could Incur $1.00 of additional Indebtedness under
paragraph (1) of Section 4.03 and
(2) no Default shall have occurred and be continuing.
Any such designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
-25-
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and that are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of Holdings
all the Capital Stock of which (other than directors' qualifying shares) is
owned by Holdings or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction" .............................. 4.07(1)
"Bankruptcy Law" ..................................... 6.01
"covenant defeasance option" ......................... 8.01(b)
"Custodian" .......................................... 6.01
"Event of Default" ................................... 6.01
"legal defeasance option" ............................ 8.01(b)
"Offer" .............................................. 4.06(2)
"Offer Amount" ....................................... 4.06(3)(b)
"Offer Period" ....................................... 4.06(3)(b)
"Paying Agent" ....................................... 2.03
"protected purchaser" ................................ 2.07
"Registrar" .......................................... 2.03
"Successor Company" .................................. 5.01(a)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
-26-
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means Holdings and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
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ARTICLE II
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Original
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Appendix, which is hereby incorporated in and expressly made a part
of this Indenture. The (i) Original Securities and the Trustee's certificate of
authentication and (ii) Private Exchange Securities and the Trustee's
certificate of authentication shall each be substantially in the form of Exhibit
A hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B hereto, which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which Holdings is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to Holdings). Each Security shall be dated the date of its authentication. The
Securities shall be issuable only in registered form without interest coupons.
SECTION 2.02. Execution and Authentication. One or more Officers
shall sign the Securities for Holdings by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably
acceptable to Holdings to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by a Trust Officer, a copy of which
shall be furnished to Holdings. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. Holdings shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange
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(the "Registrar") and an office or agency where Securities may be presented for
payment (the "Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. Holdings may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent, and the term "Registrar" includes any
co-registrars. Holdings initially appoints the Trustee as (i) Registrar and
Paying Agent in connection with the Securities and (ii) the Securities Custodian
(as defined in the Appendix) with respect to the Global Securities (as defined
in the Appendix) and any definitive Securities.
Holdings shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. Holdings shall notify the Trustee of the
name and address of any such agent. If Holdings fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 7.07. Holdings or any of its
domestically organized Wholly Owned Subsidiaries may act as Paying Agent or
Registrar.
Holdings may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by Holdings and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice; provided, however, that the Trustee may resign as
Paying Agent or Registrar only if the Trustee also resigns as Trustee in
accordance with Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to 10:00
a.m. New York City time on each due date of principal or interest on any
Security, Holdings shall deposit with the Paying Agent (or if Holdings or a
Subsidiary is acting as Paying Agent, segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. Holdings shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by Holdings in making any such payment.
If Holdings or a Subsidiary of Holdings acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund.
Holdings at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section 2.04, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
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SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, Holdings shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with the Appendix. When
a Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements of
Section 8-401(a) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, Holdings shall execute and the Trustee
shall authenticate Securities at the Registrar's request. Holdings may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section
2.06. Holdings shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, Holdings, the Trustee, the Paying Agent, and the Registrar may deem
and treat the Person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of Holdings, the Trustee, the
Paying Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
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SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, Holdings shall issue and
the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies Holdings or the Trustee within a reasonable time after he has notice
of such loss, destruction or wrongful taking and the Registrar does not register
a transfer prior to receiving such notification, (ii) makes such request to
Holdings or the Trustee prior to the Security being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (iii) satisfies any other reasonable requirements of
the Trustee. If required by the Trustee or Holdings, such Holder shall furnish
an indemnity bond sufficient in the judgment of the Trustee to protect Holdings,
the Trustee, the Paying Agent and the Registrar from any loss that any of them
may suffer if a Security is replaced. Holdings and the Trustee may charge the
Holder for their expenses in replacing a Security. In the event any such
mutilated, lost, destroyed or wrongfully taken Security has become or is about
to become due and payable, Holdings in its discretion may pay such Security
instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of Holdings.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.08 as not outstanding. Subject to Section 13.06, a Security does not
cease to be outstanding because Holdings or an Affiliate of Holdings holds the
Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and Holdings receive proof satisfactory to them
that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal of and interest and Additional Amounts payable on that date
with respect to the Securities (or portions thereof) to be redeemed or maturing,
as the case may be, and the Paying Agent is not prohibited from paying such
money to the Securityholders on that date pursuant to the terms of this
Indenture, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
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SECTION 2.09. Temporary Securities. In the event that Definitive
Securities (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Securities are ready for delivery, Holdings may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Definitive Securities but may
have variations that Holdings considers appropriate for temporary Securities.
Without unreasonable delay, Holdings shall prepare and the Trustee shall
authenticate Definitive Securities and deliver them in exchange for temporary
Securities upon surrender of such temporary Securities at the office or agency
of Holdings, without charge to the Holder.
SECTION 2.10. Cancellation. Holdings at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver canceled Securities to Holdings pursuant to written
direction by an Officer. Holdings may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If Holdings defaults in a payment
of interest on the Securities, Holdings shall pay the defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
Holdings may pay the defaulted interest to the Persons who are Securityholders
on a subsequent special record date. Holdings shall fix or cause to be fixed any
such special record date and payment date to the reasonable satisfaction of the
Trustee and shall promptly mail or cause to be mailed to each Securityholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. Holdings 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,
however, 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. Holdings will
promptly notify the Trustee of any change in the "CUSIP" numbers.
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ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If Holdings elects to redeem
Securities pursuant to paragraph (g) of Section 4.08 or paragraph 5 of the
Securities, it shall notify the Trustee in writing of the redemption date and
the principal amount of Securities to be redeemed.
Holdings shall give each notice to the Trustee provided for in this
Section 3.01 at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from Holdings to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by Holdings and given to the Trustee, which record date shall be not
fewer than 15 days after the date of notice to the Trustee. Any such notice may
be canceled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee in its
sole discretion shall deem to be fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal amount of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify Holdings promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, Holdings shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
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(2) the redemption price, stated as a percentage of Accreted Value
or principal amount (a "Redemption Price") and, in the case of
any redemption date on or after May 14, 2004, the amount of
accrued interest and unpaid interest to the redemption date;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and Accreted Value or
principal amounts, as the case may be, of the particular
Securities to be redeemed;
(6) that, unless Holdings defaults in making such redemption
payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, Accreted
Value or interest on Securities (or portion thereof) called
for redemption ceases to accrete or accrue, as the case may
be, on and after the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At Holdings' request, the Trustee shall give the notice of
redemption in Holdings' name and at Holdings' expense. In such event, Holdings
shall provide the Trustee with the information required by this Section 3.03.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the Redemption Price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice and, after May 14, 2004, plus accrued and unpaid cash
interest and Additional Amounts, if any, to the redemption date; provided,
however, that if, after May 14, 2004, the redemption date is after a regular
record date and on or prior to the interest payment date, accrued and unpaid
cash interest shall be payable to the Securityholder of the redeemed Securities
registered on the relevant record date. Failure to give notice or any defect in
the notice to any Holder shall not affect the validity of the notice to any
other Holder.
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SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on
the redemption date, Holdings shall deposit with the Paying Agent (or, if
Holdings or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the Redemption Price, and after May 14, 2004, accrued
and unpaid cash interest and Additional Amounts, if any, on all Securities to be
redeemed on that date other than Securities or portions of Securities called for
redemption that have been delivered by Holdings to the Trustee for cancellation.
On and after the redemption date, Accreted Value will cease to accrete or, after
May 14, 2004, interest will cease to accrue, as the case may be, on Securities
or portions thereof called for redemption so long as Holdings has deposited with
the Paying Agent funds sufficient to pay the Redemption Price, and after May 14,
2004, unpaid cash interest and Additional Amounts, if any, on, the Securities to
be redeemed.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, Holdings shall execute and the Trustee shall
authenticate for the Holder (at Holdings' expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. Holdings shall promptly pay the
principal, cash interest, Redemption Price and Additional Amounts, if any, on
the Securities on the dates and in the manner provided in the Securities and in
this Indenture. Principal and interest shall be considered paid on the date due
if on such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest, then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
Holdings shall pay interest on overdue principal at the rate
specified therefor in the Securities, and, after May 14, 2004, it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
SECTION 4.02. SEC Reports. Notwithstanding that Holdings may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, Holdings shall file with the SEC, and provide the Trustee and
Securityholders and prospective Securityholders (upon request) within 15 days
after it files them with the SEC, copies of its annual report and the
information, documents and other reports that are specified in Section 13 and
15(d) of the Exchange Act. In addition, following an Equity Offering, Holdings
shall furnish to the Trustee and the Securityholders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by Holdings or the Com-
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pany to its public shareholders generally. Holdings also shall comply with the
other provisions of TIA ss. 314(a). 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
Holdings' compliance with any of its covenants hereunder (as to which Trustee in
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. Limitation on Indebtedness.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary to, Incur any Indebtedness; provided, however, that Holdings or any
Restricted Subsidiary may Incur Indebtedness if on the date of such Incurrence
and after giving effect thereto the Debt to EBITDA Ratio would be less than
7.25:1.
(2) Notwithstanding the foregoing paragraph (1), Holdings and its
Restricted Subsidiaries may Incur the following Indebtedness:
(a) Bank Indebtedness in an aggregate principal amount not to exceed
$585,000,000 less the aggregate amount of all prepayments of
principal applied to permanently reduce any such Indebtedness;
(b) Indebtedness of the Company owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and
held by the Company or any Wholly Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital
Stock or any other event that results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or a Wholly
Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof;
(c) Indebtedness (i) represented by the Securities, (ii) represented by
the Notes and the Guarantees, (iii) outstanding on the Closing Date
(other than the Indebtedness described in clauses (a) and (b)
above), (iv) consisting of Refinancing Indebtedness or Company
Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (c) (including Indebtedness Refinancing
Indebtedness) or Section 4.03(1) or (v) consisting of guarantees of
any Indebtedness permitted under clauses (a) and (b) of this
paragraph (2);
(d) (i) Indebtedness of a Restricted Subsidiary Incurred and outstanding
on or prior to the date on which such Restricted Subsidiary was
acquired by Holdings (other than Indebtedness Incurred as
consideration in, or to provide all or any
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portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Subsidiary of, or was otherwise
acquired by, Holdings); provided, however, that on the date that
such Restricted Subsidiary is acquired by Holdings, Holdings would
have been able to Incur $1.00 of additional Indebtedness pursuant to
Section 4.03(1) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (d) and (ii) Refinancing
Indebtedness Incurred by the Company or a Restricted Subsidiary in
respect of Indebtedness Incurred pursuant to this clause (d);
(e) Indebtedness in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds provided by Holdings
and the Restricted Subsidiaries in the ordinary course of their
business;
(f) Purchase Money Indebtedness and Capitalized Lease Obligations (in an
aggregate principal amount not in excess of $20,000,000 at any time
outstanding);
(g) Hedging Obligations of Holdings or any Restricted Subsidiary
directly related to Indebtedness permitted to be Incurred by
Holdings or any Restricted Subsidiary pursuant to the Indenture for
the purpose of fixing or hedging interest rate risk or currency
fluctuations;
(h) (i) Indebtedness of another Person Incurred and outstanding on or
prior to the date on which such Person consolidates with or merges
with or into Holdings or the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Person
consolidates with or merges with or into Holdings or the Company);
provided, however, that on the date that such transaction is
consummated, Holdings would have been able to Incur $1.00 of
additional Indebtedness pursuant to Section 4.03(1) after giving
effect to the Incurrence of such Indebtedness pursuant to this
clause (h) and (ii) Refinancing Indebtedness Incurred by Holdings or
the Company or the Successor Company in respect of Indebtedness
Incurred pursuant to subclause (i) of this clause (h); or
(i) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to Section 4.03(1) or any other clause of this Section
4.03(2)) in an aggregate principal amount on the date of Incurrence
that, when added to all other Indebtedness Incurred pursuant to this
clause (i) and then outstanding, shall not exceed $5,000,000.
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(3) Notwithstanding the foregoing, Holdings shall not Incur any
Indebtedness pursuant to Section 4.03(2) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations, unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. In addition, Holdings shall not Incur any Secured Indebtedness that
is not Pari Passu Indebtedness, unless, contemporaneously therewith, effective
provision is made to secure the Securities equally and ratably with (or on a
senior basis to, in the case of Indebtedness subordinated in right of payment to
the Securities) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(4) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that Holdings or any Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded solely as
a result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03:
(a) Indebtedness Incurred pursuant to the Credit Agreement prior to or
on the Closing Date shall be treated as Incurred pursuant to Section
4.03(2)(a);
(b) Indebtedness permitted by this Section 4.03 need not be permitted
solely by reference to one provision permitting such Indebtedness
but may be permitted in part by one such provision and in part by
one or more other provisions of this Section 4.03 permitting such
Indebtedness; and
(c) in the event that Indebtedness meets the criteria of more than one
of the types of Indebtedness described in this Section 4.03,
Holdings, in its sole discretion, shall classify such Indebtedness
and only be required to include the amount of such Indebtedness in
one of such clauses.
SECTION 4.04. Limitation on Restricted Payments.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to:
(a) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving Holdings) or similar payment to the
holders of its Capital Stock except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to Holdings or another Restricted
Subsidiary (and, if such Restricted Subsidiary has shareholders other than
Holdings or other Restricted Subsidiaries, to its other shareholders on a
pro rata basis);
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(b) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of Holdings or any Restricted Subsidiary held by Persons
other than Holdings or another Restricted Subsidiary;
(c) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case, due within one year
of the date of acquisition); or
(d) make any Investment (other than a Permitted Investment) in any
Person
(any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein
referred to as a "Restricted Payment") if at the time Holdings or such
Restricted Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or
would result therefrom);
(ii) Holdings could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(1); or
(iii) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if
other than in cash, to be determined in good faith by
the Board of Directors, whose determination shall be
conclusive and evidenced by a resolution of the Board of
Directors) declared or made subsequent to the Closing
Date would exceed the sum of, without duplication:
(A) (i) 100% of EBITDA accrued during the period
(treated as one accounting period) from the
beginning of the fiscal quarter immediately
following the fiscal quarter during which the
Closing Date occurs to the end of the most
recent fiscal quarter for which financial
statements are publicly available (or, in
case such EBITDA will be a deficit, minus
100% of such deficit), minus
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(ii) 140% of Consolidated Interest Expense accrued
during the period (treated as one accounting
period) from the beginning of the fiscal
quarter immediately following the fiscal
quarter during which the Closing Date occurs
to the end of the most recent fiscal quarter
for which financial statements are publicly
available; plus
(B) the aggregate Net Cash Proceeds received by
Holdings from the issue or sale of its Capital
Stock (other than Disqualified Stock) subsequent
to the Closing Date (other than (x) an issuance or
sale to a Subsidiary of Holdings, (y) an issuance
or sale to an employee stock ownership plan or
other trust established by Holdings or any of its
Subsidiaries or (z) to the extent used in
accordance with Section 4.04(2)(e)(ii); plus
(C) the aggregate Net Cash Proceeds received by
Holdings from the sale or other disposition (other
than to Holdings or a Restricted Subsidiary) of
any Investments previously made by Holdings or a
Restricted Subsidiary and treated as a Restricted
Payment; provided that the amount added pursuant
to this clause (C) shall not exceed the amount
treated as a Restricted Payment and not previously
added pursuant to this paragraph (iii); plus
(D) the amount by which Indebtedness of Holdings or
its Restricted Subsidiaries is reduced on
Holdings' balance sheet upon the conversion or
exchange (other than by a Subsidiary of Holdings)
subsequent to the Closing Date of any Indebtedness
of Holdings or its Restricted Subsidiaries issued
after the Closing Date that is convertible or
exchangeable for Capital Stock (other than
Disqualified Stock) of Holdings (less the amount
of any cash or the fair market value of other
property distributed by Holdings or any Restricted
Subsidiary upon such conversion or exchange); plus
(E) the amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting
from (i) payments of dividends, repayments of the
principal of loans or ad-
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vances or other transfers of assets to the Company
or any Restricted Subsidiary from Unrestricted
Subsidiaries or (ii) the redesignation of
Unrestricted Subsidiaries as Restricted
Subsidiaries (valued, in each case, as provided in
the definition of "Investment") not to exceed, in
the case of any Unrestricted Subsidiary, the
amount of Investments previously made by Holdings
or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments;
plus
(F) $5,000,000.
(2) The provisions of Section 4.04(1) shall not prohibit:
(a) any purchase, repurchase, retirement, defeasance or other
acquisition or retirement for value of Capital Stock or Subordinated
Obligations of Holdings made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Capital Stock of Holdings
(other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary of Holdings or an employee stock ownership
plan or other trust established by Holdings or any of its
Subsidiaries); provided, however, that:
(i) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments; and
(ii) the Net Cash Proceeds from such sale applied in the
manner set forth in this clause (a) shall be excluded
from the calculation of amounts under clause (d)(iii)(B)
of Section 4.04(1);
(b) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of
Holdings made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of Holdings that is
permitted to be Incurred pursuant to Section 4.03(2); provided,
however, that such purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(c) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided,
however, that such
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purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments;
(d) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividend would have complied
with Section 4.04; provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
and
(e) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of Holdings or any of its
Subsidiaries from employees, former employees, consultants, former
consultants, directors or former directors of Holdings or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, consultants, former consultants, directors or former
directors), pursuant to the terms of agreements (including
employment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or
sell, or are granted the option to purchase or sell, shares of such
common stock; provided, however, that the aggregate amount of such
repurchases shall not exceed in any calendar year the sum of (i)
$5,000,000 plus (ii) the Net Cash Proceeds received since the date
of the Indenture and not previously credited to any repurchase or
other acquisition of such shares or options to purchase shares of
common stock pursuant to this clause (2)(e)(ii) of Section 4.04 by
Holdings from the sale of Capital Stock to employees, consultants
and directors of Holdings or the Company; provided, further,
however, that such repurchases and other acquisitions of shares, or
options to purchase shares of common stock shall be included in the
calculation of the amount of Restricted Payments.
Notwithstanding the foregoing, no cash dividends in excess of
$10,000,000 shall be paid by Holdings unless Holdings shall have set aside in an
escrow account an amount not less than the amount of accretion accrued from the
original issue date of the Securities.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. Holdings shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness or other obligations owed to Holdings or any
of its Restricted Subsidiaries;
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(2) make any loans or advances to Holdings or any of its Restricted
Subsidiaries; or
(3) transfer any of its property or assets to Holdings or any of its
Restricted Subsidiaries,
except:
(a) any encumbrance or restriction pursuant to applicable law or
an agreement in effect at or entered into on the Closing Date;
(b) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary prior to
the date on which such Restricted Subsidiary was acquired by
Holdings (other than Indebtedness Incurred as consideration
in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate the
transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired by Holdings) and
outstanding on such date;
(c) any encumbrance or restriction (x) pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to
an agreement referred to in clause (a) or (b) of this Section
4.05 or this clause (c) or (y) contained in any amendment to
an agreement referred to in clause (a) or (b) of this Section
4.05 or this clause (c) or (z) pursuant to any other agreement
regarding Indebtedness otherwise permitted by Section 4.03;
provided, however, that the encumbrances and restrictions
contained in any such Refinancing agreement, amendment or
other agreement are no less favorable to the Securityholders
than the encumbrances and restrictions contained in such
predecessor agreements or, with respect to agreements entered
into at or after the Closing Date, the most restrictive
agreement in existence at or prior to the Closing Date;
(d) in the case of clause (3), any encumbrance or restriction:
(i) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is
subject to a lease, license or similar contract; or
-43-
(ii) contained in security agreements securing Indebtedness
of a Restricted Subsidiary to the extent such
encumbrance or restriction restricts the transfer of the
property subject to such security agreements;
(e) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary pending the closing of
such sale or disposition;
(f) any encumbrance or restriction relating to Purchase Money
Indebtedness or Capitalized Lease Obligations for property
acquired in the ordinary course of business that imposes
restrictions on the ability of Holdings or a Restricted
Subsidiary to sell, lease or transfer the acquired property to
Holdings or its Restricted Subsidiaries;
(g) restrictions on cash or other deposits imposed by customers
under contracts entered into in the ordinary course of
business;
(h) any encumbrance or restriction contained in joint venture
agreements and other similar agreements entered into in the
ordinary course of business and customary for such types of
agreements; and
(i) any encumbrance or restriction pursuant to an agreement for
Indebtedness under Section (2)(e) and (2)(g) of Section 4.03.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless:
(a) Holdings or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise)
at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors,
of the shares and assets subject to such Asset Disposition;
(b) at least 75% of the consideration thereof received by Holdings or
such Restricted Subsidiary is in the form of cash, provided that the
following shall be deemed to be cash for purposes of this clause
(b): (i) the amount of any liabilities (as shown on Holdings', or
such Restricted Subsidiary's, most recent balance sheet or in the
notes thereto) of Holdings or any Restricted Subsidiary
-44-
(other than liabilities that are by their terms subordinated to the
Securities) that are assumed by the transferee of any such assets,
(ii) the amount of any securities received by Holdings or such
Restricted Subsidiary from such transferee that are converted by
Holdings or such Restricted Subsidiary into cash (to the extent of
the cash received) within 90 days following the closing of such
Asset Disposition, (iii) the fair market value of any
Telecommunications Assets received by Holdings or any Restricted
Subsidiary in such Asset Disposition and (iv) the fair market value
of any Permitted Joint Venture Interests received by Holdings or any
Restricted Subsidiary in such Asset Disposition; provided that the
aggregate fair market value of all Permitted Joint Venture Interests
received pursuant to this clause (iv), valued, in each case, at the
time of receipt, shall not exceed 10% of Consolidated Net Tangible
Assets,
(for purposes of this Section 4.06(1)(b), all determinations of fair
market value shall be made in good faith by the Board of Directors
and evidenced by an Officers' Certificate delivered to the Trustee);
and
(c) from and after the date on which neither the Bank Indebtedness or
the Notes (including any Refinancings thereof) are outstanding, an
amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by Holdings (or such Restricted Subsidiary,
as the case may be):
(i) first, to the extent Holdings elects (or is required by the
terms of any Indebtedness), to prepay, repay, redeem, purchase
or otherwise acquire Indebtedness (other than any Disqualified
Stock) of a Wholly Owned Subsidiary (in each case, other than
Indebtedness owed to Holdings or an Affiliate of Holdings and
other than Preferred Stock) within 180 days of the later of
the date of such Asset Disposition or the receipt of such Net
Available Cash;
(ii) second, to the extent of the balance of Net Available Cash
after application in accordance with clause (i) of this
Section 4.06(1)(c), to the extent Holdings or such Restricted
Subsidiary elects to, or enters into a binding agreement to,
reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary
with cash in an amount equal to the amount of Net Available
Cash received by, or to be received by, Holdings or another
Restricted Subsidiary) within 180 days of the later of such
Asset Disposition or the receipt of such Net Available Cash;
and
-45-
(iii) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (i) and (ii) of
this Section 4.06(1)(c), to make an Offer to purchase
Securities pursuant to and subject to the conditions set forth
in paragraph (2) below; provided, however, that, if Holdings
elects (or is required by the terms of any other Holdings
Indebtedness), such Offer may be made ratably to purchase the
Securities and other Pari Passu Indebtedness of Holdings;
provided, however that, in connection with any prepayment, repayment
or purchase of Indebtedness pursuant to clause (i) or (iii) of this
Section 4.06(1)(c), Holdings or such Restricted Subsidiary shall
retire such Indebtedness and shall cause the related loan commitment
(if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Upon completion of any Offer (as defined below), the amount of Net
Available Cash shall be reset at zero and Holdings shall be entitled to use any
remaining proceeds for any corporate purposes to the extent permitted under this
Indenture. Notwithstanding the foregoing provisions of this Section 4.06,
Holdings and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.06 except to the extent that
the aggregate Net Available Cash from all Asset Dispositions that is not applied
in accordance with this Section 4.06 exceeds $10,000,000.
(2) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to clause (1)(c)(iii) of this Section 4.06(1)(c),
Holdings shall be required to offer to purchase Securities tendered pursuant to
an offer by the Company for the Securities (an "Offer") at a purchase price of
100% of their Accreted Value (or, if after May 14, 2004, principal amount plus
accrued and unpaid interest thereon), and Additional Amounts in respect thereof,
if any, to the date of purchase in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture and to
purchase other Pari Passu Indebtedness on the terms and to the extent
contemplated thereby. Holdings shall not be required to make an Offer for
Securities (and other Pari Passu Indebtedness) pursuant to this Section 4.06 if
the Net Available Cash available therefor (after application of the proceeds as
provided in clauses (1)(c)(i) and, (c)(ii) of this Section 4.06(1)(c)) is less
than $10,000,000 for any particular Asset Disposition (which lesser amount shall
be carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(3)(a) Promptly, and in any event within 10 days after Holdings
becomes obligated to make an Offer, Holdings shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by Holdings
either in whole or in part (subject to prorating as hereinafter
-46-
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of Holdings which Holdings in good faith believes will
enable such Holders to make an informed decision (which at a minimum shall
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of Holdings, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of Holdings filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in Holdings' business subsequent to the date of the latest of such
reports, and (iii) if material, appropriate pro forma financial information) and
all instructions and materials necessary to tender Securities pursuant to the
Offer, together with the address referred to in clause (c).
(b) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, Holdings shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(1). On such date,
Holdings shall also irrevocably deposit with the Trustee or with a paying agent
(or, if Holdings is acting as its own paying agent, segregate and hold in trust)
an amount equal to the Offer Amount to be invested pursuant to the specific
written directions of Holdings in Temporary Cash Investments and to be held for
payment in accordance with the provisions of this Section 4.06. Upon the
expiration of the period for which the Offer remains open (the "Offer Period"),
Holdings shall deliver to the Trustee for cancellation the Securities or
portions thereof that have been properly tendered to and are to be accepted by
Holdings. The Trustee (or the Paying Agent, if not the Trustee) shall, on the
date of purchase, mail or deliver payment to each tendering Holder in the amount
of the purchase price. In the event that the Offer Amount delivered by Holdings
to the Trustee is greater than the purchase price of the Securities tendered,
the Trustee shall deliver the excess to Holdings immediately after the
expiration of the Offer Period for application in accordance with this Section
4.06.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to Holdings
at the address specified in the notice at least three Business Days prior to the
Purchase Date. Holders shall be entitled to withdraw their election if the
Trustee or Holdings receives not later than one Business Day prior to the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered by the Holder
for purchase and a statement that such Holder is withdrawing his election to
have such Secu-
-47-
rity purchased. If at the expiration of the Offer Period the aggregate principal
amount of Securities and any other Senior Subordinated Indebtedness included in
the Offer surrendered by holders thereof exceeds the Offer Amount, Holdings
shall select the Securities and other Pari Passu Indebtedness to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by
Holdings. Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) At the time Holdings delivers Securities to the Trustee which
are to be accepted for purchase, Holdings shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by Holdings pursuant
to and in accordance with the terms of this Section 4.06. A Security shall be
deemed to have been accepted for purchase at the time the Trustee, directly or
through an agent, mails or delivers payment therefor to the surrendering Holder.
(4) Holdings shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.06, Holdings shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of Holdings
(an "Affiliate Transaction") unless such Affiliate Transaction is on terms:
(a) that are no less favorable to Holdings or such Restricted
Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arms'-length dealings with a Person
who is not such an Affiliate;
(b) that, in the event such Affiliate Transaction involves an aggregate
amount in excess of $5,000,000:
(i) are set forth in writing, and
(ii) have been approved by a majority of the members of the Board
of Directors having no personal stake, other than as a holder
of Capital Stock
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of Holdings or such Restricted Subsidiary, in such Affiliate
Transaction; and
(c) that, in the event such Affiliate Transaction involves an amount in
excess of $15,000,000, have been determined by a nationally
recognized appraisal or investment banking firm to be fair, from a
financial standpoint, to Holdings and its Restricted Subsidiaries
(the opinion of such nationally recognized appraisal or investment
banking firm shall be delivered to the Trustee).
(2) The provisions of Section 4.07(1) shall not prohibit:
(a) any Restricted Payment permitted to be paid pursuant to Section
4.04;
(b) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors;
(c) the grant of stock options or similar rights to employees and
directors of Holdings or the Company pursuant to plans approved by
the Board of Directors;
(d) loans or advances to employees in the ordinary course of business in
accordance with past practices of Holdings, but in any event not to
exceed $10,000,000 in the aggregate outstanding at any one time;
(e) the payment of reasonable fees to directors of Holdings and its
Subsidiaries who are not employees of Holdings or its Subsidiaries;
(f) any transaction between Holdings and a Restricted Subsidiary or
between Restricted Subsidiaries;
(g) customary indemnification and insurance arrangements in favor of
officers, directors, employees and consultants of Holdings or any of
the Restricted Subsidiaries;
(h) payments by Holdings or any of its Restricted Subsidiaries to Fox
Paine and its Affiliates for any financial advisory, financing,
underwriting or other placement services or in respect of other
investment banking activities, including, without limitation, in
connection with acquisitions or divestitures which payments are
approved by a majority of the Board of Directors in good faith;
-49-
(i) the existence of, or the performance by Holdings or any of its
Restricted Subsidiaries of the obligations under the terms of, any
stockholders agreements (including any registration rights agreement
or purchase agreement related thereto) to which it is a party as of
the Closing Date, as such agreements may be amended from time to
time pursuant to the terms thereof; provided, however, that the
terms of any such amendment are no less favorable to the Holders
than the terms of any such agreements in effect as of the Closing
Date, and
(j) the issuance of Capital Stock (other than Disqualified Stock) of
Holdings for cash to any Permitted Holder.
SECTION 4.08. Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that Holdings repurchase all or any part
of such Holder's Securities at a purchase price in cash equal to 101% of
Accreted Value (or, if after May 14, 2004, 101% of the principal amount thereof
plus accrued and unpaid interest thereon) and, in each case, Additional Amounts,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), in accordance with the terms contemplated in Section 4.08(b);
provided, however, that notwithstanding the occurrence of a Change of Control,
Holdings shall not be obligated to purchase the Securities pursuant to this
Section 4.08 in the event that it has exercised its right to redeem all the
Securities under paragraph 5 of the Securities. In the event that at the time of
such Change of Control the terms of the Bank Indebtedness restrict or prohibit
the repurchase of Securities pursuant to this Section 4.08, then prior to the
mailing of the notice to Holders provided for in Section 4.08(b) below but in
any event within 30 days following any Change of Control, Holdings shall:
(1) repay in full all Bank Indebtedness or, if doing so will allow
the repurchase of the Securities, offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer; or
(2) obtain the requisite consent under the agreements governing the
Bank Indebtedness to permit the repurchase of the Securities as provided
for in Section 4.08(b).
(b) Within 30 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), Holdings
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require Holdings to purchase such Holder's Securities at a
purchase price in cash equal to 101% of Accreted Value (or, if after May
14, 2004, 101% of the princi-
-50-
pal amount thereof, plus accrued and unpaid interest thereon) and, in each
case, Additional Amounts, if any, in respect thereof, if any, to the date
of purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by Holdings, consistent with this
Section 4.08, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to Holdings
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders shall be entitled to withdraw their election if the
Trustee or Holdings receives not later than one Business Day prior to the
purchase date a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered for purchase by
the Holder and a statement that such Holder is withdrawing his election to have
such Security purchased.
(d) On the purchase date, all Securities purchased by Holdings under
this Section 4.08 shall be delivered to the Trustee for cancellation, and
Holdings shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.08,
Holdings will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in Section
4.08(b) applicable to a Change of Control Offer made by Holdings and purchases
all Securities validly tendered and not withdrawn under such Change of Control
Offer.
(f) Holdings shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.08, Holdings shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.08 by virtue thereof.
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(g) In the event that Holders of not less than 98% of the principal
amount of the outstanding Securities accept a Change of Control Offer and
Holdings purchases all of the Securities held by such Holders, Holdings shall
have the right, on not less than 30 nor more than 60 days' prior notice, to
redeem all of the Securities that remain outstanding following such purchase at
the purchase price specified in the Change of Control Offer plus, to the extent
not included in the purchase price specified in the Change of Control Offer,
accrued and unpaid interest thereon and Additional Amounts in respect thereof,
if any, to the date of redemption (subject to the right of Holders of record on
the relevant record date to receive interest on the relevant interest payment
date). Any redemption of Securities pursuant to this paragraph (g) shall be
subject to, and made in accordance with, the provisions and requirements of
Article III.
SECTION 4.09. Compliance Certificate. Holdings shall deliver to the
Trustee within 120 days after the end of each fiscal year of Holdings an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of Holdings they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action Holdings is taking or proposes to take with
respect thereto. Holdings also shall comply with Section 314(a)(4) of the TIA.
SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, Holdings shall execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Limitation on Lines of Business. Holdings shall not,
and shall not permit any Restricted Subsidiary to, engage in any business, other
than a Related Business.
SECTION 4.12. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. Holdings shall not sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock except:
(1) to Holdings or a Wholly Owned Subsidiary;
(2) if, immediately after giving effect to such issuance, sale or
other disposition, neither Holdings nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary; or
(3) if, immediately after giving effect to such issuance or sale,
such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Invest-
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ment in such Person remaining after giving effect thereto would have been
permitted to be made under Section 4.04 if made on the date of such
issuance, sale or other disposition.
The proceeds of any sale of such Capital Stock permitted hereby
shall be treated as Net Available Cash from an Asset Disposition and shall be
applied in accordance with Section 4.06.
SECTION 4.13. Calculation of Original Issue Discount. Holdings shall
file with the Trustee promptly at the end of each calendar year through December
31, 2004 (i) a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on outstanding Securities as
of the end of such year and (ii) such other specific information relating to
such original issue discount as may then be relevant under the Internal Revenue
Code of 1986, as amended from time to time.
ARTICLE V
Successor Company
SECTION 5.01. When Holdings May Merge or Transfer Assets. Holdings
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of
the United States of America, any state thereof or the District of
Columbia, and the Successor Company (if not Holdings) shall expressly
assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of
Holdings under the Securities and this Indenture;
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(1);
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(4) Holdings shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture; and
(5) Holdings shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders will not recognize income, gain or
loss for Federal income tax purposes as a result of such transaction 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
transaction had not occurred.
Notwithstanding the foregoing clause (2) or (3), Holdings may merge
with an Affiliate incorporated or formed solely for the purpose of
reincorporating Holdings in another jurisdiction.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, Holdings under the Indenture, but
Holdings, in the case of a conveyance, transfer or lease of all or substantially
all its assets, shall not be released from the obligation to pay the principal
of and interest on the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) Holdings defaults in any payment of interest on any Security
when the same becomes due and payable and such default continues for a
period of 30 days;
(2) Holdings (i) defaults in the payment of Accreted Value or the
principal of any Security when the same becomes due and payable at its
Stated Maturity, upon required redemption or repurchase, upon declaration
or otherwise or (ii) fails to redeem or purchase Securities when required
pursuant to this Indenture or the Securities;
(3) Holdings fails to comply with Section 5.01;
(4) Holdings fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12 or 4.13 (other than a failure to purchase
Securities when required under Section 4.06 or 4.08) and such failure
continues for 30 days after the notice to Holdings specified below;
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(5) Holdings fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2),
(3) or (4) above) and such failure continues for 60 days after the notice
to Holdings specified below;
(6) Indebtedness of Holdings or any Subsidiary (other than
Indebtedness owing to Holdings or a Subsidiary of Holdings) is not paid
within any applicable grace period after final maturity or the
acceleration of such Indebtedness by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated
exceeds $5,000,000 or its foreign currency equivalent at the time and such
failure continues for 10 days after the notice to Holdings specified
below;
(7) Holdings or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against Holdings or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of Holdings or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of Holdings or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days; or
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(9) any judgment or decree for the payment of money in excess of
$5,000,000 or its foreign currency equivalent against Holdings or any
Subsidiary of Holdings, to the extent such judgment or decree is not
covered by insurance or is in excess of insurance coverage, and there is a
period of 60 days following the entry of such judgment or decree during
which such judgment or decree is not discharged, waived or the execution
thereof stayed.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
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.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5) or (6) above is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify Holdings of the Default and Holdings does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
Holdings shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action Holdings is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to Holdings)
occurs and is continuing, the Trustee by notice to Holdings, or the Holders of
at least 25% in principal amount of the outstanding Securities by notice to
Holdings, may declare the principal of and accrued but unpaid interest on, all
the Securities (or, if prior to May 14, 2004, the Accreted Value of all the
Securities) to be due and payable. Upon such a declaration, such Accreted Value
or principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to Holdings occurs, the
principal of, and accrued and unpaid interest on all the Securities (if prior to
May 14, 2004, the Accreted Value of all the Securities) shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing
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Events of Default have been cured or waived except nonpayment of Accreted Value
or principal or interest that has become due solely because of acceleration. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies. Notwithstanding any other provision of
the Indenture, if an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding in its own name and as trustee
of an express trust even if it does not possess any of the Securities or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security, (ii) a Default arising from the failure
to redeem or purchase any Security when required pursuant to the terms of this
Indenture or (iii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
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(1) the Holder has previously given to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of Accreted Value or principal of, as the case may be, and Additional
Amounts and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against
Holdings for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to Holdings or any Subsidiary,
their creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses,
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disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any Additional Amounts
without preference or priority of any kind, according to the amounts due
and payable on the Securities for principal, any Additional Amounts and
interest, respectively; and
THIRD: to Holdings.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and Holdings a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. 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, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Holdings (to the
extent it may lawfully do so) agrees that it shall not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
Holdings (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and 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.
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture (but
need not confirm or investigate the accuracy of mathematical calculations
or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Holdings.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively
rely and shall be protected in acting or refraining from acting upon any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorneys appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document or as to
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whether or not an Event of Default shall have occurred unless requested in
writing to do so by the Holders of not less than a majority in principal amount
of the Securities at the time outstanding, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters or
occurrence as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of Holdings, personally or by agent or attorney at the sole
cost of Holding and shall incur no liability or additional liability of any kind
by reason of such inquiry or investigation.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the
Trustee at the Corporate Trust Office of the Trustee, and such notice references
the Securities and this Indenture.
(i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with Holdings or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for Holdings use
of the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate
of authentication. The Trustee shall not be responsible for any conduct or
omission by Holdings or the occurrence of any Event of Default.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer, the Trustee shall mail to each
Securityholder notice of the
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Default within 90 days after it occurs. Except in the case of a Default in
payment of principal or interest on any Security (including payments pursuant to
the mandatory redemption provisions of such Security, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 1 beginning with the May 1 following the date of this
Indenture, and in any event prior to July 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of May 15 that complies with
Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of
the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. Holdings agrees to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. Holdings shall pay to the
Trustee from time to time such compensation as Holdings and the Trustee shall,
from time to time, agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. Holdings shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents (including agents that are not full-time employees of the
Trustee or are not regularly employed by the Trustee), counsel, accountants and
experts. Holdings, jointly and severally shall indemnify, defend and hold
harmless the Trustee or any predecessor Trustee and their Agents against any and
all loss, liability damage, claims or expense (including reasonable attorneys'
fees and expenses) incurred by or in connection with the acceptance or
administration of this trust including the costs and expenses of defending
itself against any claim (whether asserted by Holdings, any Holder or any other
Person) and the performance of its duties hereunder. The Trustee shall notify
Holdings of any claim for which it may seek indemnity promptly upon obtaining
actual knowledge thereof; provided, however, that any failure so to notify
Holdings shall not relieve Holdings of its indemnity obligations hereunder.
Holdings shall defend the claim and the indemnified party shall provide
reasonable cooperation at Holdings expense in the defense. Such indemnified
parties may have separate counsel and Holdings shall pay the fees and expenses
of such counsel; provided, however, that Holdings shall not be required to pay
such fees and expenses if it assumes such indemnified parties' defense and, in
such indemnified parties' reasonable judgment, there is no conflict of interest
between Holdings and such parties in connection with such defense. Holdings need
not reimburse any expense or indemnify, defend or hold harmless against any
loss, liability or expense
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incurred by an indemnified party through such party's own willful misconduct,
negligence or bad faith.
To secure Holdings' payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any Additional Amounts on particular Securities.
Holdings' payment obligations pursuant to this Section 7.07 shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(7) or (8) with respect to Holdings, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying Holdings in writing in accordance with the provisions of
Section 13.02. Any resignation of the Trustee shall be effective immediately
upon receipt by Holdings of such notice (unless such notice shall specify a
later time as the effective time of such resignation, in which case such later
time shall be the effective time), and the resignation of the Trustee shall not
prejudice any rights of the Trustee to receive any compensation, any
reimbursement of any expenses or any indemnity under the Indenture. The Holders
of a majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee. Holdings shall remove
the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by Holdings or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), Holdings shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Thereupon the resignation
or removal of the retiring Trustee
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shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor Trustee
shall mail a notice of its succession to Securityholders. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, Holdings' obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss.310(a). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss.310(b); provided, however, that there shall be excluded from the operation of
TIA ss.310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of Holdings are
outstanding if the requirements for such exclusion set forth in TIA ss.310(b)(1)
are met.
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SECTION 7.11. Preferential Collection of Claims Against Holdings.
The Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss.311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) Holdings delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof,
and Holdings irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including Accreted Value or interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
Holdings pays all other sums payable hereunder by Holdings, then this Indenture
shall, subject to Section 8.01(c), cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of this Indenture on demand of
Holdings accompanied by an Officers' Certificate and an Opinion of Counsel at
the cost and expense of Holdings.
(b) Subject to Sections 8.01(c) and 8.02, Holdings at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and the operation
of Section 5.01(a)(3), 5.01(a)(4), 6.01(4), 6.01(6), 6.01(7) (with respect to
Significant Subsidiaries of Holdings only), 6.01(8) (with respect to Significant
Subsidiaries of Holdings only) and 6.01(9) ("covenant defeasance option").
Holdings may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If Holdings exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If Holdings
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4),
6.01(6), 6.01(7) (with respect to Significant Subsidiaries of Holdings only),
6.01(8) (with respect to Significant Subsidiaries of Holdings only) or 6.01(9)
or because of the failure of Holdings to comply with clauses (3) and (4) of
Section 5.01(a).
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Upon satisfaction of the conditions set forth herein and upon the
written request of Holdings, the Trustee shall acknowledge in writing the
discharge of those obligations that Holdings terminates.
(c) Notwithstanding clauses (a) and (b) above, Holdings' obligations
in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in this Article
VIII shall survive until the Securities have been paid in full. Thereafter,
Holdings obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. Holdings may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) Holdings irrevocably deposits in trust with the Trustee money or
U.S. Government Obligations for the payment of principal, premium (if any)
and interest on the Securities to maturity or redemption, as the case may
be;
(2) Holdings delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion that
the payments of principal and interest when due and without reinvestment
on the deposited U.S. Government Obligations plus any deposited money
without investment will provide cash at such times and in such amounts as
will be sufficient to pay principal and interest when due on all the
Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to
Holdings occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on Holdings;
(5) Holdings delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, Holdings shall have
delivered to the Trustee an Opinion of Counsel stating that (i) Holdings
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been
a change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal in-
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come 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;
(7) in the case of the covenant defeasance option, Holdings shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders 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; and
(8) Holdings delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
Before or after a deposit, Holdings may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Holdings. The Trustee and the Paying
Agent shall promptly turn over to Holdings upon the written request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to Holdings upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to
Holdings for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. Holdings shall
pay and shall indemnify, defend and hold harmless the Trustee against any tax,
fee or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, Holdings
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obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article VIII until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article VIII; provided,
however, that, if Holdings has made any payment of interest on or principal of
any Securities because of the reinstatement of its obligations, Holdings shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. Holdings and the Trustee
may amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to secure the Securities;
(5) to add to the covenants of Holdings for the benefit of the
Holders or to surrender any right or power herein conferred upon Holdings;
(6) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities or
Private Exchange Securities which shall have terms substantially identical
in all material respects to the Original Securities (except that the
transfer restrictions contained in the Original Securities shall be
modified or eliminated, as appropriate), and which shall be treated,
together with any outstanding Original Securities, as a single issue of
securities.
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After an amendment under this Section 9.01 becomes effective,
Holdings shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02. With Consent of Holders. Holdings and the Trustee may
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for the Securities). However, without
the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or
any Additional Amounts on any Security, or change or have the effect of
changing the definition of Accreted Value;
(3) reduce the Accreted Value or principal of or extend the Stated
Maturity of any Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article III;
(5) make any Security payable in money other than that stated in the
Security; or
(6) make any change in Section 6.04 or 6.07 or the second sentence
of this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective,
Holdings shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
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SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate from Holdings certifying that the requisite number of consents have
been received. After an amendment or waiver becomes effective, it shall bind
every Securityholder. An amendment or waiver becomes effective upon the (i)
receipt by Holdings or the Trustee of the requisite number of consents, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by Holdings
and the Trustee.
Holdings may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if Holdings or the Trustee so determines, Holdings in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid
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and binding obligation of Holdings enforceable against it in accordance with its
terms, subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03).
SECTION 9.07. Payment for Consent. Neither Holdings nor any
Affiliate of Holdings shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to Holdings:
ALEC Holdings, Inc.
510 L. Street
Suite 500
Anchorage, Alaska 99501
Attention of:
Michael E. Holmstrom
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention of:
Corporate Trust Trustee Administration
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Holdings or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it; provided,
however, that in the case of the Trustee a notice or communication is duly given
upon receipt.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss.312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. Holdings, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss.312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by Holdings to the Trustee to take or refrain
from taking any action under this Indenture, Holdings shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by Holdings or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with Holdings shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
shall be considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 10.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 10.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of Holdings shall not have any liability for
any obligations of Holdings under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
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SECTION 10.11. Successors. All agreements of Holdings in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
ALEC HOLDINGS, INC.,
By: /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
THE BANK OF NEW YORK, as Trustee,
By: /s/ Michele L. Russo
-------------------------------------
Name: MICHELE L. RUSSO
Title: Assistant Treasurer
APPENDIX A
PROVISIONS RELATING TO ORIGINAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions.
1.01. Definitions. For the purposes of this Appendix A the following
terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities clearing
agency.
"Definitive Security" means a certificated Original Security or
Exchange Security (bearing the Restricted Securities Legend if the transfer of
such Security is restricted by applicable law) that does not include the Global
Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means DLJ Investment Partners, L.P., DLJ
Investment Funding, Inc. and DLJ ESC II L.P.
"Private Exchange" means an offer by Holdings, pursuant to the
Registration Agreement, to issue and deliver to certain purchasers, in exchange
for the Original Securities held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange Securities.
"Private Exchange Securities" means the Securities of Holdings
issued in exchange for Original Securities pursuant to this Indenture in
connection with a Private Exchange pursuant to the Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated May 11,
1999, between Holdings and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registered Exchange Offer" means an offer by Holdings, pursuant to
the Registration Agreement, to certain Holders of Original Securities, to issue
and deliver to such Holders, in exchange for their Original Securities, a like
aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Exchange and Registration Rights
Agreement dated May 14, 1999, between Holdings and the Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Original Securities offered and
sold outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (i) the
day on which such Securities are first offered to persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (ii) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Original Securities offered and
sold to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
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"Shelf Registration Statement" means a registration statement filed
by Holdings in connection with the offer and sale of Original Securities
pursuant to the Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
1.2. Other Definitions.
Term: Defined in Section:
- ----- -------------------
"Agent Members" ....................... 2.1(b)
"IAI Global Security" ................. 2.1(a)
"Global Security" ..................... 2.1(a)
"Regulation S Global Security" ........ 2.1(a)
"Rule 144A Global Security" ........... 2.1(a)
2. The Securities.
2.1. Form and Dating. The Original Securities issued on the date
hereof will be (i) offered and sold by Holdings pursuant to the Purchase
Agreement and (ii) resold, initially only to (A) QIBs in reliance on Rule 144A
and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance
on Regulation S. Such Original Securities may thereafter be transferred to,
among others, QIBs, purchasers in reliance on Regulation S and, except as set
forth below, IAIs in accordance with Rule 501.
(a) Global Securities. Rule 144A Securities may be issued in the
form of one or more permanent global Securities in definitive, fully registered
form (collectively, the "Rule 144A Global Security") and Regulation S Securities
shall be issued initially in the form of one or more global Securities
(collectively, the "Regulation S Global Security"), in each case without
interest coupons and bearing the Global Securities Legend and Restricted
Securities Legend, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Securities Custodian, and registered in
the name of the Depositary or a nominee of the Depositary, duly executed by
Holdings and authenticated by the Trustee as provided in this Indenture. One or
more global securities in definitive, fully registered form without interest
coupons and bearing the Global Securities Legend and the Restricted Securities
Legend (collectively, the "IAI Global Security") may also be issued on the
Closing Date, deposited with the Securities Custodian, and registered in the
name of the Depositary or a nominee of the Depositary, duly executed by Holdings
and authenticated by the Trustee as provided in this Indenture to accommodate
transfers of beneficial interests in the Securities to IAIs subsequent to the
initial distribution. Beneficial ownership interests in the Regulation S Global
Security shall not be exchangeable for interests in the Rule 144A Global
Security, the IAI Global Security or any other Security without a Restricted
Securities Legend until the expiration of the Restricted Period. The Rule 144A
Global Security, the IAI Global Security
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and the Regulation S Global Security are each referred to herein as a "Global
Security" and are collectively referred to herein as "Global Securities." The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
Holdings shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to a written order of Holdings, authenticate
and deliver initially one or more Global Securities that (a) shall be registered
in the name of the Depositary for such Global Security or Global Securities or
the nominee of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the Trustee
as Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or by the Trustee as Securities Custodian
or under such Global Security, and the Depositary may be treated by Holdings,
the Trustee and any agent of Holdings or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent Holdings, the Trustee or any agent of Holdings or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
(c) Definitive Securities. Owners of beneficial interests in
Securities may initially elect to receive physical delivery of certificated
Securities.
2.2. Authentication. The Trustee shall authenticate and make
available for delivery upon a written order of Holdings signed by an Officer (1)
Original Securities for original issue on the date hereof in an aggregate
principal amount of $46,928,435.00, (2) the (A) Exchange Securities for issue
only in a Registered Exchange Offer and (B) Private Exchange Securities for
issue only in a Private Exchange, in the case of each of (A) and (B) pursuant to
the Registration Agreement and for a like principal amount of Original
Securities exchanged pursuant thereto. Such order shall specify the amount of
the Securities to be authenticated, the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Original
Securities, Exchange Securities or Private Exchange Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$46,928,435.00 except as provided in Section 2.08 of this Indenture.
2.3. Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar with a
request:
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(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to Holdings and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect
(in the form set forth on the reverse side of the Original
Security); or
(B) if such Definitive Securities are being transferred to
Holdings, a certification to that effect (in the form set forth on
the reverse side of the Original Security); or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or in reliance upon another exemption
from the registration requirements of the Securities Act, (i) a
certification to that effect (in the form set forth on the reverse
side of the Original Security) and (ii) if Holdings or the Trustee
so requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to Holdings and the Registrar, together
with:
(i) certification either (in the form set forth on the reverse side
of the Original Security) that such Definitive Security is being
transferred (A) to a QIB in accordance with Rule 144A, (B) to an IAI that
has furnished to the Trustee a signed
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letter substantially in the form of Exhibit D or (C) outside the United
States in an offshore transaction within the meaning of Regulation S and
in compliance with Rule 904 under the Securities Act or, will remain with
such Definitive Securityholder; and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Security
equal to the principal amount of the Definitive Security so canceled. If no
Global Securities are then outstanding and the Global Security has not been
previously exchanged for certificated securities pursuant to Section 2.4,
Holdings shall issue and the Trustee shall authenticate, upon written order of
Holdings in the form of an Officers' Certificate, a new Global Security in the
appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security or the IAI
Global Security to a transferee who takes delivery of such interest through the
Regulation S Global Security, whether before or after the expiration of the
Restricted Period, shall be made only upon receipt by the Trustee of a
certification from the transferor to the effect that such transfer is being made
in accordance with Regulation S or (if available) Rule 144 under the Securities
Act and that, if such transfer is being made prior to the expiration of the
Restricted Period, the interest transferred shall be held immediately thereafter
through Euroclear or Cedel. In the case of a transfer of a beneficial interest
in either the Regulation S Global Security or the Rule 144A Global Security for
an interest in the IAI Global Security, the transferee must furnish a signed
letter substantially in the form of Exhibit D to the Trustee.
-6-
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security, the
Registrar shall reflect on its books and records the date and an increase in the
principal amount of the Global Security to which such interest is being
transferred in an amount equal to the principal amount of the interest to be so
transferred, and the Registrar shall reflect on its books and records the date
and a corresponding decrease in the principal amount of Global Security from
which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 prior to the consummation of the Registered
Exchange Offer or the effectiveness of a Shelf Registration Statement with
respect to such Securities, such Securities may be exchanged only in accordance
with such procedures as are substantially consistent with the provisions of this
Section 2.3 (including the certification requirements set forth on the reverse
of the Original Securities intended to ensure that such transfers comply with
Rule 144A, Regulation S or such other applicable exemption from registration
under the Securities Act, as the case may be) and such other procedures as may
from time to time be adopted by Holdings.
(d) Restrictions on Transfer of Regulation S Global Security. (i)
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (A) to Holdings, (B) so long
as such security is eligible for resale pursuant to Rule 144A, to a person whom
the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore
transaction in accordance with Regulation S, (D) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act, (E) to an IAI purchasing for its own account, or for the
account of such an IAI, in a minimum principal amount of Securities of $250,000
or (F) pursuant to an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities laws of any state of
the United States. Prior to the expiration of the Restricted Period, transfers
by an owner of a beneficial interest in the Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A Global
Security or the IAI Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Original Security to the effect that
-7-
such transfer is being made to (i) a person whom the transferor reasonably
believes is a QIB within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A or (ii) an IAI purchasing for its own account, or
for the account of such an IAI, in a minimum principal amount of the
Securities of $250,000. Such written certification shall no longer be
required after the expiration of the Restricted Period. In the case of a
transfer of a beneficial interest in the Regulation S Global Security for an
interest in the IAI Global Security, the transferee must furnish a signed
letter substantially in the form of Exhibit D to the Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial ownership
interests in the Regulation S Global Security shall be transferable in
accordance with applicable law and the other terms of this Indenture.
(e) LEGEND. (i) Except as permitted by the following paragraphs (ii),
(iii) or (iv), each Security certificate evidencing the Global Securities and
the Definitive Securities (and all Securities issued in exchange therefor or
in substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
"THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
HOLDINGS OR ANY AFFILIATE OF HOLDINGS WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO HOLDINGS, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
-8-
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO HOLDINGS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS
SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that does
not bear the legends set forth above and rescind any restriction on the transfer
of such Transfer Restricted Security if the Holder certifies in writing to the
Registrar that its request for such exchange was made in reliance on Rule 144
(such certification to be in the form set forth on the reverse of the Original
Security).
(iii) After a transfer of any Original Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Original Securities or Private
Exchange Securities, as the case may be, all requirements pertaining to the
Restricted Securities Legend on such Original Securities or such Private
Exchange Securities shall cease to apply and the requirements that any such
Original Securities or such Private Exchange Securities be issued in global form
shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Original Securities pursuant to which Holders of such Original or
Securities are offered Exchange Securities in exchange for their Original
Securities, all requirements pertaining to
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Original Securities that Original Securities be issued in global form shall
continue to apply, and Exchange Securities in global form without the Restricted
Securities Legend shall be available to Holders that exchange such Original
Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Original Securities pursuant to which Holders of such Original Securities are
offered Private Exchange Securities in exchange for their Original Securities,
all requirements pertaining to such Original Securities that Original Securities
be issued in global form shall continue to apply, and Private Exchange
Securities in global form with the Restricted Securities Legend shall be
available to Holders that exchange such Original Securities in such Private
Exchange.
(vi) Upon a sale or transfer after the expiration of the Restricted
Period of any Original Security acquired pursuant to Regulation S, all
requirements that such Original Security bear the Restricted Securities Legend
shall cease to apply and the requirements requiring any such Original Security
be issued in global form shall continue to apply.
(f) Cancellation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancellation or retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
Securities. (i) To permit registrations of transfers and exchanges, Holdings
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but Holdings may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Sections 3.06,
4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, Holdings, the Trustee, the Paying Agent or the Registrar may deem
and treat the person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of Holdings, the Trustee, the Paying Agent or
the Registrar shall be affected by notice to the contrary.
-10-
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
(h) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depositary or any other Person with respect
to the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption or repurchase) or the payment of any amount,
under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Security) 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 Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
(iii) Each Holder of a Security agrees to indemnify Holdings and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
2.4. Definitive Securities. (a) A Global Security deposited with the
Depositary or with the Trustee as Securities Custodian pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies Holdings that
it is unwilling or unable to continue as a Depositary for such Global Security
or if at any time the Depositary ceases to be a "clearing agency" registered
under the Exchange Act, and a successor depositary is not appointed by Holdings
within 90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) Holdings, in its sole discretion, no-
-11-
tifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section 2.04 shall be
registered in such names as the Depositary shall direct. Any certificated
Original Security in the form of a Definitive Security delivered in exchange for
an interest in the Global Security shall, except as otherwise provided by
Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), Holdings will promptly make available to the
Trustee a reasonable supply of Definitive Securities in fully registered form
without interest coupons.
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EXHIBIT A
FORM OF FACE OF ORIGINAL SECURITY
Global Securities Legend
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO HOLDINGS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
Restricted Securities Legend
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
"THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH HOLDINGS OR ANY AFFILIATE
OF HOLDINGS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY),
A-1
ONLY (A) TO HOLDINGS, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO HOLDINGS'
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS."
A-2
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $ ; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $ ; (3) THE ISSUE DATE IS MAY 14, 1999; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS %.
No. $_______
Senior Discount Debenture due 2011
[CUSIP No.______]
ALEC HOLDINGS, INC., a Delaware corporation, promises to pay to
[Cede & Co.], or registered assigns, the principal sum [of Dollars] listed
on the Schedule of Increases or Decreases in Global Security attached hereto on
May 14, 2011.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
A-3
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
ALEC HOLDINGS, INC.,
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is
one of the Securities referred to
in the Indenture.
By: _______________________________
Authorized Signatory
A-4
FORM OF REVERSE SIDE OF ORIGINAL SECURITY
Senior Discount Debenture due 2011
1. INTEREST
(a) ALEC HOLDINGS, INC., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Holdings"), promises to pay cash interest on the
principal amount of this Security at the rate of 13% per annum. Cash interest
on the Securities shall accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from May 14, 1999. Holdings
shall pay cash interest in arrears semiannually on May 15 and November 15
of each year commencing November 15, 2004. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. Holdings shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum,
and its shall pay interest on overdue installments of interest at the same
rate to the extent lawful.
(b) ADDITIONAL AMOUNTS. The holder of this Security is entitled
to the benefits of an Exchange and Registration Rights Agreement, dated
May 14, 1999, between Holdings and the Initial Purchasers named therein (the
"Registration Agreement"). Capitalized terms used in this paragraph (b) but
not defined herein have the meanings assigned to them in the Registration
Agreement. If (i) the Shelf Registration Statement or Exchange Offer
Registration Statement, as applicable under the Registration Agreement, is
not filed with the Commission on or prior to 75 days after the Issue Date,
(ii) the Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, is not declared effective on or prior to 150
days after the Issue Date, (iii) the Exchange Offer is not consummated on or
prior to 180 days after the Issue Date, or (iv) the Shelf Registration
Statement is filed and declared effective on or prior to 150 days after the
Issue Date but shall thereafter cease to be effective (at any time that
Holdings is obligated to maintain the effectiveness thereof) without being
succeeded within 45 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv),
a "Registration Default"), Holdings shall pay Additional Amounts to each
holder of Transfer Restricted Securities, during the period of one or more
such Registration Defaults, in an amount equal to $0.192 per week per $1,000
Accreted Value of the Securities constituting Transfer Restricted Securities
held by such holder until the applicable Registration Statement is filed or
declared effective, the Registered Exchange Offer is consummated or the Shelf
Registration Statement again becomes effective, as the case may be. All
accrued Additional Amounts shall be paid to holders semi-annually on each
May 15 and November 15 of each year beginning with the first such date after
any Additional Amounts begin to accrue. Following the cure of all
Registration Defaults, the accrual of Additional Amounts shall cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such Additional Amounts. For purposes of the foregoing,
"Transfer Restricted Securities" means (i) each Original Security until
A-5
the date on which such Original Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Original Security or Private Exchange Security until the date on which such
Original Security or Private Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with a Shelf Registration
Statement or (iii) each Original Security or Private Exchange Security until the
date on which such Original Security or Private Exchange Security is distributed
to the public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
2. Method of Payment
Holdings shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Holdings shall pay principal, premium, Additional
Amounts and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including principal,
premium, Additional Amounts and interest) shall be made by wire transfer of
immediately available funds to the accounts specified by The Depository Trust
Company. Holdings will make all payments in respect of a certificated Security
(including principal, premium, Additional Amounts and interest), by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. Holdings may appoint and
change any Paying Agent, Registrar or co-registrar without notice. Holdings or
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
4. Indenture
Holdings issued the Securities under an Indenture dated as of May
14, 1999 (the "Indenture"), between Holdings and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings as-
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cribed thereto in the Indenture. The Securities are subject to all terms and
provisions of the Indenture, and Securityholders are referred to the Indenture
and the TIA for a statement of such terms and provisions.
The Securities are senior unsecured obligations of Holdings limited
to $46,928,435.00 aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the Original
Securities referred to in the Indenture. The Securities include the Original
Securities and any Exchange Securities and Private Exchange Securities issued in
exchange for Original Securities. The Original Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
ability of Holdings and its Restricted Subsidiaries to, among other things, make
certain Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
issue or sell shares of capital stock of such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates and asset sales. The
Indenture also imposes limitations on the ability of Holdings to consolidate or
merge with or into any other Person or convey, transfer or lease all or
substantially all of the property of Holdings.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of Holdings prior to May 15, 2004. Thereafter,
the Securities shall be redeemable at the option of Holdings, in whole or in
part, on not less than 30 nor more than 60 days prior notice, at the following
Redemption Prices (expressed as percentages of principal amount), plus accrued
and unpaid cash interest thereon, and Additional Amounts in respect thereof, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on May 15 of the years
set forth below:
Year Redemption Price
---- ----------------
2004 106.500%
2005 105.200%
2006 103.900%
2007 102.600%
2008 101.300%
2009 and thereafter 100.000%
In addition, prior to May 15, 2002, Holdings may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities with
the Net Cash Proceeds of one or more Equity Offerings by Holdings, at a
Redemption Price equal to 113% of the Accreted Value thereof, plus any
Additional Amounts in respect thereof to the redemption
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date; provided, however, that after giving effect to any such redemption, at
least 65% of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption by Holdings shall be made within 90 days of
such related Equity Offering by Holdings, and must be made upon not less than 30
nor more than 60 days' notice mailed to each Holder of Notes being redeemed and
otherwise in accordance with the procedures set forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at the registered address of such Holder. Securities
in denominations larger than $1,000 may be redeemed in part. If money sufficient
to pay the Redemption Price of, and, after May 14, 2004 accrued and unpaid cash
interest on, and in each case Additional Amounts, if any, on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date, Accreted Value will cease to accrete or
interest will cease to accrue, as the case may be, on such Securities (or such
portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause
Holdings to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of Accreted Value (or, if after May 14, 2004, 101%
of the principal amount of the Securities to be repurchased plus accrued and
unpaid interest thereon) and, in each case, Additional Amounts, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of purchase) as provided in, and subject to the terms
of, the Indenture.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons. A Holder may
transfer or exchange Securities in accordance with the Indenture. Upon any
transfer or exchange, the Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed.
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10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to Holdings
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
Holdings and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, Holdings at any time may terminate
some of or all its obligations under the Securities and the Indenture if
Holdings deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, Holdings and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to secure the Securities; (v) to add
additional covenants or to surrender rights and powers conferred on Holdings;
(vi) to comply with the requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the TIA; (vii) to make any change that
does not adversely affect the rights of any Securityholder; or (viii) to provide
for the issuance of the Exchange Securities or Private Exchange Securities.
14. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
Holdings) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the Accreted Value
of, or, if after May 14, 2004, the principal of and accrued but unpaid interest
on, all the Securities to be due and payable. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of Holdings occurs,
the Accreted Value of,
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or, if after May 14, 2004, the principal of and interest on all the Securities
shall become immediately due and payable without any declaration or other act on
the part of the Trustee or any Holders. Under certain circumstances, the Holders
of a majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
15. Trustee Dealings with Holdings
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by Holdings or its Affiliates and may otherwise deal with Holdings or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of Holdings
shall not have any liability for any obligations of Holdings under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
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17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Holdings will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________ agent to transfer this Security on the
books of Holdings. The agent may substitute another to act for him.
Date: __________________ Your Signature: _____________________________________
Sign exactly as your name appears on
the other side of this Security
A-12
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $__________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) |_| to Holdings; or
(2) |_| pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) |_| inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933)
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule 144A, in each
case pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(4) |_| outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933; or
(5) |_| to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed letter containing
certain representations and agreements; or
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(6) |_| pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
Person other than the registered holder thereof; provided, however, that
if box (4), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as Holdings has reasonably requested
to confirm that such transfer is being made pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act of 1933.
______________________________
Your Signature
Signature Guarantee:
Date: _____________________________ _____________________________________
Signature must be guaranteed Signature of Signature Guarantee
by a participant in a recognized
signature guaranty medallion
program or other signature
guarantor acceptable to the Trustee
__________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding Holdings as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: _____________________ ______________________________________________
NOTICE: To be executed by an executive officer
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[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
Principal amount of
Amount of decrease in Amount of increase in this Global Security Signature of authorized
Principal Amount of Principal Amount of following such decrease signatory of Trustee or
Date of Exchange this Global Security this Global Security or increase Securities Custodian
- ---------------- --------------------- --------------------- ----------------------- -----------------------
A-15
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by Holdings
pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by
Holdings pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$______________
Date: ____________________ Your Signature: __________________________________
Sign exactly as your name appears
on the other side of this Security
Signature Guarantee: ___________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee
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EXHIBIT B
FORM OF FACE OF EXCHANGE SECURITY
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $ ; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $ ; (3) THE ISSUE DATE IS MAY 14, 1999; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS %.
No. $_________
Senior Discount Debenture due 2011
[CUSIP No. ______]
ALEC HOLDINGS, INC., a Delaware corporation, promises to pay to
[Cede & Co.], or registered assigns, the principal sum [of Dollars] listed
on the Schedule of Increases or Decreases in Global Security attached hereto on
May 14, 2011.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
B-1
Additional provisions of this Security are set forth on the other side of
this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
ALEC HOLDINGS, INC.,
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this
is one of the Securities
referred to in the Indenture.
By: _________________________________
Authorized Signatory
B-2
FORM OF REVERSE SIDE OF EXCHANGE SECURITY
Senior Discount Debenture due 2011
1. Interest
ALEC HOLDINGS, INC., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Holdings"), promises to pay cash interest on the principal
amount of this Security at the rate of 13% per annum. Cash interest on the
Securities shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from May 14, 1999. Holdings shall pay
interest semiannually on May 15 and November 15 of each year commencing November
15, 2004. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. Holdings shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
Holdings shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Holdings shall pay principal, premium and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. Holdings will make all
payments in respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. Holdings may appoint and
change any Paying Agent, Registrar or co-registrar without notice. Holdings or
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
B-3
4. Indenture
Holdings issued the Securities under an Indenture dated as of May
14, 1999 (the "Indenture"), between Holdings and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the Indenture, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms and provisions.
The Securities are senior unsecured obligations of Holdings limited
to $46,928,435.00 aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the Exchange
Securities referred to in the Indenture. The Securities include the Original
Securities and any Exchange Securities and Private Exchange Securities issued in
exchange for Original Securities. The Original Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
ability of Holdings and its Restricted Subsidiaries to, among other things, make
certain Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
issue or sell shares of capital stock of such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates and make asset sales. The
Indenture also imposes limitations on the ability of Holdings to consolidate or
merge with or into any other Person or convey, transfer or lease all or
substantially all of the property of Holdings.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of Holdings prior to May 15, 2004. Thereafter,
the Securities shall be redeemable at the option of Holdings, in whole or in
part, on not less than 30 nor more than 60 days prior notice, at the following
Redemption Prices (expressed as percentages of principal amount), plus accrued
and unpaid cash interest thereon, and Additional Amounts in respect thereof, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on May 15 of the years
set forth below:
B-4
Year Redemption Price
---- ----------------
2004 106.500%
2005 105.200%
2006 103.900%
2207 102.600%
2008 101.300%
2009 and thereafter 100.000%
In addition, prior to May 15, 2002, Holdings may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities with
the Net Cash Proceeds of one or more Equity Offerings by Holdings, at a
Redemption Price equal to [ ]% of the Accreted Value thereof, plus any
Additional Amounts in respect thereof, the Securities, to the redemption date;
provided, however, that after giving effect to any such redemption, at least 65%
of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption by Holdings shall be made within 90 days of
such related Equity Offering by Holdings, and must be made upon not less than 30
nor more than 60 days' notice mailed to each Holder of Notes being redeemed and
otherwise in accordance with the procedures set forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at the registered address of such Holder. Securities
in denominations larger than $1,000 may be redeemed in part. If money sufficient
to pay the Redemption Price of and, after May 14, 2004, accrued and unpaid
interest and, in each case, Additional Amounts, if any, on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date, Accreted Value will cease to accrete or
accrue, as the case may be, on such Securities (or such portions thereof) called
for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause
Holdings to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of Accreted Value (or, if after May 14, 2004, 101%
of the principal amount of the Securities to be repurchased plus accrued and
unpaid interest thereon) and, in each case, Additional Amounts, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive
B-5
interest due on the relevant interest payment date that is on or prior to the
date of purchase) as provided in, and subject to the terms of, the Indenture.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons. A Holder may
transfer or exchange Securities in accordance with the Indenture. Upon any
transfer or exchange, the Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to Holdings
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
Holdings and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, Holdings at any time may terminate
some of or all its obligations under the Securities and the Indenture if
Holdings deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, Holdings and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated
B-6
Securities; (iv) to secure the Securities; (v) to add additional covenants or to
surrender rights and powers conferred on Holdings; (vi) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (vii) to make any change that does not adversely affect
the rights of any Securityholder; or (viii) to provide for the issuance of the
Exchange Securities or Private Exchange Securities.
14. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
Holdings) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the Accreted Value
of, or, if after May 14, 2004, the principal of and accrued but unpaid interest
on all the Securities to be due and payable. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of Holdings occurs,
the Accredted Value of, or, if after May 14, 2004, the principal of and interest
on all the Securities shall become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. Under
certain circumstances, the Holders of a majority in principal amount of the
outstanding Securities may rescind any such acceleration with respect to the
Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
B-7
15. Trustee Dealings with Holdings
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by Holdings or its Affiliates and may otherwise deal with Holdings or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of Holdings
shall not have any liability for any obligations of Holdings under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Holdings will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________ agent to transfer this Security on the
books of Holdings. The agent may substitute another to act for him.
Date: __________________ Your Signature: _____________________________________
Sign exactly as your name appears on
the other side of this Security
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[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
Principal amount of
Amount of decrease in Amount of increase in this Global Security Signature of authorized
Principal Amount of Principal Amount of following such decrease signatory of Trustee or
Date of Exchange this Global Security this Global Security or increase Securities Custodian
- ---------------- --------------------- --------------------- ----------------------- -----------------------
B-10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by Holdings
pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by
Holdings pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$______________
Date: ____________________ Your Signature: __________________________________
Sign exactly as your name appears
on the other side of this Security
Signature Guarantee: ___________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee
B-11
EXHIBIT C
Form of
Transferee Letter of Representation
ALEC Holdings, Inc.
510 L. Street
Suite 500
Anchorage, Alaska 99501
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ]
principal amount of the Senior Discount Debentures due 2011 (the "Securities")
of ALEC Holdings, Inc. ("Holdings").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:____________________________
Address:_________________________
Taxpayer ID Number:______________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is
C-1
two years after the later of the date of original issue and the last date on
which Holdings or any affiliate of Holdings was the owner of such Securities (or
any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
Holdings, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB")
that is purchasing for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor," in each case in a
minimum principal amount of Securities of $250,000, or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter to
Holdings and the Trustee, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that Holdings and the Trustee
reserve the right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Securities pursuant to clause (d), (e) or
(f) above to require the delivery of an opinion of counsel, certifications or
other information satisfactory to Holdings and the Trustee.
TRANSFEREE: ___________________,
By: _____________________________________
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