EXHIBIT 4.2
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XxXXXXXXX XXXXXXXXXXXX
xxx
XXXXXX XXXXXX TRUST COMPANY OF NEW YORK,
Trustee
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First Supplemental Indenture
Dated as of January 15, 2001
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11 3/8% Senior Notes Due 2009
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TABLE OF CONTENTS
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ARTICLE I.
DESCRIPTION OF THE NOTES
SECTION 1.01 Title of Series.............................................. 2
SECTION 1.02 Limit on Amount of Series.................................... 2
SECTION 1.03 Payment of Principal......................................... 2
SECTION 1.04 Payment of Interest.......................................... 2
SECTION 1.05 Place of Payment, etc........................................ 2
SECTION 1.06 No Redemption at Election of Company......................... 2
SECTION 1.07 No Sinking Fund.............................................. 3
SECTION 1.08 Denominations................................................ 3
SECTION 1.09 Security Registrar; Paying Agent............................. 3
SECTION 1.10 Percentage of Principal at Which Issued...................... 3
SECTION 1.11 Stated Currency.............................................. 3
SECTION 1.12 Indexing of Amounts.......................................... 3
SECTION 1.13 Election of Currency of Payment.............................. 3
SECTION 1.14 Special Rights of Holders of Notes........................... 3
SECTION 1.15 Additional Events of Default and Covenants................... 3
SECTION 1.16 Registered Securities........................................ 3
SECTION 1.17 Persons to Whom Interest is Payable.......................... 3
SECTION 1.18 Defeasance and Covenant Defeasance........................... 4
SECTION 1.19 Definitive Securities........................................ 4
SECTION 1.20 No Debt Warrants............................................. 4
SECTION 1.21 No Additional Amounts........................................ 4
SECTION 1.22 Convertibility............................................... 4
SECTION 1.23 Guarantees................................................... 4
ARTICLE II.
ADDITIONAL DEFINITIONS
Acquired Indebtedness........................................ 5
Affiliate Transaction........................................ 5
Asset Sale................................................... 5
Asset Sale Offer............................................. 5
Asset Sale Payment Date...................................... 5
Asset Sale Purchase Price.................................... 5
Attributable Indebtedness.................................... 5
Average Life................................................. 6
Capital Lease Obligation..................................... 6
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Cash Proceeds................................................ 6
Change of Control............................................ 6
Change of Control Offer...................................... 7
Change of Control Payment Date............................... 7
Change of Control Purchase Price............................. 7
Common Stock................................................. 7
Consolidated Capital Ratio................................... 7
Consolidated Cash Flow Available for Fixed Charges........... 7
Consolidated Income Tax Expense.............................. 7
Consolidated Interest Expense................................ 7
Consolidated Net Income...................................... 8
Consolidated Net Worth....................................... 8
Consolidated Tangible Assets................................. 8
Default Amount............................................... 8
Disqualified Stock........................................... 9
Eligible Cash Equivalents.................................... 9
Excess Proceeds.............................................. 9
Existing Indebtedness........................................ 9
Fair Market Value............................................ 9
Guarantee.................................................... 9
Incur........................................................ 10
Indebtedness................................................. 10
Interest Rate or Currency Protection Agreement............... 11
Investment................................................... 11
Issue Date................................................... 11
Lien......................................................... 11
Maturity..................................................... 11
Xxxxx'x...................................................... 11
Net Cash Proceeds............................................ 12
Permitted Holders............................................ 12
Permitted Interest Rate or Currency Protection Agreement..... 12
Permitted Investments........................................ 13
Permitted Liens.............................................. 13
Preferred Stock.............................................. 14
pro forma.................................................... 15
Purchase Money Indebtedness.................................. 15
Qualified Receivable Facility................................ 15
Qualified Receivable Subsidiary.............................. 15
Qualified Stock.............................................. 15
Receivables.................................................. 15
Restricted Payment........................................... 15
Sale and Leaseback Transaction............................... 16
Senior Credit Facility....................................... 16
Senior Discount Notes........................................ 16
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Standard & Poor's............................................ 16
Subordinated Indebtedness.................................... 16
Surviving Entity............................................. 17
Telecommunications Assets.................................... 17
Telecommunications Business.................................. 17
Wholly-Owned Restricted Subsidiary........................... 17
ARTICLE III.
CONSOLIDATION, MERGER CONVEYANCE, LEASE OR TRANSFER
SECTION 3.01 Merger, Consolidation or Sale of Assets...................... 18
ARTICLE IV.
ADDITIONAL COVENANTS
SECTION 4.01 Default Rate of Interest..................................... 19
SECTION 4.02 [intentionally omitted]...................................... 19
SECTION 4.03 [intentionally omitted]...................................... 19
SECTION 4.04 [intentionally omitted]...................................... 19
SECTION 4.05 [intentionally omitted]...................................... 19
SECTION 4.06 [intentionally omitted]...................................... 19
SECTION 4.07 Repurchase at the Option of Holders upon a Change
of Control................................................. 19
SECTION 4.08 Limitation on Asset Sales.................................... 21
SECTION 4.09 Limitation on Consolidated Indebtedness...................... 24
SECTION 4.10 Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries.................................... 27
SECTION 4.11 Limitation on Restricted Payments............................ 29
SECTION 4.12 Limitation on Liens.......................................... 31
SECTION 4.13 Limitation on Sale and Leaseback Transactions................ 33
SECTION 4.14 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries..................................... 33
SECTION 4.15 Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries.................................... 35
SECTION 4.16 Transactions with Affiliates................................. 35
SECTION 4.17 Restricted and Unrestricted Subsidiaries..................... 36
ARTICLE V.
EVENTS OF DEFAULT
SECTION 5.01 Modification of Section 501(4) of the Indenture.............. 37
SECTION 5.02 Additional Events of Default................................. 38
SECTION 5.03 Modification of Section 502(1) of the Indenture.............. 38
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ARTICLE VI.
MISCELLANEOUS
SECTION 6.01 Effective Date............................................... 39
SECTION 6.02 Successors and Assigns....................................... 39
SECTION 6.03 Separability Clause.......................................... 39
SECTION 6.04 Benefits of First Supplemental Indenture..................... 39
SECTION 6.05 No Personal Liability........................................ 39
SECTION 6.06 Governing Law................................................ 39
SECTION 6.07 Counterparts................................................. 39
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FIRST SUPPLEMENTAL INDENTURE, dated as of January 15, 2001, by and between
McLEODUSA INCORPORATED, a Delaware corporation (hereinafter called the
"Company"), having its principal office at 0000 X Xxxxxx, X.X., Xxxxx Xxxxxx,
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Xxxx 00000 and UNITED STATES TRUST COMPANY OF NEW YORK, a bank and trust company
organized under the New York banking law, as trustee hereunder (hereinafter
called the "Trustee"), currently having its Corporate Trust Office at 000 Xxxx
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00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
RECITALS
The Company and the Trustee have entered into an Indenture, dated as of
January 15, 2001 (the "Indenture"). Capitalized terms used herein, not
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otherwise defined herein, shall have the meanings given them in the Indenture.
There have heretofore been no Securities authenticated and delivered by the
Trustee under the Indenture.
In Section 301 of Article Three of the Indenture it is provided, among
other things, that the Securities may be issued in series, that all Securities
of any one series shall be identical, except as otherwise provided, that the
Securities of each series may differ as to terms and provisions thereof and that
the maximum amount of the Securities issuable of any series may or may not be
limited as the Board of Directors shall determine.
In Section 901 of Article Nine of the Indenture it is provided that, among
other things, the Company and the Trustee, from time to time and at any time,
subject to the restrictions contained in the Indenture, may enter into one or
more Supplemental Indentures, in form satisfactory to the Trustee (which
Supplemental Indenture or Indentures shall thereafter form a part of the
Indenture) for the following purposes among others: to add to the covenants and
agreements of the Company for the protection of Holders of any series of
Securities and to establish the form or terms of Securities of any series.
The Company desires, for its corporate purposes, to create and issue under
and in accordance with the provisions of the Indenture, up to $750,000,000
aggregate principal amount at maturity of Securities to be known as its 11 3/8%
Senior Notes due 2009 (the "Notes") and to enter into this First Supplemental
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Indenture to add to the covenants and agreements of the Company for the
protection of the Holders of the Notes and to establish the form and terms of
the Notes.
The form, terms and provisions of this First Supplemental Indenture and the
execution thereof by the Company have been duly authorized and all things
necessary to make this First Supplemental Indenture a valid agreement of the
Company and the Trustee and a valid amendment of and supplement to the Indenture
and to make the Notes, when authenticated by the Trustee, and delivered, the
valid and binding obligations of the Company, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Notes
issued under the Indenture on or after the date of this First Supplemental
Indenture, as follows:
ARTICLE I.
DESCRIPTION OF THE NOTES
SECTION 1.01 Title of Series. The Company hereby creates a series of its
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senior notes known as the "11 3/8% Senior Notes due 2009," which shall be deemed
"Securities" for all purposes under the Indenture. The definitive form of the
Notes shall be substantially in the form set forth in Exhibit A attached hereto,
which is incorporated herein and made part hereof. The Notes shall bear
interest, be payable and have such other terms as are stated in the form of
definitive Note or in the Indenture, as supplemented by this First Supplemental
Indenture.
SECTION 1.02 Limit on Amount of Series. The maximum aggregate principal
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amount at maturity of the Notes which may be authenticated and delivered under
the Indenture (except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections
304, 305, 306, 906, 1107 or 1305 of the Indenture and except for any Notes which
pursuant to Section 303 of the Indenture are deemed never to have been
authenticated and delivered) is $750,000,000.
SECTION 1.03 Payment of Principal. The principal amount of the Notes
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shall be payable on January 1, 2009, unless earlier redeemed or repurchased
pursuant to the terms of this First Supplemental Indenture and the Notes.
SECTION 1.04 Payment of Interest. Interest on the Notes will be payable
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semi-annually in arrears at the rate of 11.375% per annum on the aggregate
principal amount thereof (on the basis of a 360-day year of twelve 30-day
months) on January 1 and July 1 (the "Interest Payment Dates") of each year,
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commencing July 1, 2001. Interest shall be payable on the Interest Payment
Dates to the persons in whose names the Notes are registered at the close of
business on the preceding December 15 and June 15 respectively (the "Regular
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Record Dates").
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SECTION 1.05 Place of Payment, etc. The principal of, premium, if any,
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and interest on and all other amounts payable with respect to the Notes shall
initially be payable, and the Notes may be surrendered for registration of
transfer, exchange or redemption and notices or demands to or on the Company
with respect to the Notes may be served, at the Corporate Trust Office of the
Trustee.
SECTION 1.06 No Redemption at Election of Company. The Notes shall not
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be redeemable before their Stated Maturity at the election of the Company, and
Article Eleven of the Indenture shall not be applicable to the Notes.
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SECTION 1.07 No Sinking Fund. The Company shall have no obligation to
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redeem, repay or repurchase Notes pursuant to any sinking fund or analogous
provision.
SECTION 1.08 Denominations. The Notes shall be issuable in minimum
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denominations of $1,000 and any integral multiple thereof.
SECTION 1.09 Security Registrar; Paying Agent. The Security Registrar
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and the Paying Agent shall initially be the Trustee.
SECTION 1.10 Percentage of Principal at Which Issued. The Notes will be
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issued at their full principal amount.
SECTION 1.11 Stated Currency. The Notes shall be denominated in United
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States dollars.
SECTION 1.12 Indexing of Amounts. The amount of payments of principal
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of, premium (if any), or interest on or other amounts payable with respect to
the Notes shall not be determined with reference to any index.
SECTION 1.13 Election of Currency of Payment. The principal of, premium
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(if any), or interest on or other amounts payable with respect to the Notes
shall not be payable, whether at the election of the Company or a Holder
thereof, in any currency other than United States dollars.
SECTION 1.14 Special Rights of Holders of Notes. Except as set forth in
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Section 4.07 and Section 4.08 of this First Supplemental Indenture, there are
no other provisions granting special rights to the Holders of the Notes on the
occurrence of any event.
SECTION 1.15 Additional Events of Default and Covenants. Solely for the
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benefit of the Holders of the Notes, additional covenants and Events of Default
are set forth in Articles III, IV and V of this First Supplemental Indenture.
SECTION 1.16 Registered Securities. The Notes shall be issued as
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Registered Securities in global form, which will be deposited with, or on behalf
of, DTC and registered in the name of DTC's nominee and the circumstances under
which any global Note may be transferred to, and registered and exchanged for
Notes registered in the name of a Person other than DTC shall, except as set
forth below, be as set forth in Section 305 of the Indenture. Payment of
principal of, premium, if any, and interest on and other amounts payable with
respect to the Notes will be made to DTC or its nominee.
SECTION 1.17 Persons to Whom Interest is Payable. Interest on the Notes
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will be payable to the Persons in whose name the Notes are registered at the
close of business on the Regular Record Date for such interest.
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SECTION 1.18 Defeasance and Covenant Defeasance. Article Fourteen of the
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Indenture, including, without limitation, Sections 1402 and 1403 thereof, shall
be applicable to the Notes, with the following additional provisions:
(a) In the event of defeasance under Section 1402 of the Indenture,
the provisions of Article Eleven of the Indenture shall not be terminated
with respect to the Notes.
(b) The following covenants shall be additional covenants with
respect to which the Company shall be released from all its obligations
thereunder upon the Company's exercise of its option to have Section 1403
of the Indenture be applicable to the Notes: Section 3.01(c), Section
3.01(d), Section 4.07 through and including Section 4.17 of this First
Supplemental Indenture, and any covenant added to the Indenture with
respect to the Notes subsequent to the Issue Date pursuant to Section 901
of the Indenture.
(c) Upon the Company's exercise of its option to have Section 1403
of the Indenture be applicable to the Notes, the occurrence of any event
specified in Section 501(4) of the Indenture (as amended pursuant to
Section 5.01 of this First Supplemental Indenture) or in Section 5.02(a)
of this First Supplemental Indenture, in each case with respect to any of
Section 3.01(c), Section 3.01(d), Section 4.07 through and including
Section 4.17 of this First Supplemental Indenture, and any covenant added
to the Indenture with respect to the Notes subsequent to the Issue Date
pursuant to Section 901 of the Indenture, shall be deemed not to be or
result in an Event of Default.
SECTION 1.19 Definitive Securities. Notes are issuable in definitive
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form only in accordance with Section 304 of the Indenture.
SECTION 1.20 No Debt Warrants. The Notes are not issuable, and will not
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be issued, upon the exercise of debt warrants.
SECTION 1.21 No Additional Amounts. The Company will not pay any
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Additional Amounts on the Notes, and Section 1009 of the Indenture shall not be
applicable to the Notes.
SECTION 1.22 Convertibility. The Notes will not be convertible into any
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Capital Stock of the Company or other debt securities of the Company.
SECTION 1.23 Guarantees. The Notes will not be guaranteed by any of the
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Subsidiaries of the Company or by any other Person.
ARTICLE II.
ADDITIONAL DEFINITIONS
Solely for the benefit of the Holders of the Notes and so long as any of
the Notes are Outstanding, the following definitions shall be applicable to the
Notes, be included as defined terms
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for all purposes under the Indenture with respect to the Notes and, to the
extent inconsistent with the definition of any such term contained in Section
101 of the Indenture, shall replace such definition for purposes of the Notes:
"Acquired Indebtedness" means, with respect to any specified Person,
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Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person; provided that such
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Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, but excluding Indebtedness which is
extinguished, retired or repaid in connection with such other Person merging
with or into or becoming a Subsidiary of such specified Person.
"Affiliate Transaction" has the meaning set forth in Section 4.16 hereof.
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"Asset Sale" by any Person means any transfer, conveyance, sale, lease or
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other disposition by such Person or any of its Restricted Subsidiaries
(including a consolidation or merger or other sale of any such Restricted
Subsidiary with, into or to another Person in a transaction in which such
Restricted Subsidiary ceases to be a Restricted Subsidiary of the specified
Person, but excluding a disposition by a Restricted Subsidiary of such Person to
such Person or a Wholly-Owned Restricted Subsidiary of such Person or by such
Person to a Wholly-Owned Restricted Subsidiary of such Person) of (i) shares of
Capital Stock or other ownership interests of a Restricted Subsidiary of such
Person (other than as permitted by the provisions of Section 4.10 hereof), (ii)
substantially all of the assets of such Person or any of its Restricted
Subsidiaries representing a division or line of business (other than as part of
a Permitted Investment) or (iii) other assets or rights of such Person or any of
its Restricted Subsidiaries outside of the ordinary course of business and, in
each case, that is not governed by Article V hereof; provided that "Asset Sale"
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shall not include (i) sales or other dispositions of inventory, receivables and
other current assets in the ordinary course of business, (ii) simultaneous
exchanges by the Company or any Restricted Subsidiary of Telecommunications
Assets for other Telecommunications Assets in the ordinary course of business;
provided that the applicable Telecommunications Assets received by the Company
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or such Restricted Subsidiary have at least substantially equal Fair Market
Value to the Company or such Restricted Subsidiary (as determined by the Board
of Directors whose good faith determination shall be conclusive and evidenced by
a Board Resolution), and (iii) sales or other dispositions of assets with a
Fair Market Value (as certified in a Company Certificate) not in excess of
$5 million.
"Asset Sale Offer" has the meaning set forth in Section 4.08(c) hereof.
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"Asset Sale Payment Date" has the meaning set forth in Section 4.08(d)(ii)
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hereof.
"Asset Sale Purchase Price" has the meaning set forth in Section 4.08(c)
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hereof.
"Attributable Indebtedness" means, with respect to any Sale and Leaseback
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Transaction of any Person, as at the time of determination, the greater of
(i) the capitalized amount in respect of such transaction that would appear on
the balance sheet of such Person in accordance with GAAP
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and (ii) the present value (discounted at a rate consistent with accounting
guidelines, as determined in good faith by the responsible accounting officer of
such Person) of the payments during the remaining term of the lease (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty).
"Average Life" means, as of any date, with respect to any debt security or
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Disqualified Stock, the quotient obtained by dividing (i) the sum of the
products of (x) the number of years from such date to the dates of each
scheduled principal payment or redemption payment (including any sinking fund or
mandatory redemption payment requirements) of such debt security or Disqualified
Stock multiplied in each case by (y) the amount of such principal or redemption
payment, by (ii) the sum of all such principal or redemption payments.
"Capital Lease Obligation" of any Person means the obligation to pay rent
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or other payment amounts under a lease of (or other Indebtedness arrangement
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person prepared in accordance with GAAP, and
the stated maturity thereof shall be the date of the last payment of rent or any
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash Proceeds" means, with respect to any Asset Sale or issuance or sale
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of Capital Stock by any Person, the aggregate consideration received in respect
of such sale or issuance by such Person in the form of cash and Eligible Cash
Equivalents.
"Change of Control" shall be deemed to occur if (i) the sale, conveyance,
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transfer or lease of all or substantially all of the assets of the Company to
any "Person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of
the Exchange Act or any successor provision to either of the foregoing,
including any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(i) under the Exchange Act), other
than any Permitted Holder or any Restricted Subsidiary of the Company, shall
have occurred; or (ii) any "Person" or "group" (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to either
of the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(i) under
the Exchange Act), other than any Permitted Holder, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 35 percent
of the total voting power of all classes of the Voting Stock of the Company
(including any warrants, options or rights to acquire such Voting Stock),
calculated on a fully diluted basis, and such voting power percentage is greater
than or equal to the total voting power percentage then beneficially owned by
the Permitted Holders in the aggregate; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors (together with any directors whose election or
appointment by the Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
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such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.
"Change of Control Offer" has the meaning set forth in Section 4.07(a)
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hereof.
"Change of Control Payment Date" has the meaning set forth in Section
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4.07(b)(ii) hereof.
"Change of Control Purchase Price" has the meaning set forth in Section
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4.07(a) hereof.
"Common Stock" means Capital Stock other than Preferred Stock.
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"Consolidated Capital Ratio" of any Person as of any date means the ratio
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of (i) the aggregate consolidated principal amount of Indebtedness of such
Person then outstanding to (ii) the aggregate consolidated paid-in capital of
such Person as of such date.
"Consolidated Cash Flow Available for Fixed Charges" for any period means
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the Consolidated Net Income of the Company and its Restricted Subsidiaries for
such period increased by the sum of (i) Consolidated Interest Expense of the
Company and its Restricted Subsidiaries for such period, plus (ii) Consolidated
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Income Tax Expense of the Company and its Restricted Subsidiaries for such
period, plus (iii) the consolidated depreciation and amortization expense
----
included in the income statement of the Company and its Restricted Subsidiaries
for such period, plus (iv) any non-cash expense related to the issuance to
----
employees of the Company or any Restricted Subsidiary of the Company of options
to purchase Capital Stock of the Company or such Restricted Subsidiary, plus (v)
----
any charge related to any premium or penalty paid in connection with redeeming
or retiring any Indebtedness prior to its stated maturity; and plus (vi) any
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non-cash expense related to a purchase accounting adjustment not requiring an
accrual or reserve and separately disclosed in the Company's Consolidated Income
Statement, and decreased by the amount of any non-cash item that increases such
Consolidated Net Income, all as determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded therefrom the Consolidated Cash
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Flow Available for Fixed Charges (if positive) of any Restricted Subsidiary of
the Company (calculated separately for such Restricted Subsidiary in the same
manner as provided above for the Company) that is subject to a restriction which
prevents the payment of dividends or the making of distributions to the Company
or another Restricted Subsidiary of the Company to the extent of such
restriction.
"Consolidated Income Tax Expense" for any period means the aggregate
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amounts of the provisions for income taxes of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means for any period the interest expense
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included in a consolidated income statement (excluding interest income) of the
Company and its Restricted Subsidiaries for such period in accordance with GAAP,
including without limitation or duplication (or, to the extent not so included,
with the addition of), (i) the amortization of Indebtedness discount; (ii) any
payments or fees with respect to letters of credit, bankers' acceptances or
similar facilities;
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(iii) fees with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements; (iv) Preferred Stock dividends
of the Company and its Restricted Subsidiaries (other than dividends paid in
shares of Preferred Stock that is not Disqualified Stock) declared and paid or
payable; (v) accrued Disqualified Stock dividends of the Company and its
Restricted Subsidiaries, whether or not declared or paid; (vi) interest on
Indebtedness guaranteed by the Company and its Restricted Subsidiaries; and
(vii) the portion of any Capital Lease Obligation paid during such period that
is allocable to interest expense in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any period, the
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aggregate net income (or net loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis determined in accordance
with GAAP; provided that there shall be excluded therefrom, without duplication
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(i) all items classified as extraordinary, (ii) any net income (or net loss) of
any Person other than such Person and its Restricted Subsidiaries, except to the
extent of the amount of dividends or other distributions actually paid to such
Person or its Restricted Subsidiaries by such other Person during such period,
(iii) the net income of any Person acquired by such Person or any of its
Restricted Subsidiaries in a pooling-of-interests transaction for any period
prior to the date of the related acquisition, (iv) any gain or loss, net of
taxes, realized on the termination of any employee pension benefit plan, (v) net
gains (or net losses) in respect of Asset Sales by such Person or its Restricted
Subsidiaries, (vi) the net income (or net loss) of any Restricted Subsidiary of
such Person to the extent that the payment of dividends or other distributions
to such Person is restricted by the terms of its charter or any agreement,
instrument, contract, judgment, order, decree, statute, rule, governmental
regulation or otherwise, except that such Person's equity in the net income of
any such Restricted Subsidiary for such period may be included in such
Consolidated Net Income up to the aggregate amount of cash that could, after
giving effect to the operation of such restriction, have been distributed by
such Restricted Subsidiary during such period to such Person as a dividend,
(vii) with regard to a non-wholly owned Restricted Subsidiary, any aggregate net
income (or loss) in excess of such Person's or such Restricted Subsidiary's pro
rata share of such non-wholly owned Restricted Subsidiary's net income (or loss)
and (viii) the cumulative effect of changes in accounting principles.
"Consolidated Net Worth" of any Person means, at any date of
----------------------
determination, the consolidated stockholders' equity or partners' capital
(excluding Disqualified Stock) of such Person and its subsidiaries, as
determined in accordance with GAAP.
"Consolidated Tangible Assets" of any Person means the total amount of
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assets (less applicable reserves and other properly deductible items) which
under GAAP would be included on a consolidated balance sheet of such Person and
its Subsidiaries after deducting therefrom all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, which in each case under GAAP would be included on such
consolidated balance sheet.
"Default Amount" means an amount equal to one hundred percent (100%) of
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the originally issued principal amount of the Notes.
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"Disqualified Stock" means any Capital Stock which, by its terms (or by
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the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the Stated
Maturity of the Notes.
"Eligible Cash Equivalents" means (i) securities issued or directly and
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fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof, provided that the full faith and credit of the United
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States of America is pledged in support thereof; (ii) time deposits and
certificates of deposit of any commercial bank organized in the United States
having capital and surplus in excess of $500,000,000 with a maturity date not
more than one year from the date of acquisition; (iii) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above; (iv) direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing, or subject to tender
at the option of the holder thereof within one year after the date of
acquisition thereof and, at the time of acquisition, having a rating of A or
better from Standard & Poor's or A-2 or better from Moody's; (v) commercial
paper issued by the parent corporation of any commercial bank organized in the
United States having capital and surplus in excess of $500,000,000 and
commercial paper issued by others having one of the two highest ratings
obtainable from either Standard & Poor's or Moody's and in each case maturing
within one year after the date of acquisition; (vi) overnight bank deposits and
bankers' acceptances at any commercial bank organized in the United States
having capital and surplus in excess of $500,000,000; (vii) deposits available
for withdrawal on demand with a commercial bank organized in the United States
having capital and surplus in excess of $500,000,000; and (viii) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (i) through (vi).
"Excess Proceeds" has the meaning set forth in Section 4.08(b) hereof.
---------------
"Existing Indebtedness" means Indebtedness outstanding on the date of this
---------------------
First Supplemental Indenture (other than under any Senior Credit Facility).
"Fair Market Value" means, with respect to any asset or Property, the sale
-----------------
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy, as determined in good faith by the Board of
Directors.
"Guarantee" means any direct or indirect obligation, contingent or
---------
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner. The terms
"Guaranteed," "Guaranteeing" and "Guarantor" shall have correlative meanings.
9
"Incur" means, with respect to any Indebtedness or other obligation of any
-----
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Indebtedness or other
obligation including by acquisition of Subsidiaries or the recording, as
required pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such Person (and "Incurrence," "Incurred,"
"Incurrable" and "Incurring" shall have meanings correlative to the foregoing);
provided that a change in GAAP that results in an obligation of such Person that
--------
exists at such time becoming Indebtedness shall not be deemed an Incurrence of
such Indebtedness and that neither the accrual of interest nor the accretion of
original issue discount shall be deemed an Incurrence of Indebtedness.
Indebtedness otherwise incurred by a Person before it becomes a Subsidiary of
the Company (whether by merger, consolidation, acquisition or otherwise) shall
be deemed to have been incurred at the time at which such Person becomes a
Subsidiary of the Company.
"Indebtedness" means, at any time (without duplication), with respect to
------------
any Person, whether recourse as to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, Guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with the acquisition of
Property, assets or businesses, excluding trade accounts payable made in the
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business, which in either case are not more than 60 days overdue or which are
being contested in good faith), (v) any Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person and, to the extent held by Persons other than such Person or its
Restricted Subsidiaries, the maximum fixed redemption or repurchase price of
Disqualified Stock of such Person's Restricted Subsidiaries, at the time of
determination, (vii) every obligation under Interest Rate and Currency
Protection Agreements of such Person, (viii) any Attributable Indebtedness with
respect to any Sale and Leaseback Transaction to which such Person is a party
and (ix) any obligation of the type referred to in clauses (i) through (viii) of
this definition of another Person and all dividends and distributions of another
Person the payment of which, in either case, such Person has Guaranteed or is
responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise. For purposes of the preceding sentence, the maximum fixed repurchase
price of any Disqualified Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Stock as
if such Disqualified Stock were repurchased on any date on which Indebtedness
shall be required to be determined pursuant to this First Supplemental
Indenture; provided that, if such Disqualified Stock is not then permitted to be
--------
repurchased, the repurchase price shall be the book value of such Disqualified
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided that
--------
the amount outstanding at any time of any Indebtedness issued with original
issue discount (including, without limitation, the Senior Discount Notes) is the
10
face amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.
"Interest Rate or Currency Protection Agreement" of any Person means any
----------------------------------------------
forward contract, futures contract, swap, option, future option or other
financial agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreements) relating to, or the value of which is dependent
upon, interest rates or currency exchange rates or indices.
"Investment" in any Person means any direct, indirect or contingent (i)
----------
advance or loan to, Guarantee of any Indebtedness of, extension of credit or
capital contribution to such Person, (ii) the acquisition of any shares of
Capital Stock, bonds, notes, debentures or other securities of such Person, or
(iii) the acquisition, by purchase or otherwise, of all or substantially all of
the business, assets or stock or other evidence of beneficial ownership of such
Person; provided that Investments shall exclude commercially reasonable
--------
extensions of trade credit. The amount of any Investment shall be the original
cost of such Investment, plus the cost of all additions thereto and minus the
---- -----
amount of any portion of such Investment repaid to such Person in cash as a
repayment of principal or a return of capital, as the case may be, but without
any other adjustments for increases or decreases in value, or write-ups, write-
downs or write-offs with respect to such Investment. In determining the amount
of any Investment involving a transfer of any Property other than cash, such
Property or asset shall be valued at its Fair Market Value at the time of such
transfer.
"Issue Date" means the date on which the Notes are first authenticated and
----------
delivered under this First Supplemental Indenture.
"Lien" means, with respect to any Property or other asset, any mortgage or
----
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien (statutory or other), charge, easement, encumbrance, preference,
priority or other security or similar agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such Property or other asset
(including, without limitation, any conditional sale or title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Maturity" means, when used with respect to a Note, the date on which the
--------
principal of such Note becomes due and payable as provided therein or in the
Indenture or this First Supplemental Indenture, whether on the date specified in
such Note as the fixed date on which the principal of such Note is due and
payable, on a Change of Control Payment Date or an Asset Sale Payment Date, or
by declaration of acceleration, call for redemption or otherwise.
"Moody's" means Xxxxx'x Investors Service, Inc., or, if Xxxxx'x Investors
-------
Service, Inc. shall cease rating the specified debt securities and such ratings
business with respect thereto shall have been transferred to a successor Person,
such successor Person; provided that if Xxxxx'x Investors Service, Inc. ceases
--------
rating the specified debt securities and its ratings business with respect
thereto shall not have been transferred to any successor Person or such
successor Person is Standard & Poor's, then "Moody's" shall mean any other
nationally recognized rating agency (other than
11
Standard & Poor's) that rates the specified debt securities and that shall have
been designated by the Company in a Company Certificate.
"Net Cash Proceeds" means, with respect to the sale of any Property or
-----------------
assets by any Person or any of its Restricted Subsidiaries, Cash Proceeds
received net of (i) all reasonable out-of-pocket expenses of such Person or such
Restricted Subsidiary incurred in connection with such sale, including, without
limitation, all legal, title and recording tax expenses, commissions and other
fees and expenses incurred (but excluding any finder's fee or broker's fee
payable to any Affiliate of such Person) and all federal, state, foreign and
local taxes arising in connection with such sale that are paid or required to be
accrued as a liability under GAAP by such Person or its Restricted Subsidiaries;
(ii) all payments made or required to be made by such Person or its Restricted
Subsidiaries on any Indebtedness which is secured by such Properties or other
assets in accordance with the terms of any Lien upon or with respect to such
Properties or other assets or which must, by the terms of such Lien, or in order
to obtain a necessary consent to such transaction or by applicable law, be
repaid in connection with such sale; (iii) all contractually required
distributions and other payments made to minority interest holders (but
excluding distributions and payments to Affiliates of such Person) in
Restricted Subsidiaries of such Person as a result of such transaction; and
(iv) appropriate amounts to be provided by such Person or any Restricted
Subsidiary thereof, as the case may be, as a reserve in accordance with GAAP
against any liabilities associated with such assets and retained by such Person
or any Restricted Subsidiary thereof, as the case may be, after such
transaction, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such transaction, in each case as determined by the Board of
Directors of such Person, in its reasonable good faith judgment evidenced by a
resolution of the Board of Directors filed with the Trustee; provided that, in
--------
the event that any consideration for a transaction (which would otherwise
constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow; and provided, further, that any non-cash consideration received in
-------- -------
connection with any transaction, which is subsequently converted to cash, shall
be deemed to be Net Cash Proceeds at such time, and shall thereafter be applied
in accordance with the applicable provisions of this Indenture.
"Permitted Holders" means Alliant Energy Corp., Media/Communications
-----------------
Partners III Limited Partnership and Forstmann Little & Co. and their
respective successors and assigns, and Xxxxx X. XxXxxx, Xxxx X. XxXxxx, Xxxxxxx
X. Xxxxxxx and Xxxx Xx and foundations and trusts controlled by any of them, and
Affiliates (other than the Company and the Restricted Subsidiaries) of each of
the foregoing.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
--------------------------------------------------------
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Indebtedness Incurred and which shall
have a notional amount no greater than the payments due with respect to the
Indebtedness being hedged thereby and not for purposes of speculation.
12
"Permitted Investments" means:
---------------------
(1) Eligible Cash Equivalents;
(2) Investments in Property used in the ordinary course of business;
(3) Investments in any Person as a result of which such Person
becomes a Restricted Subsidiary in compliance with Section 4.17 hereof;
(4) Investments pursuant to agreements or obligations of the Company
or a Restricted Subsidiary, in effect on the Issue Date, to make such
Investments;
(5) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers' compensation, performance and
other similar deposits;
(6) Permitted Interest Rate or Currency Protection Agreements with
respect to any floating rate Indebtedness that is permitted under Section
4.09 or Section 4.10 hereof to be outstanding;
(7) bonds, notes, debentures or other debt securities received as a
result of Asset Sales permitted under Section 4.08 hereof;
(8) Investments in existence at the Issue Date;
(9) commission, payroll, travel and similar advances to employees in
the ordinary course of business to cover matters that are expected at the
time of such advances ultimately to be treated as expenses in accordance
with GAAP;
(10) stock, obligations or securities received in satisfaction of
judgments; and
(11) Investments made pursuant to any deferred-compensation plan,
including any Investments made through a trust (including a grantor trust)
established in connection with any such plan, for the benefit of employees
of the Company or of any Restricted Subsidiary.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
---------------
charges or claims which are not yet delinquent or which are being contested in
good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (ii) other Liens incidental to the conduct of the Company's and
its Restricted Subsidiaries' business or the ownership of its property and
assets not securing any Indebtedness, and which do not in the aggregate
materially detract from the value of the Company's and its Restricted
Subsidiaries' property or assets when taken as a whole, or materially impair the
use thereof in the operation of its business; (iii) Liens with respect to assets
of a Restricted Subsidiary granted by such Restricted Subsidiary to the Company
to secure Indebtedness owing to the Company; (iv) pledges and deposits made in
the ordinary course of business in connection with
13
workers' compensation and unemployment insurance, statutory Liens of landlords,
carriers, warehousemen, mechanics, materialmen, repairmen and other types of
statutory obligations; (v) deposits made to secure the performance of tenders,
bids, leases, and other obligations of like nature incurred in the ordinary
course of business (exclusive of obligations for the payment of borrowed money);
(vi) zoning restrictions, servitudes, easements, rights-of-way, restrictions and
other similar charges or encumbrances incurred in the ordinary course of
business which, in the aggregate, do not materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of the
business of the Company or its Restricted Subsidiaries; (vii) Liens arising out
of judgments or awards against the Company or any Restricted Subsidiary with
respect to which the Company or such Restricted Subsidiary is prosecuting an
appeal or proceeding for review and the Company or such Restricted Subsidiary is
maintaining adequate reserves in accordance with GAAP; (viii) any interest or
title of a lessor in the property subject to any lease other than a Capital
Lease; (ix) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Issue Date; provided that (a) such Lien is
--------
created solely for the purpose of securing Indebtedness Incurred, in accordance
with Section 4.09 hereof, (1) to finance the cost (including the cost of
improvement or construction) of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the commencement of
full operation of such property or (2) to refinance any Indebtedness previously
so secured, (b) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of such cost and (c) any such Lien shall not extend to or
cover any property or assets other than such item of property or assets and any
improvements on such item; (x) leases or subleases granted to others that do not
materially interfere with the ordinary course of business of the Company and its
Restricted Subsidiaries; (xi) Liens encumbering property or assets under
construction arising from progress or partial payments by a customer of the
Company or its Restricted Subsidiaries relating to such property or assets;
(xii) Liens arising from filing precautionary Uniform Commercial Code financing
statements regarding leases; (xiii) Liens on property of, or on shares of stock
or Indebtedness of, any corporation existing at the time such corporation
becomes, or becomes a part of, any Restricted Subsidiary; provided that such
--------
Liens do not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets acquired; (xiv) Liens in
favor of the Company or any Restricted Subsidiary; (xv) Liens securing
reimbursement obligations with respect to letters of credit that encumber
documents and other property relating to such letters of credit and the products
and proceeds thereof; (xvi) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (xvii) Liens encumbering customary initial
deposits and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Permitted Interest Rate
Agreements and Currency Agreements; and (xviii) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business in accordance with the past practices of the Company
and its Restricted Subsidiaries prior to the Issue Date.
"Preferred Stock" of any Person means Capital Stock of such Person of any
---------------
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of
14
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"pro forma" means, with respect to any calculation made or required to be
---------
made pursuant to the terms hereof, a calculation in accordance with Article 11
of Regulation S-X promulgated under the Securities Act (to the extent
applicable), as interpreted in good faith by the Board of Directors, or
otherwise, a calculation made in good faith by the Board of Directors, as the
case may be.
"Purchase Money Indebtedness" means Indebtedness of the Company (including
---------------------------
Acquired Indebtedness and Capital Lease Obligations, mortgage financings and
purchase money obligations) incurred for the purpose of financing all or any
part of the cost of construction, acquisition, development or improvement by the
Company or any Restricted Subsidiary of any Telecommunications Assets of the
Company or any Restricted Subsidiary and including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
connection therewith, as the same may be amended, supplemented, modified or
restated from time to time.
"Qualified Receivable Facility" means Indebtedness of the Company or any
-----------------------------
Subsidiary Incurred from time to time pursuant to either (x) credit facilities
secured by Receivables or (y) receivable purchase facilities, and including any
related notes, Guarantees, collateral documents, instruments and agreements
executed in connection therewith, as the same may be amended, supplemented,
modified or restated from time to time.
"Qualified Receivable Subsidiary" means a Restricted Subsidiary formed
-------------------------------
solely for the purpose of obtaining a Qualified Receivable Facility and
substantially all of the Property of which is Receivables.
"Qualified Stock" of any Person means a class of Capital Stock other than
---------------
Disqualified Stock.
"Receivables" means receivables, chattel paper, instruments, documents or
-----------
intangibles evidencing or relating to the right to payment of money and proceeds
and products thereof in each case generated in the ordinary course of business.
"Restricted Payment" means (i) a dividend or other distribution declared
------------------
or paid on the Capital Stock of the Company or to the Company's stockholders (in
their capacity as such), or declared or paid to any Person other than the
Company or a Restricted Subsidiary of the Company on the Capital Stock of any
Restricted Subsidiary, in each case, other than dividends, distributions or
payments made solely in Qualified Stock of the Company or such Restricted
Subsidiary, (ii) a payment made by the Company or any of its Restricted
Subsidiaries (other than to the Company or any Restricted Subsidiary) to
purchase, redeem, acquire or retire any Capital Stock of the Company or of a
Restricted Subsidiary, (iii) a payment made by the Company or any of its
Restricted Subsidiaries (other than a payment made solely in Qualified Stock of
the Company) to redeem, repurchase, defease (including an in-substance or legal
defeasance) or otherwise acquire or retire for value (including pursuant to
mandatory repurchase covenants), prior to any scheduled maturity,
15
scheduled sinking fund or mandatory redemption payment, Indebtedness of the
Company or such Restricted Subsidiary which is subordinate (whether pursuant to
its terms or by operation of law) in right of payment to the Notes and which was
scheduled to mature on or after the maturity of the Notes or (iv) an Investment
in any Person, including an Unrestricted Subsidiary or the designation of a
Subsidiary as an Unrestricted Subsidiary, other than (a) a Permitted Investment,
(b) an Investment by the Company in a Wholly-Owned Restricted Subsidiary of the
Company or (c) an Investment by a Restricted Subsidiary in the Company or a
Wholly-Owned Restricted Subsidiary of the Company.
"Sale and Leaseback Transaction" means, with respect to any Person, any
------------------------------
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.
"Senior Credit Facility" means Indebtedness of the Company and its
----------------------
Subsidiaries Incurred from time to time pursuant to one or more credit
agreements or similar facilities made available from time to time to the Company
and its Subsidiaries, whether or not secured, and including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
connection therewith, as the same may be amended, supplemented, modified or
restated from time to time.
"Senior Discount Notes" means the Company's 10 1/2% Senior Discount Notes
---------------------
due March 1, 2007.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of
-----------------
McGraw Hill Corporation, or, if Standard & Poor's Ratings Group shall cease
rating the specified debt securities and such ratings business with respect
thereto shall have been transferred to a successor Person, such successor
Person; provided that if Standard & Poor's Ratings Group ceases rating the
--------
specified debt securities and its ratings business with respect thereto shall
not have been transferred to any successor Person or such successor Person is
Moody's, then "Standard & Poor's" shall mean any other nationally recognized
rating agency (other than Moody's) that rates the specified debt securities and
that shall have been designated by the Company in an a Company Certificate.
"Subordinated Indebtedness" means Indebtedness of the Company as to which
-------------------------
the payment of principal of (and premium, if any) and interest and other payment
obligations in respect of such Indebtedness shall be subordinate to the prior
payment in full of the Notes to at least the following extent: (i) no payments
of principal of (or premium, if any) or interest on or otherwise due in respect
of such Indebtedness may be permitted for so long as any default in the payment
of principal (or premium, if any) or interest on the Notes exists; (ii) in the
event that any other default that with the passing of time or the giving of
notice, or both, would constitute an event of default exists with respect to the
Notes, upon notice by 25% or more in principal amount of the Notes to the
Trustee, the Trustee shall give notice to the Company and the holders of such
Indebtedness (or trustees or agents therefor) of a payment blockage, and
thereafter no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Indebtedness may be made for a period of
179 days from the date of such notice; and (iii) such Indebtedness may not
(x) provide for payments of
16
principal of such Indebtedness at the stated maturity thereof or by way of a
sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof by the Company (including any
redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of acceleration
of such Indebtedness upon an event of default thereunder), in each case prior to
the final Stated Maturity of the Notes or (y) permit redemption or other
retirement (including pursuant to an offer to purchase made by the Company) of
such other Indebtedness at the option of the holder thereof prior to the final
Stated Maturity of the Notes, other than a redemption or other retirement at the
option of the holder of such Indebtedness (including pursuant to an offer to
purchase made by the Company) which is conditioned upon a change of control of
the Company pursuant to provisions substantially similar to those contained in
Section 4.07 hereof (and which shall provide that such Indebtedness will not be
repurchased pursuant to such provisions prior to the Company's repurchase of the
Notes required to be repurchased by the Company pursuant to Section 4.07
hereof).
"Surviving Entity" has the meaning set forth in Section 3.01(a) hereof.
----------------
"Telecommunications Assets" means all assets, rights (contractual or
-------------------------
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business.
"Telecommunications Business" means the business of (i) transmitting, or
---------------------------
providing services relating to the transmission of, voice, video or data through
owned or leased wireline or wireless transmission facilities, (ii) creating,
developing, constructing, installing, repairing, maintaining or marketing
communications-related systems, network equipment and facilities, software and
other products, (iii) creating, developing, producing or marketing audiotext or
videotext, (iv) publishing or distributing telephone (including Internet)
directories, whether in paper, electronic, audio or video format, (v) marketing
(including direct marketing and telemarketing), or (vi) evaluating,
participating in or pursuing any other business that is primarily related to
those identified in the foregoing clauses (i), (ii), (iii), (iv) or (v) above
(in the case of clauses (iii), (iv) and (v), however, in a manner consistent
with the Company's manner of business on the Issue Date), and shall, in any
event, include all businesses in which the Company or any of its Subsidiaries
are engaged on the Issue Date; provided that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors.
"Wholly-Owned Restricted Subsidiary" of any Person means a Subsidiary of
----------------------------------
such Person all of the outstanding Capital Stock or other ownership interests
(other than director's qualifying shares) of which shall at the time be owned by
such Person or by one or more other Wholly-Owned Restricted Subsidiaries of such
Person or by such Person and one or more other Wholly-Owned Restricted
Subsidiaries of such Person.
17
ARTICLE III.
CONSOLIDATION, MERGER CONVEYANCE, LEASE OR TRANSFER
Solely for the benefit of the Holders of the Notes and so long as any of
the Notes are Outstanding, the provisions of Section 3.01 hereof shall be
applicable to the Notes instead of the provisions of Section 801 of the
Indenture, and all references in the Indenture to Section 801 thereof shall be
deemed to refer to Section 3.01 hereof, and all references in the Indenture to
Article Eight thereof shall be deemed to include Section 3.01 hereof:
SECTION 3.01 Merger, Consolidation or Sale of Assets. The Company shall
---------------------------------------
not in any transaction or series of related transactions, consolidate with, or
merge with or into, any other Person or permit any other Person to merge with or
into the Company (other than a merger of a Restricted Subsidiary of the Company
into the Company in which the Company is the continuing corporation), or sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially all
of the Property and assets of the Company and its Restricted Subsidiaries taken
as a whole to any other Person, unless:
(a) either (i) the Company shall be the continuing corporation or (ii)
the corporation (if other than the Company) formed by such consolidation or
into which the Company is merged, or the Person which acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the Property and assets of the Company and its
Restricted Subsidiaries taken as a whole (any such corporation or Person
being the "Surviving Entity") shall be a corporation organized and validly
existing under the laws of the United States of America, any political
subdivision thereof, any state thereof or the District of Columbia, and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form reasonably satisfactory to the Trustee,
the due and punctual payment of the principal of (and premium, if any) and
interest on all the Notes and the performance of every covenant and
obligation in the Indenture and in this First Supplemental Indenture on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction or series of
related transactions on a pro forma basis (including, without limitation,
any Indebtedness incurred or anticipated to be incurred in connection with
or in respect of such transaction or series of related transactions), no
Default or Event of Default shall have occurred and be continuing;
(c) immediately after giving effect to such transaction or series of
related transactions on a pro forma basis (including, without limitation,
any Indebtedness incurred or anticipated to be incurred in connection with
or in respect of such transaction or series of transactions), the Company
(or the Surviving Entity, if the Company is not continuing) would (A) be
permitted to Incur $1.00 of additional Indebtedness under Section 4.09(a)
hereof and (B) have a Consolidated Net Worth that is not less than the
Consolidated Net Worth of the Company immediately before such transaction
or series of transactions; and
18
(d) if, as a result of any such transaction, Property of the Company
would become subject to a Lien prohibited by the provisions of this First
Supplemental Indenture described under Section 4.12 hereof, the Company or
the successor entity to the Company shall have secured the Notes as
required thereby.
ARTICLE IV.
ADDITIONAL COVENANTS
Solely for the benefit of the Holders of the Notes and so long as any of
the Notes are Outstanding, the following covenants and agreements shall, in
addition to the covenants and agreements contained in Article Ten of the
Indenture, be applicable to the Notes, and all references in the Indenture to
Article Ten thereof shall be deemed to include Article IV hereof:
SECTION 4.01 Default Rate of Interest. To the extent lawful, the Company
------------------------
shall pay interest on (i) any overdue principal of (and premium, if any, on) the
Notes, at the interest rate borne on the Notes, plus 1% per annum, and (ii)
Defaulted Interest (without regard to any applicable grace period), at the same
rate. The Company's obligation pursuant to the previous sentence shall apply
whether such overdue amount is due at its Stated Maturity, as a result of the
Company's obligations pursuant to Section 4.07 or Section 4.08 hereof, or
otherwise.
SECTION 4.02 [intentionally omitted]
SECTION 4.03 [intentionally omitted]
SECTION 4.04 [intentionally omitted]
SECTION 4.05 [intentionally omitted]
SECTION 4.06 [intentionally omitted]
SECTION 4.07 Repurchase at the Option of Holders upon a Change of
----------------------------------------------------
Control. (a) Upon the occurrence of a Change of Control, each Holder shall
-------
have the right to require the Company to purchase such Holder's Notes, in whole
or in part, in a principal amount that is an integral multiple of $1,000,
pursuant to the offer described in Section 4.07(b) hereof (the "Change of
Control Offer"), at a purchase price (the "Change of Control Purchase Price") in
cash equal to 101 percent of the principal amount of such Notes (or portions
thereof), plus accrued and unpaid interest, if any, to the Change of Control
Payment Date.
(b) Within 30 calendar days of the date of any Change of Control, the
Company, or the Trustee at the request and expense of the Company, shall send to
each Holder by first class mail, postage prepaid, a notice prepared by the
Company stating:
19
(i) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to this Section 4.07, and that all Notes that
are timely tendered will be accepted for payment;
(ii) the Change of Control Purchase Price, and the date Notes are to
be purchased pursuant to the Change of Control Offer (the "Change of
Control Payment Date"), which date shall be a date occurring no earlier
than 30 calendar days nor later than 60 calendar days subsequent to the
date such notice is mailed;
(iii) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change
of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest from and after the Change of Control Payment Date;
(v) that any Holder electing to have any Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to
surrender such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of such Notes completed, to the Paying Agent at
the address specified in the notice, prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;
(vi) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter, setting forth the name
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have
such Notes or portions thereof purchased pursuant to the Change of Control
Offer;
(vii) that any Holder electing to have Notes purchased pursuant to
the Change of Control Offer must specify the principal amount that is being
tendered for purchase, which principal amount must be $1,000 or an integral
multiple thereof;
(viii) that any Holder whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Note or Notes surrendered, which unpurchased portion will be
equal in principal amount to $1,000 or an integral multiple thereof; and
(ix) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to this Section 4.07.
(c) On the Change of Control Payment Date, the Company shall (i) accept
for payment any Notes or portions thereof properly tendered pursuant to the
Change of Control Offer;
20
(ii) irrevocably deposit with the Paying Agent, by 10:00 a.m., New York City
time, on such date, in immediately available funds, an amount equal to the
Change of Control Purchase Price in respect of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee the Notes
so accepted together with a Company Certificate listing the Notes or portions
thereof tendered to the Company and accepted for payment. The Paying Agent shall
promptly send by first class mail, postage prepaid, to each Holder of Notes or
portions thereof so accepted for payment, payment in an amount equal to the
Change of Control Purchase Price for such Notes or portions thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
(d) Upon surrender and cancellation of a Note that is purchased in part
pursuant to a Change of Control Offer, the Company shall promptly issue and the
Trustee shall authenticate and deliver to the surrendering Holder of such Note,
a new Note equal in principal amount to the unpurchased portion of such
surrendered Note; provided that each such new Note shall be in a principal
--------
amount of $1,000 or an integral multiple thereof.
(e) The Company shall comply with the requirements of Section 14(e) under
the Exchange Act and any other securities laws or regulations, to the extent
such laws and regulations are applicable, in connection with the purchase of
Notes pursuant to a Change of Control Offer.
SECTION 4.08 Limitation on Asset Sales. (a) The Company shall not, and
-------------------------
shall not permit any of its Restricted Subsidiaries, directly or indirectly, to,
consummate any Asset Sale, unless:
(i) the Company or such Restricted Subsidiary, as the case may be,
receives consideration for such Asset Sale at least equal to the Fair
Market Value (as evidenced by a Board Resolution delivered to the Trustee)
of the Property or assets sold or otherwise disposed of;
(ii) at least 75 percent of the consideration received in respect of
such Asset Sale by the Company or such Restricted Subsidiary, as the case
may be, for such Property or assets consists of (a) Cash Proceeds and/or
Telecommunications Assets; (b) shares of publicly-traded Voting Stock of
any Person engaged in the Telecommunications Business in the United States;
or (c) the assumption of Indebtedness of the Company or such Restricted
Subsidiary (other than Indebtedness that is subordinated to the Notes) and
the release of the Company or the Restricted Subsidiary, as the case may
be, from all liability on the Indebtedness assumed; and
(iii) the Company or such Restricted Subsidiary, as the case may be,
uses the Net Cash Proceeds from such Asset Sale in the manner set forth in
Section 4.08(b) hereof.
(b) Within 360 calendar days after the closing of any Asset Sale, the
Company or such Restricted Subsidiary, as the case may be, may, at its option:
21
(i) reinvest an amount equal to the Net Cash Proceeds, or any
portion thereof, from such Asset Sale in Telecommunications Assets or in
Capital Stock of any Person engaged in the Telecommunications Business;
and/or
(ii) apply an amount equal to such Net Cash Proceeds, or remaining
Net Cash Proceeds, to the permanent reduction of Indebtedness of the
Company (other than Indebtedness to a Restricted Subsidiary of the Company)
that is senior to or pari passu with the Notes or to the permanent
---- -----
reduction of Indebtedness or Preferred Stock of any Restricted Subsidiary
of the Company (other than Indebtedness to, or Preferred Stock owned by,
the Company or another Restricted Subsidiary of the Company).
Net Cash Proceeds from any Asset Sale that are not applied pursuant to clause
(i) or (ii) above within 360 calendar days of the closing of such Asset Sale
shall constitute "Excess Proceeds."
(c) If at any time the aggregate amount of Excess Proceeds calculated as
of such date exceeds $25 million, the Company shall use the then-existing Excess
Proceeds to make an offer, as described in Section 4.08(d) hereof (an "Asset
Sale Offer"), to purchase from all Holders, on a pro rata basis with holders of
all other Indebtedness that ranks pari passu with the Notes and that requires
the Company to make an offer equivalent to an Asset Sale Offer, Notes in an
aggregate principal amount equal to the maximum principal amount that may be
purchased out of the then-existing Excess Proceeds, at a purchase price (the
"Asset Sale Purchase Price") in cash equal to 100 percent of the principal
amount of such Notes, plus accrued and unpaid interest, if any, to the Asset
Sale Payment Date.
(d) Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $25 million, the Company, or the Trustee at the request and expense of
the Company, shall send to each Holder by first class mail, postage prepaid, a
notice prepared by the Company stating:
(i) that an Asset Sale Offer is being made pursuant to this Section
4.08, and that all Notes that are timely tendered will be accepted for
payment, subject to proration in the event the amount of Excess Proceeds is
less than the aggregate Asset Sale Purchase Price of all Notes timely
tendered pursuant to the Asset Sale Offer;
(ii) the Asset Sale Purchase Price, the amount of Excess Proceeds
that are available to be applied to purchase tendered Notes, and the date
Notes are to be purchased pursuant to the Asset Sale Offer (the "Asset Sale
Payment Date"), which date shall be a date no earlier than 30 calendar days
nor later than 40 calendar days subsequent to the date such notice is
mailed;
(iii) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
22
(iv) that, unless the Company defaults in the payment of the Asset
Sale Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest from and after the Asset Sale Payment Date;
(v) that any Holder electing to have any Notes or portions thereof
purchased pursuant to the Asset Sale Offer will be required to surrender
such Notes, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of such Notes completed, to the Paying Agent at the address
specified in the notice, prior to the close of business on the third
Business Day preceding the Asset Sale Payment Date;
(vi) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Asset Sale Payment Date, a telegram,
telex, facsimile transmission or letter, setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to have
such Notes or portions thereof purchased pursuant to the Asset Sale Offer;
(vii) that any Holder electing to have Notes purchased pursuant to
the Asset Sale Offer must specify the principal amount that is being
tendered for purchase, which principal amount must be $1,000 or an integral
multiple thereof;
(viii) that any Holder whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Note or Notes surrendered, which unpurchased portion will be
equal in principal amount to $1,000 or an integral multiple thereof; and
(ix) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to this Section 4.08.
(e) If the aggregate Asset Sale Purchase Price of the Notes surrendered by
Holders exceeds the amount of Excess Proceeds as indicated in the notice
required by Section 4.08(d) hereof, the Trustee shall select the Notes to be
purchased on a pro rata basis based on the principal amount of the Notes
tendered, with such adjustments as may be deemed appropriate by the Trustee, so
that only Notes in denominations of $1,000 or integral multiples thereof shall
be purchased.
(f) On the Asset Sale Payment Date, the Company shall (i) accept for
payment any Notes or portions thereof properly tendered and selected for
purchase pursuant to the Asset Sale Offer and Section 4.08(e) hereof; (ii)
irrevocably deposit with the Paying Agent, by 10:00 a.m., New York City time, on
such date, in immediately available funds, an amount equal to the Asset Sale
Purchase Price in respect of all Notes or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee the Notes so accepted
together with a Company Certificate listing the Notes or portions thereof
tendered to the Company and accepted for payment. The Paying Agent shall
promptly send by first class mail, postage prepaid, to each Holder of Notes or
portions thereof so accepted for payment, payment in an amount equal to the
Asset Sale Purchase Price for such Notes or portions
23
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on or as soon as practicable after the Asset Sale Payment Date.
(g) Upon surrender and cancellation of a Note that is purchased in part,
the Company shall promptly issue and the Trustee shall authenticate and deliver
to the surrendering Holder of such Note a new Note equal in principal amount to
the unpurchased portion of such surrendered Note; provided that each such new
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
(h) Upon completion of an Asset Sale Offer (including payment of the Asset
Sale Purchase Price for accepted Notes), any surplus Excess Proceeds that were
the subject of such offer shall cease to be Excess Proceeds, and the Company may
then use such amounts for general corporate purposes.
(i) The Company shall comply with the requirements of Section 14(e) under
the Exchange Act and any other securities laws or regulations, to the extent
such laws and regulations are applicable, in connection with the purchase of
Notes pursuant to an Asset Sale Offer.
SECTION 4.09 Limitation on Consolidated Indebtedness. (a) The Company
---------------------------------------
shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness after the Issue Date unless either (a) the ratio of (i) the
aggregate consolidated principal amount of Indebtedness of the Company
outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the Incurrence of such Indebtedness and any
other Indebtedness Incurred since such balance sheet date and the receipt and
application of the proceeds thereof, to (ii) Consolidated Cash Flow Available
for Fixed Charges for the four full fiscal quarters immediately preceding the
Incurrence of such Indebtedness for which consolidated financial statements of
the Company have been filed with the Commission or have otherwise become
publicly available, determined on a pro forma basis as if any such Indebtedness
had been Incurred and the proceeds thereof had been applied at the beginning of
such four fiscal quarters, would be less than 5.5 to 1.0 for such four-quarter
periods ending on or prior to December 31, 2002 and 5.0 to 1.0 for such periods
ending thereafter, or (b) the Company's Consolidated Capital Ratio as of the
most recent quarterly or annual balance sheet of the Company that has been filed
with the Commission or has otherwise become publicly available, after giving pro
forma effect to (x) the Incurrence of such Indebtedness and any other
Indebtedness Incurred since such balance sheet date and (y) paid-in capital
received since such balance sheet date or concurrently with the Incurrence of
such Indebtedness, and in each case the receipt and application of the proceeds
thereof, is less than 2.0 to 1.0.
(b) Notwithstanding the foregoing limitation, the Company and any
Restricted Subsidiary may Incur each and all of the following:
(i) Indebtedness under Senior Credit Facilities in an aggregate
principal amount outstanding or available at any one time not to exceed
$250 million, and any renewal, extension, refinancing or refunding thereof
in an amount which, together with any principal amount remaining
outstanding or available under all Senior Credit Facilities, does not
exceed
24
the aggregate principal amount outstanding or available under all Senior
Credit Facilities immediately prior to such renewal, extension, refinancing
or refunding;
(ii) Indebtedness under Qualified Receivable Facilities in an
aggregate principal amount outstanding or available at any one time not to
exceed the greater of (x) $150 million or (y) an amount equal to 85% of net
Receivables determined in accordance with GAAP, and any renewal, extension,
refinancing or refunding thereof in an amount which, together with any
principal amount remaining outstanding or available under all Qualified
Receivable Facilities, does not exceed the aggregate principal amount
outstanding or available under all Qualified Receivable Facilities
immediately prior to such renewal, extension, refinancing or refunding;
(iii) Purchase Money Indebtedness, provided that the amount of such
--------
Purchase Money Indebtedness does not exceed 100% of the cost of the
construction, acquisition or improvement of the applicable
Telecommunications Assets;
(iv) Indebtedness owed by the Company to any Restricted Subsidiary
of the Company or Indebtedness owed by a Restricted Subsidiary of the
Company to the Company or a Restricted Subsidiary of the Company; provided
--------
that upon either (x) the transfer or other disposition by such Restricted
Subsidiary or the Company of any Indebtedness so permitted to a Person
other than the Company or another Restricted Subsidiary of the Company or
(y) the issuance (other than directors' qualifying shares), sale, lease,
transfer or other disposition of shares of Capital Stock (including by
consolidation or merger) of such Restricted Subsidiary to a Person other
than the Company or another such Restricted Subsidiary, if such issuance,
sale, lease, transfer or other disposition (as the case may be) shall cause
such Restricted Subsidiary to cease to be a Restricted Subsidiary of the
Company, the provisions of this clause (iv) shall no longer be applicable
to such Indebtedness and such Indebtedness shall be deemed to have been
Incurred at the time of such transfer or other disposition;
(v) Indebtedness Incurred to renew, extend, refinance or refund
(each, a "refinancing") the Notes or Indebtedness outstanding at the date
of this First Supplemental Indenture or Purchase Money Indebtedness
Incurred pursuant to clause (iii) of this paragraph in an aggregate
principal amount not to exceed the aggregate principal amount of and
accrued interest on the Indebtedness so refinanced plus the amount of any
premium required to be paid in connection with such refinancing pursuant to
the terms of the Indebtedness so refinanced or the amount of any premium
reasonably determined by the Company as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase,
plus the expenses of the Company incurred in connection with such
refinancing; provided that Indebtedness the proceeds of which are used to
--------
refinance the Notes or Indebtedness which is pari passu to the Notes or
Indebtedness which is subordinate in right of payment to the Notes shall
only be permitted under this clause (v) if (A) in the case of any
refinancing of the Notes or Indebtedness which is pari passu to the Notes,
the refinancing Indebtedness is made pari passu to the Notes or constitutes
Subordinated Indebtedness, and, in the case of any refinancing of
Subordinated Indebtedness, the refinancing Indebtedness
25
constitutes Subordinated Indebtedness and (B) in any case, the refinancing
Indebtedness by its terms, or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, (x) does not provide for
payments of principal of such Indebtedness at stated maturity or by way of
a sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof by the Company (including any
redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of the
acceleration of any payment with respect to such Indebtedness upon any
event of default thereunder), in each case prior to the time the same are
required by the terms of the Indebtedness being refinanced and (y) does not
permit redemption or other retirement (including pursuant to an offer to
purchase made by the Company) of such Indebtedness at the option of the
Holder thereof prior to the time the same are required by the terms of the
Indebtedness being refinanced, other than a redemption or other retirement
at the option of the Holder of such Indebtedness (including pursuant to an
offer to purchase made by the Company) which is conditioned upon a change
of control pursuant to provisions substantially similar to those described
in Section 4.07 hereof;
(vi) Indebtedness consisting of Permitted Interest Rate and Currency
Protection Agreements;
(vii) Indebtedness (A) in respect of performance, surety or appeal
bonds provided in the ordinary course of business or (B) arising from
--------
customary agreements providing for indemnification, adjustment of purchase
price for closing balance sheet changes within 90 days after closing, or
similar obligations, or from Guarantees or letters of credit, surety bonds
or performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in each case Incurred
in connection with the disposition of any business, assets or Restricted
Subsidiary of the Company (other than Guarantees of Indebtedness Incurred
by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary of the Company for the purpose of financing such
acquisition) and in an aggregate principal amount not to exceed the gross
proceeds actually received by the Company or any Restricted Subsidiary in
connection with such disposition; and
(viii) Indebtedness not otherwise permitted to be Incurred pursuant
to clauses (i) through (vii) above, which, together with any other
outstanding Indebtedness Incurred pursuant to this clause (viii), has an
aggregate principal amount not in excess of $50 million at any time
outstanding.
(c) Notwithstanding any other provision of this Section 4.09, the maximum
amount of Indebtedness that the Company or a Restricted Subsidiary may Incur
pursuant to this Section 4.09, shall not be deemed to be exceeded due solely as
the result of fluctuations in the exchange rates of currencies.
(d) For purposes of determining any particular amount of Indebtedness
under this Section 4.09, (1) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness
26
otherwise included in the determination of such particular amount shall not be
included and (2) any Liens granted pursuant to the equal and ratable provisions
referred to in Section 4.12 hereof shall not be treated as Indebtedness. For
purposes of determining compliance with this Section 4.09, in the event that an
item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses, the Company, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses.
SECTION 4.10 Limitation on Indebtedness and Preferred Stock of Restricted
------------------------------------------------------------
Subsidiaries. The Company shall not permit any Restricted Subsidiary of the
------------
Company to Incur any Indebtedness or issue any Preferred Stock except:
(i) Indebtedness or Preferred Stock outstanding on the date of this
First Supplemental Indenture after giving effect to the application of the
proceeds of the Notes;
(ii) Indebtedness Incurred or Preferred Stock issued to and held by
the Company or a Restricted Subsidiary of the Company (provided that such
Indebtedness or Preferred Stock is at all times held by the Company or a
Restricted Subsidiary of the Company);
(iii) Indebtedness Incurred or Preferred Stock issued by a Person
prior to the time (A) such Person became a Restricted Subsidiary of the
Company, (B) such Person merges into or consolidates with a Restricted
Subsidiary of the Company or (C) another Restricted Subsidiary of the
Company merges into or consolidates with such Person (in a transaction in
which such Person becomes a Restricted Subsidiary of the Company), which
Indebtedness or Preferred Stock was not Incurred or issued in anticipation
of such transaction and was outstanding prior to such transaction;
(iv) Indebtedness under a Senior Credit Facility which is permitted
to be outstanding under clause (i) of Section 4.09(b);
(v) in the case of a Restricted Subsidiary that is a Qualified
Receivable Subsidiary, Indebtedness under a Qualified Receivable Facility
which is permitted to be outstanding under clause (ii) of Section 4.09(b);
(vi) Indebtedness consisting of Permitted Interest Rate and Currency
Protection Agreements;
(vii) Indebtedness (A) in respect of performance, surety and appeal
bonds provided in the ordinary course of business or (B) arising from
customary agreements providing for indemnification, adjustment of purchase
price for closing balance sheet changes within 90 days after closing, or
similar obligations, or from Guarantees or letters of credit, surety bonds
or performance bonds securing any obligation of such Restricted Subsidiary
pursuant to such agreements, in each case Incurred in connection with the
disposition of any business, assets or Restricted Subsidiary of such
Restricted Subsidiary (other than Guarantees of
27
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition) and in an aggregate principal amount not to exceed the gross
proceeds actually received by such Restricted Subsidiary in connection with
such disposition;
(viii) Indebtedness or Preferred Stock which is exchanged for, or the
proceeds of which are used to refinance, refund or redeem, any Indebtedness
or Preferred Stock permitted to be outstanding pursuant to clauses (i) and
(iii) hereof or any extension or renewal thereof (for purposes hereof, a
"refinancing"), in an aggregate principal amount, in the case of
Indebtedness, or with an aggregate liquidation preference in the case of
Preferred Stock, not to exceed the aggregate principal amount of the
Indebtedness so refinanced or the aggregate liquidation preference of the
Preferred Stock so refinanced, plus the amount of any premium required to
----
be paid in connection with such refinancing pursuant to the terms of the
Indebtedness or Preferred Stock so refinanced or the amount of any premium
reasonably determined by the Company as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase,
plus the amount of expenses of the Company and the applicable Restricted
----
Subsidiary Incurred in connection therewith and provided the Indebtedness
--------
or Preferred Stock Incurred or issued upon such refinancing by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness or Preferred Stock is Incurred or issued, (x) does not provide
for payments of principal or liquidation value at the stated maturity of
such Indebtedness or Preferred Stock or by way of a sinking fund applicable
to such Indebtedness or Preferred Stock or by way of any mandatory
redemption, defeasance, retirement or repurchase of such Indebtedness or
Preferred Stock by the Company or any Restricted Subsidiary of the Company
(including any redemption, retirement or repurchase which is contingent
upon events or circumstances, but excluding any retirement required by
virtue of acceleration of such Indebtedness upon an event of default
thereunder), in each case prior to the time the same are required by the
terms of the Indebtedness or Preferred Stock being refinanced and (y) does
not permit redemption or other retirement (including pursuant to an offer
to purchase made by the Company or a Restricted Subsidiary of the Company)
of such Indebtedness or Preferred Stock at the option of the holder thereof
prior to the stated maturity of the Indebtedness or Preferred Stock being
refinanced, other than a redemption or other retirement at the option of
the holder of such Indebtedness or Preferred Stock (including pursuant to
an offer to purchase made by the Company or a Restricted Subsidiary of the
Company) which is conditioned upon the change of control of the Company
pursuant to provisions substantially similar to those described in Section
4.07 hereof and provided, further, that in the case of any exchange or
-------- -------
redemption of Preferred Stock of a Restricted Subsidiary of the Company,
such Preferred Stock may only be exchanged for or redeemed with Preferred
Stock of such Restricted Subsidiary; and
(ix) Indebtedness Incurred or Preferred Stock issued by a Restricted
Subsidiary, provided that the Fair Market Value of the Company's Investment
--------
in all Restricted Subsidiaries which Incur Indebtedness or issue Preferred
Stock pursuant to this clause (ix)
28
shall not exceed, at any time, $50,000,000 in the aggregate, and provided
--------
further that such Indebtedness Incurred is otherwise permitted pursuant to
-------
Section 4.09 hereof.
SECTION 4.11 Limitation on Restricted Payments. (a) The Company shall
---------------------------------
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment unless, at the time of and after giving
effect to such proposed Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof;
(ii) after giving effect, on a pro forma basis, to such Restricted
Payment and the incurrence of any Indebtedness the net proceeds of which
are used to finance such Restricted Payment, the Company could incur at
least $1.00 of additional Indebtedness pursuant to the first paragraph of
Section 4.09 hereof; and
(iii) after giving effect to such Restricted Payment on a pro forma
basis, the aggregate amount expended (the amount so expended, if other than
cash, to be determined in good faith by a majority of the disinterested
members of the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution thereof) or declared for all Restricted
Payments after February 22, 1999, does not exceed the sum of (A) 50% of the
Consolidated Net Income of the Company (or, if Consolidated Net Income
shall be a deficit, minus 100% of such deficit) for the period (taken as
one accounting period) beginning on the last day of the fiscal quarter
immediately preceding February 22, 1999, and ending on the last day of the
fiscal quarter for which the Company's financial statements have been filed
with the Commission or otherwise become publicly available immediately
preceding the date of such Restricted Payment, plus (B) 100% of the net
----
reduction in Investments, subsequent to February 22, 1999, in any Person,
resulting from payments of interest on Indebtedness, dividends, repayments
of loans or advances, or other transfers of Property (but only to the
extent such interest, dividends, repayments or other transfers of Property
are not included in the calculation of Consolidated Net Income), in each
case to the Company or any Restricted Subsidiary from any Person
(including, without limitation, from Unrestricted Subsidiaries) or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments" in
Article II hereof), not to exceed in the case of any Person the amount of
Investments previously made subsequent to February 22, 1999, by the Company
or any Restricted Subsidiary in such Person and which was treated as a
Restricted Payment; provided that the Company or a Restricted Subsidiary of
--------
the Company may make any Restricted Payment with the aggregate net proceeds
received after February 22, 1999, including the fair value of property
other than cash (determined in good faith by the Board of Directors as
evidenced by a resolution of the Board of Directors filed with the
Trustee), (x) as capital contributions to the Company, (y) from the
issuance (other than to a Restricted Subsidiary) of Capital Stock (other
than Disqualified Stock) of the Company and warrants, rights or options on
Capital Stock (other than Disqualified Stock) of the Company, or (z) from
the conversion of Indebtedness of the
29
Company into Capital Stock (other than Disqualified Stock and other than by
a Restricted Subsidiary) of the Company after February 22, 1999.
(b) The foregoing limitations shall not prevent the Company from:
(i) paying a dividend on its Capital Stock at any time within 60
days after the declaration thereof if, on the declaration date, the Company
could have paid such dividend in compliance with the preceding paragraph of
this Section 4.11;
(ii) retiring (A) any Capital Stock of the Company or any Restricted
Subsidiary of the Company, (B) Indebtedness of the Company that is
subordinated in right of payment to the Notes, or (C) Indebtedness of a
Restricted Subsidiary of the Company, in exchange for, or out of the
proceeds of the substantially concurrent sale of Qualified Stock of, the
Company;
(iii) retiring any Indebtedness of the Company subordinated in right
of payment to the Notes in exchange for, or out of the proceeds of, the
substantially concurrent incurrence of Indebtedness of the Company (other
than Indebtedness to a Subsidiary of the Company), provided that such new
--------
Indebtedness (A) is subordinated in right of payment to the Notes at least
to the same extent as, (B) has an Average Life at least as long as, and
(C) has no scheduled principal payments due in any amount earlier than, any
equivalent amount of principal under the Indebtedness so retired;
(iv) retiring any Indebtedness of a Restricted Subsidiary of the
Company in exchange for, or out of the proceeds of, the substantially
concurrent incurrence of Indebtedness of the Company or any Restricted
Subsidiary that is permitted under Section 4.09 hereof (in the case of
Indebtedness of the Company) and Section 4.10 hereof (in the case of
Indebtedness of Restricted Subsidiaries) and that (A) is not secured by any
assets of the Company or any Restricted Subsidiary to a greater extent than
the retired Indebtedness was so secured, (B) has an Average Life at least
as long as the retired Indebtedness, and (C) is subordinated in right of
payment to the Notes at least to the same extent as the retired
Indebtedness;
(v) retiring any Capital Stock or options to acquire Capital Stock
of the Company or any Restricted Subsidiary of the Company held by any
directors, officers or employees of the Company or any Restricted
Subsidiary, provided that the aggregate price paid for all such retired
--------
Capital Stock shall not exceed, in the aggregate, the sum of $2 million
plus the aggregate cash proceeds received by the Company subsequent to the
Issue Date from issuances of Capital Stock or options to acquire Capital
Stock by the Company to directors, officers or employees of the Company and
its Subsidiaries;
(vi) making payments or distributions to dissenting stockholders
pursuant to applicable law in connection with a consolidation, merger or
transfer of assets permitted in Article III hereof;
30
(vii) retiring any Capital Stock of the Company to the extent
necessary (as determined in good faith by a majority of the disinterested
members of the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution thereof) to prevent the loss, or to secure
the renewal or reinstatement, of any license or franchise held by the
Company or any Restricted Subsidiary from any governmental agency;
(viii) making Investments in any Person primarily engaged in the
Telecommunications Business; provided, that the aggregate amount of such
--------
Investments does not exceed at any time the sum of (A) $30,000,000 plus (B)
----
the amount of Net Cash Proceeds received by the Company after February 22,
1999, as a capital contribution or from the sale of its Capital Stock
(other than Disqualified Stock) to a Person who is not a Subsidiary of the
Company, except to the extent such Net Cash Proceeds are used to make
Restricted Payments permitted pursuant to clauses (x), (y) and (z) of
clause (iii) of Section 4.11(a) hereof or clause (ii) of Section 4.11(b)
hereof or this clause (viii), plus (C) the net reduction in Investments
----
made pursuant to this clause (viii) resulting from distributions on or
repayments of such Investments or from the Net Cash Proceeds from the sale
of any such Investment (except in each case to the extent any such payment
or proceeds are included in the calculation of Consolidated Net Income) or
from such Person becoming a Restricted Subsidiary (valued in each case as
provided in the definition of "Investment" set forth in Article II hereof),
provided that the net reduction in any Investment shall not exceed the
--------
amount of such Investment; and
(ix) making Investments not otherwise permitted in an aggregate
amount not to exceed $15 million at any time outstanding.
(c) In determining the amount of Restricted Payments permissible under
this Section 4.11, amounts expended pursuant to clauses (ii), (iii) and (iv) of
the foregoing paragraph shall not be included as Restricted Payments.
(d) Not later than the date of making any Restricted Payment (including
any Restricted Payment permitted to be made pursuant to the two previous
paragraphs), the Company shall deliver to the Trustee a Company Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the required calculations were computed, which calculations may be
based upon the Company's latest available financial statements.
SECTION 4.12 Limitation on Liens. (a) The Company shall not, and shall
-------------------
not permit any Restricted Subsidiary of the Company to, Incur or suffer to exist
any Lien on or with respect to any property or assets now owned or hereafter
acquired to secure any Indebtedness without making, or causing such Restricted
Subsidiary to make, effective provision for securing the Notes (x) equally and
ratably with such Indebtedness as to such property for so long as such
Indebtedness will be so secured or (y) in the event such Indebtedness is
Indebtedness of the Company which is subordinate in right of payment to the
Notes, prior to such Indebtedness as to such property for so long as such
Indebtedness will be so secured.
31
(b) The foregoing restrictions shall not apply to:
(i) Liens existing on the date of this First Supplemental Indenture
and securing Indebtedness outstanding on the date of this First
Supplemental Indenture or Incurred on or after the Issue Date pursuant to
any Senior Credit Facility or Qualified Receivable Facility;
(ii) Liens securing Indebtedness in an amount which, together with
the aggregate amount of Indebtedness then outstanding or available under
all Senior Credit Facilities (or under refinancings or amendments of such
Senior Credit Facilities), does not exceed 1.5 times the Company's
Consolidated Cash Flow Available for Fixed Charges for the four full fiscal
quarters preceding the Incurrence of such Lien for which the Company's
consolidated financial statements have been filed with the Commission or
become publicly available, determined on a pro forma basis as if such
Indebtedness had been Incurred and the proceeds thereof had been applied at
the beginning of such four fiscal quarters;
(iii) Liens in favor of the Company or any Wholly-Owned Restricted
Subsidiary of the Company;
(iv) Liens on Property of the Company or a Restricted Subsidiary
acquired, constructed or constituting improvements made after the Issue
Date of the Notes to secure Purchase Money Indebtedness which is otherwise
permitted under this First Supplemental Indenture, provided that (a) the
--------
principal amount of any Indebtedness secured by any such Lien does not
exceed 100% of such purchase price or cost of construction or improvement
of the Property subject to such Lien, (b) such Lien attaches to such
property prior to, at the time of or within 180 days after the acquisition,
completion of construction or commencement of operation of such Property
and (c) such Lien does not extend to or cover any Property other than the
specific item of Property (or portion thereof) acquired, constructed or
constituting the improvements made with the proceeds of such Purchase Money
Indebtedness;
(v) Liens to secure Acquired Indebtedness, provided that (a) such
--------
Lien attaches to the acquired asset prior to the time of the acquisition of
such asset and (b) such Lien does not extend to or cover any other
Property;
(vi) Liens to secure Indebtedness Incurred to extend, renew,
refinance or refund (or successive extensions, renewals, refinancings or
refundings), in whole or in part, Indebtedness secured by any Lien referred
to in the foregoing clauses (i), (ii), (iv) and (v) so long as such Lien
does not extend to any other Property and the principal amount of
Indebtedness so secured is not increased except as otherwise permitted
under clause (v) of Section 4.09(b) hereof (in the case of Indebtedness of
the Company) or clause (viii) of Section 4.10 hereof (in the case of
Indebtedness of Restricted Subsidiaries);
(vii) Liens not otherwise permitted by the foregoing clauses (i)
through (vi) in an aggregate amount not to exceed 5% of the Company's
Consolidated Tangible Assets;
32
(viii) Liens granted after the Issue Date pursuant to the immediately
preceding paragraph to secure the Notes; and
(ix) Permitted Liens.
SECTION 4.13 Limitation on Sale and Leaseback Transactions. The Company
---------------------------------------------
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, enter into, assume, Guarantee or otherwise become liable with
respect to any Sale and Leaseback Transaction (other than a Sale and Leaseback
Transaction between the Company or a Restricted Subsidiary on the one hand and a
Restricted Subsidiary or the Company on the other hand), unless (i) the Company
or such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Sale and Leaseback Transaction at least equal to the Fair Market
Value (as evidenced by a Board Resolution delivered to the Trustee) of the
Property subject to such transaction; (ii) the Attributable Indebtedness of the
Company or such Restricted Subsidiary with respect thereto is included as
Indebtedness and would be permitted by Section 4.09 hereof or Section 4.10
hereof, as the case may be; (iii) the Company or such Restricted Subsidiary
would be permitted to create a Lien on such Property without securing the Notes
by Section 4.12 hereof; and (iv) the Net Cash Proceeds from such transaction are
applied in accordance with Section 4.08 hereof; provided that the Company shall
--------
be permitted to enter into Sale and Leaseback Transactions for up to $30 million
with respect to construction of the Company's headquarters buildings located in
Cedar Rapids, Iowa, provided that any such transaction is entered into within
--------
180 days of the earlier of (x) substantial completion or (y) occupation of the
applicable phase of such headquarters building.
SECTION 4.14 Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Subsidiaries. The Company shall not, and shall not permit any
----------------------
Restricted Subsidiary to, directly or indirectly, cause or suffer to exist or
become effective, or enter into, any encumbrance or restriction (other than
pursuant to law or regulation) on the ability of any Restricted Subsidiary (i)
to pay dividends or make any other distributions in respect of its Capital Stock
or pay any Indebtedness or other obligation owed to the Company or any
Restricted Subsidiary; (ii) to make loans or advances to the Company or any
Restricted Subsidiary; or (iii) to transfer any of its Property to the Company
or any other Restricted Subsidiary, except:
(a) any encumbrance or restriction existing as of the Issue Date or
any other agreement relating to any Existing Indebtedness or any
Indebtedness under a Senior Credit Facility or a Qualified Receivable
Facility otherwise permitted under this First Supplemental Indenture;
(b) any encumbrance or restriction pursuant to an agreement relating
to an acquisition of Property, so long as the encumbrances or restrictions
in any such agreement relate solely to the Property so acquired;
(c) any encumbrance or restriction relating to any Indebtedness of
any Restricted Subsidiary existing on the date on which such Restricted
Subsidiary is acquired by the
33
Company or another Restricted Subsidiary (other than any such Indebtedness
Incurred by such Restricted Subsidiary in connection with or in
anticipation of such acquisition);
(d) any encumbrance or restriction pursuant to an agreement effecting
a permitted refinancing of Indebtedness issued pursuant to an agreement
referred to in the foregoing clauses (a) through (c), so long as the
encumbrances and restrictions contained in any such refinancing agreement
are not materially more restrictive than the encumbrances and restrictions
contained in such agreements;
(e) customary provisions (A) that restrict the subletting, assignment
or transfer of any property or asset that is a lease, license, conveyance
or contract or similar property or asset; (B) existing by virtue of any
transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of the Company or any Restricted Subsidiary
not otherwise prohibited by this First Supplemental Indenture or (C)
arising or agreed to in the ordinary course of business, not relating to
any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company or any
Restricted Subsidiary;
(f) in the case of clause (iii) above, restrictions contained in any
security agreement (including a Capital Lease Obligation) securing
Indebtedness of the Company or a Restricted Subsidiary otherwise permitted
under this First Supplemental Indenture, but only to the extent such
restrictions restrict the transfer of the property subject to such security
agreement; and
(g) any restriction with respect to a Restricted Subsidiary of the
Company imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary, provided that the consummation of
--------
such transaction would not result in an Event of Default or an event that,
with the passing of time or the giving of notice or both, would constitute
an Event of Default, that such restriction terminates if such transaction
is not consummated and that the consummation or abandonment of such
transaction occurs within one year of the date such agreement was entered
into.
Nothing contained in this Section 4.14 shall prevent the Company or any
other Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted under Section 4.12 hereof or (2)
restricting the sale or other disposition of property or assets of the Company
or any of its Restricted Subsidiaries that secure Indebtedness of the Company or
any of its Restricted Subsidiaries otherwise permitted under Section 4.09 hereof
or Section 4.10 hereof, as the case may be.
34
SECTION 4.15 Limitation on Issuance and Sale of Capital Stock of
---------------------------------------------------
Restricted Subsidiaries. The Company (i) shall not permit any Restricted
-----------------------
Subsidiary to issue any Capital Stock other than to the Company or a Wholly-
Owned Restricted Subsidiary unless immediately after giving effect thereto such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment of the Company or any other Restricted Subsidiary in such Restricted
Subsidiary would have been permitted under Section 4.11 hereof if made on the
date of such issuance and (ii) shall not permit any Person other than the
Company or a Wholly-Owned Restricted Subsidiary to own any Capital Stock of any
Restricted Subsidiary, other than directors' qualifying shares and except for:
(a) a sale of 100% of the Capital Stock of a Restricted Subsidiary
sold in a transaction not prohibited by the covenant described under
Section 4.08 hereof;
(b) a sale of the Capital Stock of a Restricted Subsidiary sold in a
transaction not prohibited by the covenant described under Section 4.08
hereof if, after giving effect thereto, greater than 50% of the Capital
Stock of such Restricted Subsidiary is owned by the Company or by a Wholly-
Owned Restricted Subsidiary;
(c) Capital Stock of a Restricted Subsidiary issued and outstanding
on the Issue Date and held by Persons other than the Company or any
Restricted Subsidiary;
(d) Capital Stock of a Restricted Subsidiary issued and outstanding
prior to the time that such Person becomes a Restricted Subsidiary so long
as such Capital Stock was not issued in anticipation or contemplation of
such Person's becoming a Restricted Subsidiary or otherwise being acquired
by the Company;
(e) any Preferred Stock permitted to be issued under Section 4.10
hereof; and
(f) ownership by any Person other than the Company or a Subsidiary of
the Company of less than 50% of the Capital Stock of a Person (A) in which
the Company or a Restricted Subsidiary has made a Permitted Investment
pursuant to clause (iii) of the definition of "Permitted Investments" set
forth in Article II hereof, (B) of which more than 50% of such Person's
Capital Stock is owned, directly or indirectly, by the Company and (C) as
to which the Company has the power to direct the policies, management and
affairs.
SECTION 4.16 Transactions with Affiliates. The Company shall not, and
----------------------------
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
sell, lease, transfer, or otherwise dispose of, any of its Properties or assets
to, or purchase any Property or assets from, or enter into any contract,
agreement, understanding, loan, advance or Guarantee with or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a)
such Affiliate Transaction or series of Affiliate Transactions is on terms that
are no less favorable to the Company or such Restricted Subsidiary than those
that would have been obtained in a comparable arm's-length transaction by the
Company or such Restricted Subsidiary with a Person that is not an Affiliate
(or, in the event that there are no comparable transactions involving Persons
who are not Affiliates of the Company or the relevant Restricted Subsidiary to
apply for comparative purposes, is otherwise
35
on terms that, taken as a whole, the Company has determined to be fair to the
Company or the relevant Restricted Subsidiary) and (b) the Company delivers to
the Trustee (i) with respect to any Affiliate Transaction involving aggregate
payments in excess of $5 million, a certificate of the chief executive,
operating or financial officer of the Company evidencing such officer's
determination that such Affiliate Transaction or series of Affiliate
Transactions complies with clause (a) above and is in the best interests of the
Company or such Restricted Subsidiary and (ii) with respect to any Affiliate
Transaction or series of Affiliate Transactions involving aggregate payments in
excess of $15 million, a Board Resolution certifying that such Affiliate
Transaction or series of Affiliate Transactions complies with clause (a) above
and that such Affiliate Transaction or series of Affiliate Transactions has been
approved by a majority of the disinterested members of the Board of Directors
who have determined that such Affiliate Transaction or series of Affiliate
Transactions is in the best interest of the Company or such Restricted
Subsidiary; provided that the following shall not be deemed Affiliate
--------
Transactions:
(i) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and
consistent with industry practice;
(ii) any agreement or arrangement with respect to the compensation
of a director or officer of the Company or any Restricted Subsidiary
approved by a majority of the disinterested members of the Board of
Directors and consistent with industry practice;
(iii) transactions between or among the Company and its Restricted
Subsidiaries;
(iv) transactions permitted by Section 4.11 hereof;
(v) transactions pursuant to any agreement or arrangement existing
on the Issue Date; and
(vi) transactions with respect to wireline or wireless transmission
capacity, the lease or sharing or other use of cable or fiberoptic lines,
equipment, rights-of-way or other access rights, between the Company or any
Restricted Subsidiary and any other Person; provided, in any case, that
--------
such transaction is on terms that are no less favorable, taken as a whole,
to the Company or the relevant Restricted Subsidiary than those that could
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with Persons who are not Affiliates of the Company or
the relevant Restricted Subsidiary (or, in the event that there are no
comparable transactions involving Persons who are not Affiliates of the
Company or the relevant Restricted Subsidiary to apply for comparative
purposes, is otherwise on terms that, taken as a whole, the Company has
determined to be fair to the Company or the relevant Restricted
Subsidiary).
SECTION 4.17 Restricted and Unrestricted Subsidiaries. (a) The Company
----------------------------------------
may designate a Subsidiary (including a newly formed or newly acquired
Subsidiary) of the Company or any of its Restricted Subsidiaries as an
Unrestricted Subsidiary if such Subsidiary does not have any
36
obligations which, if in Default, would result in a cross default on
Indebtedness of the Company or a Restricted Subsidiary (other than Indebtedness
to the Company or a Wholly-Owned Restricted Subsidiary), and (i) such Subsidiary
has total assets of $1,000 or less, (ii) such Subsidiary has assets of more than
$1,000 and an Investment in such Subsidiary in an amount equal to the Fair
Market Value of such Subsidiary would then be permitted under Section 4.11(a)
hereof or (iii) such designation is effective immediately upon such Person
becoming a Subsidiary. Unless so designated as an Unrestricted Subsidiary, any
Person that becomes a Subsidiary of the Company or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary thereof.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, take any action or enter into any transaction or series of
transactions that would result in a Person (other than a newly formed
Subsidiary having no outstanding Indebtedness (other than Indebtedness to
the Company or a Restricted Subsidiary) at the date of determination)
becoming a Restricted Subsidiary (whether through an acquisition, the
redesignation of an Unrestricted Subsidiary or otherwise), unless, after
giving effect to such action, transaction or series of transactions on a
pro forma basis, (i) the Company could incur at least $1 of additional
Indebtedness pursuant to Section 4.09(a) hereof and (ii) no Default or
Event of Default would occur.
(c) Subject to clause (b), an Unrestricted Subsidiary may be
redesignated as a Restricted Subsidiary. The designation of a Subsidiary
as an Unrestricted Subsidiary or the designation of an Unrestricted
Subsidiary as a Restricted Subsidiary in compliance with clause (b) shall
be made by the Board of Directors pursuant to a Board Resolution delivered
to the Trustee and shall be effective as of the date specified in such
Board Resolution, which shall not be prior to the date such Board
Resolution is delivered to the Trustee.
ARTICLE V.
EVENTS OF DEFAULT
Solely for the benefit of the Holders of the Notes and so long as any of
the Notes are Outstanding, the Events of Default and acceleration remedy in this
Article V shall be applicable to the Notes. Except as otherwise specified
herein, all of the Events of Default and remedies set forth in Section 501 of
the Indenture shall also apply to the Notes.
SECTION 5.01 Modification of Section 501(4) of the Indenture. The
-----------------------------------------------
following shall replace, in its entirety, the provisions of Section 501(4) of
the Indenture:
"(4) default in the performance, or breach, of any covenant or warranty of
the Company contained in the Indenture or the Notes (other than a covenant
or warranty addressed in Sections 501(1), 501(2) or 501(3) of the Indenture
or in Section 5.02(a) of the First Supplemental Indenture), and the
continuance of such Default or breach for a period of 60 calendar days
after written notice thereof has been given to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25 percent of
the aggregate
37
principal amount of the outstanding Notes specifying such Default and
stating that such notice is a "Notice of Default" delivered in connection
with the Indenture; or"
SECTION 5.02 Additional Events of Default. The following shall be
----------------------------
additional Events of Default:
(a) default in the performance, or breach, of any covenant or
agreement contained in Section 4.07, Section 4.08 or Article III hereof or
in Article Eight of the Indenture; or
(b) a default or defaults under any bond, debenture, note or other
evidence of Indebtedness by the Company or any Restricted Subsidiary of the
Company (or under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness by the Company or any such Restricted Subsidiary) having,
individually or in the aggregate, a principal or similar amount outstanding
of at least $10 million, whether such indebtedness now exists or shall
hereafter be created, which default or defaults shall have resulted in the
acceleration of the maturity of such Indebtedness prior to its express
maturity or shall constitute a failure to pay such Indebtedness when due
and payable after the expiration of any applicable grace period with
respect thereto or shall have resulted in such Indebtedness becoming or
being declared due and payable; or
(c) a final judgment or final judgments for the payment of money
(other than to the extent covered by insurance as to which the insurance
company has acknowledged coverage and other than to the extent covered by
an indemnity given by an insurance company) is entered against the Company
or any Restricted Subsidiary of the Company in an aggregate amount in
excess of $10 million by a court or courts of competent jurisdiction, which
judgment is not discharged, waived, stayed, bonded or satisfied for a
period of 45 consecutive calendar days.
SECTION 5.03 Modification of Section 502(1) of the Indenture. The
-----------------------------------------------
following shall be added to Section 502(1) of the Indenture after the end
thereof:
"In the event of a declaration of acceleration because an Event of Default
set forth in Section 5.02(b) of the First Supplemental Indenture has
occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering
such Event of Default pursuant to Section 5.02(b) thereof shall be
remedied, or cured, or waived by the holders of the relevant Indebtedness,
within 60 calendar days after such event of default; provided no judgment
--------
or decree for the payment of the money due on the Notes has been obtained
by the Trustee as provided in Article Five of the Indenture."
38
ARTICLE VI.
MISCELLANEOUS
SECTION 6.01 Effective Date. This First Supplemental Indenture shall be
--------------
effective as of the date first above written and upon the execution and delivery
hereof by each of the parties hereto.
SECTION 6.02 Successors and Assigns. All covenants and agreements in
----------------------
this First Supplemental Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 6.03 Separability Clause. In case any provision in this First
-------------------
Supplemental Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 6.04 Benefits of First Supplemental Indenture. Nothing in this
----------------------------------------
First Supplemental Indenture or in the Notes, express or implied, shall give to
any Person, other than the parties hereto, any Security Registrar, any Paying
Agent, any Authenticating Agent and their successors hereunder and the Holders
of the Notes any benefit or any legal or equitable right, remedy or claim under
this First Supplemental Indenture.
SECTION 6.05 No Personal Liability. No recourse under or on any
---------------------
obligation, covenant or agreement contained in this First Supplemental Indenture
or in the Notes, or because of any indebtedness evidenced thereby, shall be had
against any promoter, as such or, against any past, present or future director,
officer, employee or shareholder, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Notes by the Holders
thereof and as part of the consideration for the issue of the Notes.
SECTION 6.06 Governing Law. This First Supplemental Indenture and the
-------------
Notes shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in such
state. This First Supplemental Indenture is subject to the provisions of the
Trust Indenture Act which, by the provisions thereof, are deemed or required to
be part of this First Supplemental Indenture and shall, to the extent
applicable, be governed by such provisions. If and to the extent that any
provision of this First Supplemental Indenture limits, qualifies or conflicts
with the duties imposed by, or with another provision (an "incorporated
provision") included in this First Supplemental Indenture by operation of,
Sections 310 through 318, inclusive, of the Trust Indenture Act, such imposed
duties or incorporated provision shall control.
SECTION 6.07 Counterparts. This First Supplemental Indenture may be
------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
39
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first above written.
McLEODUSA INCORPORATED
By: _______________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
By: _______________________________________
Name:
Title:
40
EXHIBIT A
[form of Note]
41
