DESCRIPTION OF INDEBTEDNESS OF LEVEL 3 COMMUNICATIONS, INC. AND THE ISSUER
The following is a description of the material outstanding indebtedness of Level 3 Communications, Inc. and the Issuer,
other than the original notes. For purposes of this section of the prospectus only, "Level 3" refers only to Level 3 Communications, Inc., the parent company of the Issuer. The
following summaries of Level 3's and the Issuer's senior secured term loans and outstanding notes (other than the original notes which are the subject of this exchange offer) are qualified in
their entirety by reference to the Credit Agreement governing the senior secured term loans and the indentures to which each issue of notes relates. Copies of the Credit Agreement and indentures are
available on request from Level 3.
For
a discussion of the acquisition of Parent by CenturyLink and the Credit Agreement Refinancing, see "SummaryRecent Developments."
Indebtedness of the Issuer
As of March 13, 2007, the Issuer, as borrower, and Level 3, as guarantor, Merrill Lynch Capital Corporation, as
administrative agent and collateral agent ("Merrill Lynch"), and certain other agents and certain lenders entered into a Credit Agreement (as amended, amended and restated or otherwise modified, the
"Credit Agreement"), pursuant to which the lenders have extended senior secured term loans to the Issuer.
As
of September 30, 2016, the Issuer had $4.611 billion of borrowings outstanding under the Credit Agreement, consisting of $815 million principal amount of
Tranche B-III 2019 term loans,
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$1.796 billion
principal amount of Tranche B 2020 term loans and $2.0 billion principal amount of Tranche B-II 2022 term loans.
The
Issuer's obligations under the Credit Agreement are secured by certain assets of Level 3 and certain of its subsidiaries which do not require regulatory approval to grant
liens on their assets. The obligations of the Issuer under the Credit Agreement are also guaranteed by Level 3, Level 3 LLC and certain of its subsidiaries that do not require
regulatory approval to enter into such guarantees.
The
principal amount of the Tranche B-III 2019 term loans will be payable in full on August 1, 2019. The principal amount of the Tranche B 2020 term loans will be
payable in full on January 15, 2020. The principal amount of the Tranche B-II 2022 term loans will be payable in full on May 31, 2022. Additional secured term loans or revolving
loans may in the future be extended to the Issuer under the Credit Agreement.
The
Tranche B-III 2019 term loans, Tranche B 2020 term loans and Tranche B-II 2022 term loans have an interest rate, in the case of any ABR Borrowing (as defined in
the Credit Agreement), equal to (a) the greater of (i) the Prime Rate (as defined in the Credit Agreement) in effect on such day, (ii) the Federal Funds Effective Rate (as defined
in the Credit Agreement) in effect on such day plus
1
/
2
of 1% and (iii) the sum of (A) the higher of (x) the LIBO Rate (as defined in the Credit Agreement) for a
one month interest period on such day and (y) 1.0% (in the case of the Tranche B-III 2019 term loans and the Tranche B 2020 term loans) or 0.75% (in the case of the
Tranche B-II 2022 term loans), plus (B) 1.0%, plus (b) 2.0% per annum (in the case of the Tranche B-III 2019 term loans and
the Tranche B 2020 term loans) or 1.75% per annum (in the case of the Tranche B-II 2022 term loans). In the case of any Eurodollar Borrowing (as defined in the Credit Agreement), the
Tranche B-III 2019 term loans and Tranche B 2020 term loans bear interest at the LIBO Rate for the interest period for such borrowing plus 3.0% per annum and the Tranche B-II 2022
term loan bears interest at the LIBO Rate for the interest period for such borrowing plus 2.75% per annum.
The
Credit Agreement provides that indebtedness outstanding under the senior secured term loans will be paid with all of the net available cash proceeds with respect to certain asset
sales, if these proceeds are not reinvested in Level 3's business. The Credit Agreement contains negative covenants restricting and limiting the ability of Level 3, the Issuer and any
restricted subsidiary to engage in certain activities, including:
-
-
limitations on indebtedness and the incurrence of liens;
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-
restrictions on dividends and distributions on capital stock, and other similar distributions;
-
-
limitations on transactions restricting the ability of subsidiaries to pay dividends and other similar distributions;
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-
restrictions on the issuance and sale of capital stock of subsidiaries;
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-
restrictions on sale leaseback transactions, sales of assets and investments, including restrictions on asset transfers by guarantors
under the Credit Agreement to subsidiaries of Level 3 which are not guarantors;
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limitations on transactions with affiliates;
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-
limitations on designating subsidiaries as unrestricted subsidiaries;
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limitations on actions with respect to existing intercompany obligations; and
-
-
in the case of Level 3, the Issuer and any guarantor, restrictions on mergers and sales of substantially all assets.
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The
Credit Agreement does not require Level 3 or the Issuer to maintain specific financial ratios. The Credit Agreement does contain certain events of default.
As
of September 30, 2016, approximately $4.611 billion aggregate principal amount of the senior secured term loans was outstanding. For a discussion of the Credit Agreement
Refinancing, see "SummaryRecent DevelopmentsCredit Agreement Refinancing."
On November 14, 2013, the Issuer issued $640 million aggregate principal amount of its 6.125% Senior Notes due 2021 (the
"6.125% Senior Notes") under an indenture among Level 3, as guarantor, the Issuer and The Bank of New York Mellon Trust
Company, N.A., as trustee. The 6.125% Senior Notes (i) are senior unsecured, unsubordinated obligations of the Issuer; (ii) rank equally in right of payment with all other existing and
future senior unsecured unsubordinated indebtedness of the Issuer and (iii) are unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 and Level 3 LLC.
The 6.125% Senior Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 15 and October 15 of each year.
The
Issuer may redeem the 6.125% Senior Notes, in whole or in part, at any time before November 15, 2016, at a redemption price equal to 100% of their principal amount, plus a
make-whole premium and accrued and unpaid interest. The Issuer also may redeem the 6.125% Senior Notes, in whole or in part, at any time on or after November 15, 2016. If a redemption occurs
before November 15, 2018, the Issuer will pay a premium on the principal amount of the 6.125% Senior Notes redeemed, plus accrued and unpaid interest. This premium decreases annually from
3.063% for a redemption during the twelve month period beginning on November 15, 2016 to 1.531% for a redemption during the twelve month period beginning on November 15, 2017. In
addition, on or prior to November 15, 2016, the Issuer may redeem up to 35% of the aggregate principal amount of the 6.125% Senior Notes with the net proceeds of certain equity offerings of
Level 3 at a redemption price equal to 106.125% of the principal amount of the 6.125% Senior Notes so redeemed, plus accrued and unpaid interest, provided that at least 65% of the aggregate
principal amount of the 6.125% Senior Notes originally issued remain outstanding after such redemption.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 6.125% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, the Issuer, Parent and the Trustee entered
into a supplemental indenture with respect to the indenture governing the 6.125% Senior Notes that provides that the acquisition of Parent by CenturyLink as contemplated by the Merger Agreement will
not constitute a "Change of Control" under the indenture governing the 6.125% Senior Notes, subject to delivery of an officers' certificate to the Trustee providing the certification required by the
supplemental indenture.
The
indenture relating to the 6.125% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries; (ix) transactions with affiliates; (x) reports; (xi) limitation on designations of
unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer and future guarantors of the 6.125% Senior Notes and guarantors of the 6.125% Proceeds Note, limitations on
mergers, consolidations and sales of all or substantially all of the assets of such entities.
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The
holders of the 6.125% Senior Notes may force the Issuer to immediately repay the principal on the 6.125% Senior Notes, including interest to the acceleration date, if certain
defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $25 million, which defaults result in the acceleration
of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $640 million aggregate principal amount of the 6.125% Senior Notes was outstanding.
On November 26, 2013, the Issuer issued $300 million aggregate principal amount of Floating Rate Senior Notes due 2018
(the "2018 Floating Rate Notes") under an indenture among Level 3, as guarantor, the Issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2018 Floating Rate Notes are
senior unsecured, unsubordinated obligations of the Issuer. They rank equally in right of payment with all other existing and future senior unsecured, unsubordinated indebtedness of the Issuer. The
2018 Floating Rate Notes are unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 and Level 3 LLC. The 2018 Floating Rate Notes bear interest at a rate of
LIBOR plus 3.50% per annum, reset semiannually, and payable semiannually in arrears on May 15 and November 15 of each year.
The
Issuer may redeem the 2018 Floating Rate Notes, in whole or in part, at any time.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 2018 Floating Rate Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any.
The
indenture relating to the 2018 Floating Rate Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries; (ix) transactions with affiliates; (x) reports; (xi) limitation on designations of
unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer, future guarantors of the 2018 Floating Rate Notes and guarantors of the 2018 Floating Rate Proceeds Note,
limitations on mergers, consolidations and sales of all or substantially all of the assets of such entities.
The
holders of the 2018 Floating Rate Notes may force the Issuer to immediately repay the principal on the 2018 Floating Rate Notes, including interest to the acceleration date, if
certain defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $25 million, which defaults result in the
acceleration of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $300 million aggregate principal amount of the 2018 Floating Rate Notes was outstanding.
On August 12, 2014, Level 3 Escrow II, Inc. ("Level 3 Escrow II") issued $1.0 billion
aggregate principal amount of 5.375% Senior Notes due 2022 (the "2022 5.375% Senior Notes") under an indenture between Level 3 Escrow II and The Bank of New York Mellon Trust Company, N.A., as
trustee. The 2022 5.375% Senior Notes were senior unsecured, unsubordinated obligations of Level 3 Escrow II and, following the Notes Assumption (as defined below) are senior unsecured,
unsubordinated obligations of the Issuer. The 2022 5.375% Senior Notes are unconditionally
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guaranteed
on an unsubordinated unsecured basis by Level 3 and Level 3 LLC. The 2022 5.375% Senior Notes bear interest at a rate of 5.375% per annum, payable semiannually in
arrears on May 15 and November 15 of each year.
The
gross proceeds from the offering together with cash on hand were deposited into a segregated escrow account, and were to remain in escrow until the date on which certain escrow
conditions, including, but not limited to, the substantially concurrent consummation of the tw telecom Acquisition by Level 3 and the assumption of all obligations under the 2022 5.375% Senior
Notes and the related indenture by the Issuer (the "Notes Assumption") were satisfied. Prior to the Notes Assumption, the sole obligor of the 2022 5.375% Senior Notes was Level 3 Escrow II. On
October 31, 2014, following the consummation of the tw telecom Acquisition by Level 3 and the satisfaction of certain escrow conditions, the Issuer entered into a supplemental indenture,
dated as of October 31, 2014, to the indenture governing the 2022 5.375% Senior Notes with Level 3, Level 3 LLC and The Bank of New York Mellon Trust Company, N.A., as
trustee, providing for the consummation of the Notes Assumption and the unconditional guarantee by Level 3 and Level 3 LLC of the Issuer's obligations
under the 2022 5.375% Senior Notes and the related indenture. Upon and after the Notes Assumption, the 2022 5.375% Senior Notes are fully and unconditionally guaranteed on an unsubordinated and
unsecured basis by Level 3 and Level 3 LLC.
The
Issuer may redeem the 2022 5.375% Senior Notes, in whole or in part, at any time before August 15, 2017, at a redemption price equal to 100% of their principal amount, plus a
make-whole premium and accrued and unpaid interest. The Issuer also may redeem the 2022 5.375% Senior Notes, in whole or in part, at any time or from time to time on or after August 15, 2017.
If a redemption occurs before August 15, 2019, the Issuer will pay a premium on the principal amount of the 2022 5.375% Senior Notes redeemed. This premium decreases annually from approximately
2.688% for a redemption during the twelve month period beginning on August 15, 2017 to approximately 1.344% for a redemption during the twelve month period beginning on August 15, 2018.
In addition, on or prior to August 15, 2017, the Issuer may redeem up to 40% of the 2022 5.375% Senior Notes with net proceeds of certain equity offerings of Level 3 at a redemption
price equal to 105.375% of the principal amount of the 2022 5.375% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) to the redemption date.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 2022 5.375% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, the Issuer, Parent and the Trustee
entered into a supplemental indenture with respect to the indenture governing the 2022 5.375% Senior Notes that provides that the acquisition of Parent by CenturyLink as contemplated by the Merger
Agreement will not constitute a "Change of Control" under the indenture governing the 2022 5.375% Senior Notes, subject to delivery of an officers' certificate to the Trustee providing the
certification required by the supplemental indenture.
The
indenture relating to the 2022 5.375% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries; (ix) transactions with affiliates; (x) reports; (xi) limitation on designations of
unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer, future guarantors of the 2022 5.375% Senior Notes and guarantors of the 5.375% due 2022 Proceeds Note,
limitations on mergers, consolidations and sales of all or substantially all of the assets of such entities.
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The
holders of the 2022 5.375% Senior Notes may force the Issuer to immediately repay the principal on the 2022 5.375% Senior Notes, including interest to the acceleration date, if
certain defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $25 million, which defaults result in the
acceleration of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $1.0 billion aggregate principal amount of the 2022 5.375% Senior Notes was outstanding.
On January 29, 2015, the Issuer issued $500 million aggregate principal amount of its 5.625% Senior Notes due 2023 (the
"5.625% Senior Notes") under an indenture among Level 3, as guarantor, the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee. The 5.625% Senior Notes (i) are senior
unsecured, unsubordinated obligations of the Issuer; (ii) rank equally in right of payment with all other existing and future senior unsecured unsubordinated indebtedness of the Issuer and
(iii) are unconditionally guaranteed on an unsubordinated, unsecured basis by Level 3 and Level 3 LLC. The 5.625% Senior Notes bear interest at a rate of 5.625% per annum,
payable semiannually in arrears on June 15 and December 15 of each year.
The
Issuer may redeem the 5.625% Senior Notes, in whole or in part, at any time before February 1, 2018, at a redemption price equal to 100% of their principal amount, plus a make
whole premium and accrued and unpaid interest. The Issuer also may redeem the 5.625% Senior Notes, in whole or in part, at any time on or after February 1, 2018. If a redemption occurs before
February 1, 2020, the Issuer will pay a premium on the principal amount of the 5.625% Senior Notes redeemed, plus accrued and unpaid interest. This premium decreases annually from 2.8125% for a
redemption during the twelve month period beginning on February 1, 2018 to 1.4063% for a redemption during the twelve month period beginning on February 1, 2019. In addition, on or prior
to February 1, 2018, the Issuer may redeem up to 40% of the aggregate principal amount of the 5.625% Senior Notes with the net proceeds of certain equity offerings of Level 3 at a
redemption price equal to 105.625% of the principal amount of the 5.625% Senior Notes so redeemed, plus accrued and unpaid interest, provided that at least 60% of the aggregate principal amount of the
5.625% Senior Notes originally issued remain outstanding after such redemption.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 5.625% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, the Issuer, Parent and the Trustee entered
into a supplemental indenture with respect to the indenture governing the 5.625% Senior Notes that provides that the acquisition of Parent by CenturyLink as contemplated by the Merger Agreement will
not constitute a "Change of
Control" under the indenture governing the 5.625% Senior Notes, subject to delivery of an officers' certificate to the Trustee providing the certification required by the supplemental indenture.
The
indenture relating to the 5.625% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries; (ix) transactions with affiliates; (x) reports; (xi) limitation on designations of
unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer and future guarantors of the 5.625% Senior Notes and guarantors of the 5.625% Proceeds Note, limitations on
mergers, consolidations and sales of all or substantially all of the assets of such entities.
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The
holders of the 5.625% Senior Notes may force the Issuer to immediately repay the principal on the 5.625% Senior Notes, including interest to the acceleration date, if certain
defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $25 million, which defaults result in the acceleration
of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $500 million aggregate principal amount of the 5.625% Senior Notes was outstanding.
On April 28, 2015, the Issuer issued $700 million aggregate principal amount of its 5.125% Senior Notes due 2023 (the
"5.125% Senior Notes") under an indenture among Level 3, as guarantor, the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee. The 5.125% Senior Notes (i) are senior
unsecured, unsubordinated obligations of the Issuer; (ii) rank equally in right of payment with all other existing and future senior unsecured unsubordinated indebtedness of the Issuer and
(iii) are unconditionally guaranteed on an unsubordinated, unsecured basis by Level 3. Each of Level 3 and the Issuer has agreed to endeavor in good faith using commercially
reasonable efforts to cause Level 3 LLC to obtain all material governmental authorizations and consents required in order for it to guarantee the 5.125% Senior Notes at the
earliest practicable date and to enter into a guarantee of those notes promptly thereafter. The 5.125% Senior Notes bear interest at a rate of 5.125% per annum, payable semiannually in arrears on
March 1 and September 1 of each year.
The
Issuer may redeem the 5.125% Senior Notes, in whole or in part, at any time before May 1, 2018, at a redemption price equal to 100% of their principal amount, plus a
make-whole premium and accrued and unpaid interest. The Issuer also may redeem the 5.125% Senior Notes, in whole or in part, at any time on or after May 1, 2018. If a redemption occurs before
May 1, 2020, the Issuer will pay a premium on the principal amount of the 5.125% Senior Notes redeemed, plus accrued and unpaid interest. This premium decreases annually from 2.5625% for a
redemption during the twelve month period beginning on May 1, 2018 to 1.2813% for a redemption during the twelve month period beginning on May 1, 2019. In addition, on or prior to
May 1, 2018, the Issuer may redeem up to 40% of the aggregate principal amount of the 5.125% Senior Notes with the net proceeds of certain equity offerings of Level 3 at a redemption
price equal to 105.125% of the principal amount of the 5.125% Senior Notes so redeemed, plus accrued and unpaid interest, provided that at least 60% of the aggregate principal amount of the 5.125%
Senior Notes originally issued remain outstanding after such redemption.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 5.125% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, the Issuer, Parent and the Trustee entered
into a supplemental indenture with respect to the indenture governing the 5.125% Senior Notes that provides that the acquisition of Parent by CenturyLink as contemplated by the Merger Agreement will
not constitute a "Change of Control" under the indenture governing the 5.125% Senior Notes, subject to delivery of an officers' certificate to the Trustee providing the certification required by the
supplemental indenture.
The
indenture relating to the 5.125% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries;
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(ix) transactions
with affiliates; (x) reports; (xi) limitation on designations of unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer and future
guarantors of the 5.125% Senior Notes and guarantors of the 5.125% Proceeds Note, limitations on mergers, consolidations and sales of all or substantially all of the assets of such entities.
The
holders of the 5.125% Senior Notes may force the Issuer to immediately repay the principal on the 5.125% Senior Notes, including interest to the acceleration date, if certain
defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $25 million, which defaults result in the acceleration
of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $700 million aggregate principal amount of the 5.125% Senior Notes was outstanding.
On November 13, 2015, the Issuer issued $900 million aggregate principal amount of its 5.375% Senior Notes due 2024 (the
"2024 5.375% Senior Notes") under an indenture among Level 3, as guarantor, the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2024 5.375% Senior Notes (i)
are senior unsecured, unsubordinated obligations of the Issuer; (ii) rank equally in right of payment with all other existing and future senior unsecured unsubordinated indebtedness of the
Issuer and (iii) are unconditionally guaranteed on an unsubordinated, unsecured basis by Level 3 and Level 3 LLC. The 2024 5.375% Senior Notes bear interest at a rate of
5.375% per annum, payable semiannually in arrears on January 15 and July 15 of each year.
The
Issuer may redeem the 2024 5.375% Senior Notes, in whole or in part, at any time before January 15, 2019, at a redemption price equal to 100% of their principal amount, plus a
make whole premium and accrued and unpaid interest. The Issuer also may redeem the 2024 5.375% Senior Notes, in whole or in part, at any time on or after January 15, 2019. If a redemption
occurs before January 15, 2021, the Issuer will pay a premium on the principal amount of the 2024 5.375% Senior Notes redeemed, plus accrued and unpaid interest. This premium decreases annually
from 2.688% for a redemption during the twelve month period beginning on January 15, 2019 to 1.344% for a redemption during the twelve month period beginning on January 15, 2020. In
addition, on or prior to January 15, 2019, the Issuer may redeem up to 40% of the aggregate principal amount of the 2024 5.375% Senior Notes with the net proceeds of certain equity offerings of
Level 3 at a redemption price equal to 105.3750% of the principal amount of the 2024 5.375% Senior Notes so redeemed, plus accrued and unpaid interest, provided that at least 60% of the
aggregate principal amount of the 2024 5.375% Senior Notes originally issued remain outstanding after such redemption.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 2024 5.375% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, the Issuer, Parent and the Trustee
entered into a supplemental indenture with respect to the indenture governing the 2024 5.375% Senior Notes that provides that
the acquisition of Parent by CenturyLink as contemplated by the Merger Agreement will not constitute a "Change of Control" under the indenture governing the 2024 5.375% Senior Notes, subject to
delivery of an officers' certificate to the Trustee providing the certification required by the supplemental indenture.
The
indenture relating to the 2024 5.375% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset
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dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries; (ix) transactions with affiliates; (x) reports; (xi) limitation on
designations of unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer and future guarantors of the 2024 5.375% Senior Notes and guarantors of the 5.375% due 2024
Proceeds Note, limitations on mergers, consolidations and sales of all or substantially all of the assets of such entities.
The
holders of the 2024 5.375% Senior Notes may force the Issuer to immediately repay the principal on the 2024 5.375% Senior Notes, including interest to the acceleration date, if
certain defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $200 million, which defaults result in the
acceleration of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $900 million aggregate principal amount of the 2024 5.375% Senior Notes was outstanding.
On April 28, 2015, the Issuer issued $800 million aggregate principal amount of its 5.375% Senior Notes due 2025 (the
"2025 5.375% Senior Notes") under an indenture among Level 3, as guarantor, the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee. The 2025 5.375% Senior Notes (i)
are senior unsecured, unsubordinated obligations of the Issuer; (ii) rank equally in right of payment with all other existing and future senior unsecured
unsubordinated indebtedness of the Issuer and (iii) are unconditionally guaranteed on an unsubordinated, unsecured basis by Level 3. Each of Level 3 and the Issuer has agreed to
endeavor in good faith using commercially reasonable efforts to cause Level 3 LLC to obtain all material governmental authorizations and consents required in order for it to guarantee
the 2025 5.375% Senior Notes at the earliest practicable date and to enter into a guarantee of those notes promptly thereafter. The 2025 5.375% Senior Notes bear interest at a rate of 5.375% per
annum, payable semiannually in arrears on March 1 and September 1 of each year.
The
Issuer may redeem the 2025 5.375% Senior Notes, in whole or in part, at any time before May 1, 2020, at a redemption price equal to 100% of their principal amount, plus a
make-whole premium and accrued and unpaid interest. The Issuer also may redeem the 2025 5.375% Senior Notes, in whole or in part, at any time on or after May 1, 2020. If a redemption occurs
before May 1, 2023, the Issuer will pay a premium on the principal amount of the 2025 5.375% Senior Notes redeemed, plus accrued and unpaid interest. This premium decreases annually from
2.6875% for a redemption during the twelve month period beginning on May 1, 2020 to 1.7917% for a redemption during the twelve month period beginning on May 1, 2021 to 0.8958% for a
redemption during the twelve month period beginning on May 1, 2022. In addition, on or prior to May 1, 2018, the Issuer may redeem up to 40% of the aggregate principal amount of the 2025
5.375% Senior Notes with the net proceeds of certain equity offerings of Level 3 at a redemption price equal to 105.375% of the principal amount of the 2025 5.375% Senior Notes so redeemed,
plus accrued and unpaid interest, provided that at least 60% of the aggregate principal amount of the 2025 5.375% Senior Notes originally issued remain outstanding after such redemption.
If
an event treated as a change in control of Level 3 and/or the Issuer occurs, the Issuer will be obligated, subject to certain conditions, to offer to purchase all of the
outstanding 2025 5.375% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, the Issuer, Parent and the Trustee
entered into a supplemental indenture with respect to the indenture governing the 2025 5.375% Senior Notes that provides that the acquisition of Parent by CenturyLink as contemplated by the Merger
Agreement will not constitute a "Change of Control" under the indenture governing the 2025 5.375% Senior Notes,
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subject
to delivery of an officers' certificate to the Trustee providing the certification required by the supplemental indenture.
The
indenture relating to the 2025 5.375% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries;
(ix) transactions with affiliates; (x) reports; (xi) limitation on designations of unrestricted subsidiaries; and (xii) in the case of Level 3, the Issuer and future
guarantors of the 2025 5.375% Senior Notes and guarantors of the 2025 5.375% Senior Notes, limitations on mergers, consolidations and sales of all or substantially all of the assets of such entities.
The
holders of the 2025 5.375% Senior Notes may force the Issuer to immediately repay the principal on the 2025 5.375% Senior Notes, including interest to the acceleration date, if
certain defaults exist under other indebtedness of Level 3 or any restricted subsidiary having an outstanding principal amount of at least $25 million, which defaults result in the
acceleration of such other indebtedness or constitute a failure to pay principal when due.
As
of September 30, 2016, approximately $800 million aggregate principal amount of the 2025 5.375% Senior Notes was outstanding.
Indebtedness of Level 3 Communications, Inc.
On December 1, 2014, Level 3 issued $600 million aggregate principal amount of its 5.75% Senior Notes due 2022
(the "5.75% Senior Notes") under an indenture between Level 3 and The Bank of New York Mellon Trust Company, N.A., as trustee. The 5.75% Senior Notes are unsecured and unsubordinated
obligations of Level 3. They rank equally in right of payment with all other existing and future senior unsecured indebtedness of Level 3. The 5.75% Senior Notes bear interest at a rate
of 5.75% per annum, payable semiannually on March 1 and September 1 of each year.
Level 3
may redeem the 5.75% Senior Notes, in whole or in part, at any time before December 1, 2017, at a redemption price equal to 100% of their principal amount, plus a
make-whole premium and accrued and unpaid interest. Level 3 also may redeem the 5.75% Senior Notes, in whole or in part, on or after December 1, 2017. If a redemption occurs before
December 1, 2019, Level 3 will pay a premium on the principal amount of the 5.75% Senior Notes redeemed. The premium decreases annually from approximately 2.8750% for a redemption during
the twelve month period beginning December 1, 2017 to approximately 1.4375% for a redemption during the twelve month period
beginning on December 1, 2018. In addition, on or prior to December 1, 2017, Level 3 may redeem up to 40% of the 5.75% Senior Notes with the proceeds of certain equity offerings
of Level 3 at a redemption price equal to 105.75% of the principal amount of the 5.75% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) to the redemption date.
If
an event treated as a change of control of occurs, Level 3 will be obligated, subject to certain conditions, to offer to purchase all outstanding 5.75% Senior Notes at a
purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any. On November 22, 2016, Parent and the Trustee entered into a supplemental indenture with respect to the
indenture governing the 5.75% Senior Notes that provides that the acquisition of Parent by CenturyLink as contemplated by the Merger Agreement will not constitute a "Change of Control" under the
indenture governing the 5.75% Senior Notes, subject to delivery of an officers' certificate to the Trustee providing the certification required by the supplemental indenture.
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The
indenture relating to the 5.75% Senior Notes contains certain covenants, including, among others, covenants with respect to the following matters: (i) limitation on
consolidated debt; (ii) limitation on debt of the Issuer and the Issuer's restricted subsidiaries; (iii) limitation on restricted payments; (iv) limitation on dividend and other
payment restrictions affecting restricted subsidiaries; (v) limitation on liens; (vi) limitation on sale and leaseback transactions; (vii) limitation on asset dispositions;
(viii) limitation on issuance and sales of capital stock of restricted subsidiaries; (ix) transactions with affiliates; (x) future subsidiary guarantors and subsidiary liens;
(xi) reports; (xii) limitation on designations of unrestricted subsidiaries; and (xiii) in the case of Level 3, limitations on mergers, consolidations and sales of certain
assets.
Either
the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding 5.75% Senior Notes may accelerate the maturity of the 5.75% Senior Notes, including
interest to the acceleration date, if certain defaults exist under the indebtedness of Level 3.
As
of September 30, 2016, approximately $600 million aggregate principal amount of the 5.75% Senior Notes was outstanding.
DESCRIPTION OF THE NOTES
General
The new notes, like the original notes, will be issued under an Indenture dated as of March 22, 2016 (the "Indenture"), among
Parent, the Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). Copies of the Indenture are available from Parent or the Issuer on request. For purposes of this
Description of the Notes, the term "Issuer" refers only to Level 3 Financing, Inc. and not to any of its subsidiaries or its parent company, Level 3 Communications, Inc.,
the term "Parent" refers only to Level 3 Communications, Inc. and not to any of its subsidiaries and the term "Level 3 LLC" refers to Level 3
Communications, LLC and not its subsidiaries, in each case except for purposes of financial data determined on a consolidated basis. For purposes of this Description of the Notes, all
references to the "Notes" shall be deemed to collectively refer to the original notes and the new notes. For a discussion of the acquisition of Parent by CenturyLink and the Credit Agreement
Refinancing, see "SummaryRecent Developments."
The
following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and to all of the provisions of the Indenture, including the definitions of certain terms therein and those terms made a part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the Indenture. The definitions of certain capitalized terms used in the following summary are set forth below under
"Certain Definitions." We urge you to read the Indenture because it, and not this description, defines your rights as a holder of the Notes.
The
Notes are unsubordinated, unsecured obligations of the Issuer, ranking equal in right of payment with all existing and future unsecured indebtedness of the Issuer that is not
expressly subordinated in right of payment to the Notes, and are senior in right of payment to all existing and future indebtedness of the Issuer that is expressly subordinated in right of payment to
the Notes. The Notes, however, are effectively subordinated to the Issuer's existing and future secured obligations, including secured obligations under existing and future credit facilities,
receivables, purchase money indebtedness, capitalized leases and certain other arrangements, to the extent of the value of the collateral securing such obligations. Additionally, the Notes are
effectively subordinated to all liabilities, including trade payables, of the Issuer's subsidiaries that are not Guarantors. As of September 30, 2016, the Issuer (excluding its subsidiaries)
had, on an as adjusted basis, $10.226 billion of indebtedness outstanding (excluding discounts and fair value
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adjustments),
of which $4.611 billion was secured indebtedness and all of which has been guaranteed by Level 3 LLC.
For
a summary of certain risks relating to an investment in the Notes, see "Risk Factors."
The Issuer's obligations under the Indenture, including the repurchase obligation resulting from a Change of Control Triggering Event,
are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated and unsecured basis by Parent and Level 3 LLC and will be fully and unconditionally guaranteed,
jointly and severally, on an unsubordinated, unsecured basis by each Restricted Subsidiary that becomes a Guarantor pursuant to the terms of the Indenture. A Restricted Subsidiary will only be
required to become a Guarantor if it incurs specified types of Debt or provides a Guarantee of the Existing Senior Notes. Each Note Guarantee will be a general unsecured obligation of the Guarantor,
will be effectively subordinated to any existing or future secured Debt of the Guarantor to the extent of the value of the assets securing such Debt, will be senior in right of payment to any existing
or future Debt of the Guarantor that is expressly subordinated in right of payment to the Note Guarantee, and will be equal in right of payment with any existing or future unsecured Debt of the
Guarantor that is not expressly subordinated in right of payment to the Note Guarantee, including any Guarantee of the Existing Senior Notes. As further described in the fourth succeeding paragraph,
the Note Guarantee of a Restricted Subsidiary may be subordinated in the future to any guarantee of any Qualified Credit Facility issued by such Restricted Subsidiary, including the Existing Credit
Facility. As of September 30, 2016, Parent (excluding its subsidiaries and guarantees) had approximately $600 million of indebtedness outstanding, excluding intercompany balances and
discount and fair value adjustments, none of which constituted secured indebtedness or subordinated indebtedness.
As
of September 30, 2016, the Issuer and its subsidiaries in the aggregate had approximately $10.401 billion of indebtedness outstanding (excluding intercompany balances
and discounts and fair value adjustments), $4.786 billion of which constituted secured indebtedness and none of which constituted subordinated indebtedness (excluding intercompany balances).
All such indebtedness of the Issuer, on an as adjusted basis, is guaranteed by Level 3 LLC. Under the circumstances described below under "Certain
CovenantsLimitation on Designations of Unrestricted Subsidiaries," Parent will be permitted to designate certain of its subsidiaries as "Unrestricted Subsidiaries." The Unrestricted
Subsidiaries will not be subject to any of the restrictive covenants in the Indenture. The Unrestricted Subsidiaries will not guarantee the Notes.
If
any Guarantor makes payments under its Note Guarantee, each of the Issuer and the other Guarantors must contribute their share of such payments. The Issuer's and the other Guarantors'
shares of such payments will be computed based on the proportion that the net worth of the Issuer or the relevant Guarantor represents relative to the aggregate net worth of the Issuer and all the
Guarantors combined.
The
Note Guarantee of a Guarantor (other than Parent) will be released (a) in connection with any sale or other disposition of all or substantially all of the assets of that
Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Parent or a Restricted Subsidiary, if the sale or other
disposition of all or substantially all of the assets of that Guarantor complies with the covenant described under "Certain CovenantsLimitation on Asset Dispositions" (or
Parent certifies in an Officers' Certificate to the Trustee that it will comply with the requirements of such covenant relating to application of the proceeds of such sale or disposition),
(b) in connection with any sale of all of the Capital Stock of a Guarantor (other than Parent) to a Person that is not (either before or after giving effect to such transaction) Parent or a
Restricted Subsidiary, if the sale of all such Capital Stock of that Guarantor complies with the
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covenant
described under "Certain CovenantsLimitation on Asset Dispositions" (or Parent certifies in an Officers' Certificate to the Trustee that it will comply with the
requirements of such covenant relating to application of the proceeds of such sale or disposition), (c) if Parent properly designates any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary pursuant to the covenant described under "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" or (d) if the Issuer
exercises the legal defeasance option or covenant defeasance option as described under "Satisfaction and Discharge of the Indenture; Defeasance."
The
Issuer, the Guarantors and the Trustee may, without notice to or consent of any holders of Notes, enter into one or more indentures supplemental to the Indenture, or amend any
indenture supplemental to the Indenture entered into by the Issuer, such Guarantor and the Trustee for the purpose of adding an additional Note Guarantee pursuant to the covenants described under
"Certain CovenantsLimitation on Consolidated Debt," "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" or
"Certain CovenantsLimitation on Actions with respect to Existing Intercompany Obligations," or to provide that the payment obligation on a Note Guarantee of a Guarantor
(other than Parent or any Sister Restricted Subsidiary) be expressly subordinated in any bankruptcy, liquidation or winding up proceeding of such Guarantor to the prior payment in full in cash of all
obligations of such Guarantor under any Guarantee of, or obligation as borrower under, any Qualified Credit Facility (which term includes various types of Debt, including secured notes) Incurred by
Parent or a Restricted Subsidiary in accordance with clause (ii) of
paragraph (b) of the covenant described under "Certain CovenantsLimitation on Consolidated Debt" or clause (ii) of paragraph (b) of the covenant
described under "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries;"
provided
,
however
, that (x) the
terms of the subordination of a Note Guarantee to any such Guarantee of, or obligation as borrower under, a Qualified
Credit Facility may not eliminate or otherwise adversely affect the subordination of the payment obligation on any other Debt of such Guarantor to the payment obligation of the Note Guarantee of such
Guarantor and (y) any Guarantee (other than a Guarantee of such Qualified Credit Facility) by such Guarantor of the Existing Senior Notes or any other Debt of Parent or any Sister Restricted
Subsidiary also shall be expressly subordinated in any bankruptcy, liquidation or winding up proceeding of such Guarantor to the prior payment in full in cash of all obligations of such Guarantor
under its Guarantee of such Qualified Credit Facility to at least the same extent and on the same terms and conditions as the subordination provisions applicable to such Guarantor's Note Guarantee. On
an as adjusted basis, Level 3 LLC's Guarantees of the Existing Senior Notes and the Notes are subordinated to Level 3 LLC's Guarantee of the Existing Credit Facility. The
Issuer has entered into a subordination agreement in accordance with the foregoing provisions subordinating Level 3 LLC's payment obligations on the Offering Proceeds Note to
Level 3 LLC's payment obligations in respect of the Loan Proceeds Note in any bankruptcy, liquidation or winding up proceeding of Level 3 LLC.
The
Issuer is a holding company with no material assets other than the stock of its subsidiaries, a loan proceeds note related to the Existing Credit Facility, the Existing Proceeds Note
and the Offering Proceeds Note. Accordingly, the Issuer will depend upon dividends, loans or other distributions from its subsidiaries, or capital contributions from Parent, to generate the funds
necessary to meet its financial obligations, including its obligations to pay you as a holder of the Notes. The Issuer's subsidiaries may not generate earnings sufficient to enable it to meet its
payment obligations. The Issuer's subsidiaries are legally distinct from it and, unless they guarantee the Notes, have no obligation to pay amounts due on the Issuer's debt or to make funds available
to it for such payment. Similarly, Parent is a holding company with no material assets other than the stock of its subsidiaries. Accordingly, Parent depends upon dividends, loans or other
distributions from its subsidiaries, including the Issuer, to generate the funds necessary to meet its financial obligations, including its obligations as a Guarantor. Future debt of certain of the
Issuer's subsidiaries may prohibit the payment of dividends or the making of loans or advances to Parent or
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the
Issuer. In addition, the ability of such subsidiaries to make such payments, loans or advances is limited by the laws of the relevant jurisdictions in which such subsidiaries are organized or
located. In certain circumstances, the prior or subsequent approval of such payments, loans or advances is required from applicable regulatory bodies or other governmental entities. To the extent the
Issuer cannot access the cash flow of its subsidiaries, and Parent is unable to access the cash flow of its subsidiaries, including the Issuer, the Issuer may not have access to sufficient cash to
repay the Notes, and Parent may not have sufficient cash to comply with its guarantee obligations on the Notes. Holders of any preferred stock of any of the Issuer's subsidiaries that are not
Guarantors and creditors, including trade creditors and other subsidiaries of Parent that have made intercompany loans to the Issuer's subsidiaries, of any of those subsidiaries have and will have
claims relating to
the assets of that subsidiary that are senior to the Notes. That is, the Notes are structurally subordinated to the debt, preferred stock and other obligations of the Issuer's subsidiaries that are
not Guarantors. All of the Issuer's existing debt is, on an as adjusted basis, guaranteed by Level 3 LLC. Holders of the Notes have no claims to the assets of any of the Issuer's
subsidiaries. See "Risk FactorsRisks Relating to the NotesThe Issuer's subsidiaries must make payments to the Issuer in order for the Issuer to make payments on the notes,
and Parent's subsidiaries must make payments to Parent in order for Parent to make payment on its obligations as a guarantor of the notes" and "Risk FactorsRisks Relating to the
NotesBecause the notes are structurally subordinated to the obligations of the Issuer's subsidiaries, you may not be fully repaid if the Issuer becomes insolvent."
Principal, Maturity and Interest
In the exchange offer, the Issuer is issuing $775,000,000 aggregate principal amount of the 5.25% Senior Notes due 2026 (the "New
Notes") in exchange for the original notes issued under the Indenture. Subject to compliance with the covenant described under "Certain CovenantsLimitation on Debt of the
Issuer and Issuer Restricted Subsidiaries," the Issuer can issue an unlimited amount of additional Notes at later dates under the Indenture. The Issuer can issue additional Notes as part of the same
series or as an additional series. Any additional Notes that the Issuer issues in the future will be identical in all respects to the Notes that the Issuer is issuing now in the exchange offer, except
that Notes issued in the future may have different issuance prices and issuance dates. However, a separate CUSIP or ISIN would be issued for the additional Notes, unless the Notes and additional Notes
are fungible for U.S. federal income tax purposes.
The
Notes will mature on March 15, 2026. Interest on the Notes will accrue at the rate of 5.25% per annum from the Issue Date, or from the most recent date to which interest has
been paid, and will be payable in cash semiannually in arrears on April 15 and October 15, commencing October 15, 2016, to the persons who are registered holders of the Notes at
the close of business on the preceding April 1 or October 1, as the case may be. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Payment.
Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at
the office or
agency of the Issuer, which, unless otherwise provided by the Issuer, will be the offices of the Trustee. At the option of the Issuer, interest may be paid by check mailed to the registered holders at
their registered addresses. The Notes will be issued without coupons and in fully registered form only, in minimum denominations of $1,000 and integral multiples thereof. The Notes will be issued only
against payment in immediately available funds. No service charge will be made for any registration of transfer or exchange of the Notes, but the Issuer may require payment of a sum sufficient to
cover any transfer tax or other similar governmental charge payable in connection therewith.
The
interest rate on the Notes is subject to increase in the circumstances (such additional interest being referred to as "Special Interest") described under "Exchange Offer;
Registration Rights." All references herein to interest on the Notes shall include such Special Interest, if appropriate.
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At any time prior to March 15, 2021, the Issuer may redeem all or a part of the Notes, upon not less than 30 nor more than
60 days' prior notice, at a redemption price equal to 100% of the principal amount of the Notes so redeemed plus the Applicable Premium as of, and accrued and unpaid interest thereon (if any)
to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).
"Applicable
Premium" means, with respect to any Note on any redemption date, the greater of (1) 1.0% of the principal amount of such Note and (2) the excess, if any, of
(a) the present value at such redemption date of (i) the redemption price of such Note at March 15, 2021 (such redemption price being set forth in the table appearing below), plus
(ii) all required interest payments due on such Note through March 15, 2021 (excluding accrued but unpaid interest to the redemption date),
computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points, over (b) the principal amount of such Note. For the avoidance of doubt, calculations
of the Applicable Premium and redemption price shall not be a duty of the Trustee or any Paying Agent.
"Treasury
Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to such redemption date (or, if such Statistical
Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to March 15, 2021;
provided
,
however
, that if the period from the redemption date to March 15, 2021 is less than one
year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
On
and after March 15, 2021, the Issuer may redeem all or a part of the Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth
below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve months beginning March 15 of the years indicated below:
|
|
|
|
|
Year
|
|
Redemption
Price
|
|
2021
|
|
|
102.625
|
%
|
2022
|
|
|
101.750
|
%
|
2023
|
|
|
100.875
|
%
|
2024 and thereafter
|
|
|
100.000
|
%
|
In
addition, at any time or from time to time on or prior to March 15, 2019, the Issuer may redeem up to 40% of the original aggregate principal amount of the Notes (including any
additional Notes) at a redemption price equal to 105.25% of the principal amount of the Notes so redeemed, plus accrued and unpaid interest thereon (if any) to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), with the net cash proceeds contributed to the capital of the Issuer of one or
more private placements to Persons other than Affiliates of Parent or underwritten public offerings of Common Stock of Parent resulting, in each case, in gross proceeds of at least $100 million
in the aggregate;
provided
,
however
, that at least 60% of the original aggregate principal amount of the
Notes (including any additional Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or
public offering upon not less than 30 nor more than 60 days' prior notice.
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Mandatory Redemption
The Issuer is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain
circumstances, the Issuer may be required to Offer to Purchase Notes as described under "Certain CovenantsChange of Control Triggering Event," "Certain
CovenantsLimitation on Asset Dispositions" and "Certain CovenantsLimitation on Actions with Respect to Existing Intercompany Obligations." The Issuer may from
time to time purchase Notes in the open market or otherwise.
Subordination of Existing Intercompany Obligations
The Issuer lent the net proceeds of the issuance of the original notes, together with cash on hand, to Level 3 LLC in
return for an intercompany demand note (the "Offering Proceeds Note") from Level 3 LLC in an equal principal amount. The Offering Proceeds Note was pledged by the Issuer to secure its
obligations under the Existing Credit Facility. Level 3 LLC is the obligor on (i) an existing intercompany demand note (the "Parent Intercompany Note") to Parent to evidence loans
from Parent to Level 3 LLC, (ii) on an existing intercompany demand note (the "6.125% Proceeds Note") to the Issuer to evidence a loan made by the Issuer to
Level 3 LLC in an aggregate principal amount of $640 million, representing the gross proceeds to the Issuer from the issuance of the 6.125% Senior Notes due 2021,
(iii) an existing intercompany demand note (the "2018 Floating Rate Proceeds Note") to the Issuer to evidence a loan made by the Issuer to Level 3 LLC in an aggregate principal
amount of $300 million, representing the gross proceeds to the Issuer from the issuance of the Floating Rate Senior Notes due 2018, (iv) an existing intercompany demand note (the "5.375%
due 2022 Proceeds Note") to the Issuer to evidence a loan made by the Issuer to Level 3 LLC in an aggregate principal amount of $1.0 billion, representing the gross proceeds to
the Issuer from the issuance of the 5.375% Senior Notes due 2022, (v) an existing intercompany demand note (the "5.625% Proceeds Note") to the Issuer to evidence a loan made by the Issuer to
Level 3 LLC in an aggregate principal amount of $500 million, representing the gross proceeds to the Issuer from the issuance of the 5.625% Senior Notes due 2023, (vi) an
existing intercompany demand note (the "5.125% Proceeds Note") to the Issuer to evidence a loan made by the Issuer to Level 3 LLC in an aggregate principal amount of $700 million,
representing the gross proceeds to the Issuer from the issuance of the 5.125% Senior Notes due 2023, (vii) an existing intercompany demand note (the "5.375% due 2024 Proceeds Note") to the
Issuer to evidence a loan made by the Issuer to Level 3 LLC in an aggregate principal amount of $900 million, representing the gross proceeds to the Issuer from the issuance of
the 5.375% Senior Notes due 2024 and (viii) an existing intercompany demand note (the "5.375% due 2025 Proceeds Note") to the Issuer to evidence a loan made by the Issuer to
Level 3 LLC in an aggregate principal amount of $800 million, representing the gross proceeds to the Issuer from the issuance of the 5.375% Senior Notes due 2025. As of
September 30, 2016, the outstanding principal amount of the Parent Intercompany Note was approximately $31.3 billion, the principal amount outstanding under the 6.125% Proceeds Note was
$640 million, the principal amount outstanding under the 2018 Floating Rate Proceeds Note was $300 million, the principal amount outstanding under the 5.375% due 2022 Proceeds Note was
$1.0 billion, the principal amount outstanding under the 5.625% Proceeds Note was $500 million, the principal amount outstanding under the 5.125% Proceeds Note was $700 million,
the principal amount outstanding under the 5.375% due 2024 Proceeds Note was $900 million and the principal amount outstanding under the 5.375% due 2025 Proceeds Note was $800 million.
Parent, as guarantor, the Issuer, as borrower, Merrill Lynch Capital Corporation, as administrative agent and collateral agent, and certain lenders are party to the Existing Credit Facility, pursuant
to which the lenders have extended $4.611 billion in senior secured term loans to the Issuer. Of the outstanding secured term loans under the Existing Credit Facility, $815 million in
aggregate principal amount mature on August 1, 2019, $1.796 billion in aggregate principal amount mature on January 15, 2020 and $2.0 billion in aggregate principal amount
mature on May 31, 2022. The
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Issuer
lent the proceeds of the term loans to Level 3 LLC in return for an intercompany demand note issued by Level 3 LLC (the "Loan Proceeds Note"). The Issuer's
obligations under the Existing Credit Facility are secured by the Parent Intercompany Note, the Loan Proceeds Note, the Existing Proceeds Notes and the Offering Proceeds Note. Each of the Existing
Proceeds Notes was subordinated to the Loan Proceeds Note pursuant to separate subordination agreements by and among the Issuer, Parent and Level 3 LLC. As of September 30, 2016,
the principal amount outstanding under the Loan Proceeds Note was $4.611 billion. Parent and the Issuer have entered into a subordination agreement (the "Subordination Agreement") that provides
that upon a total or partial liquidation, dissolution or winding up of Level 3 LLC or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to
Level 3 LLC or its Property, (a) the Issuer will be entitled to receive payment in full in cash of the Offering Proceeds Note before Level 3 LLC may make any payment
of principal of or interest on the Parent Intercompany Note to Parent, and (b) until the Offering Proceeds Note is paid in full in cash, any distribution to which Parent would be entitled but
for the Subordination Agreement will be made to the Issuer as its interests may appear. If a distribution is made to Parent that because of the Subordination Agreement should not have been made to
Parent, Parent shall hold such distribution in trust for the Issuer and pay it over to the Issuer as the Issuer's interests may appear. No right of the Issuer to enforce the subordination of the
Offering Proceeds Note shall be impaired by any act or failure to act by the Issuer or by its failure to comply with the Subordination Agreement. Parent, the Issuer and Level 3 LLC will
be restricted from taking certain actions with respect to the Offering Proceeds Note, the Parent Intercompany Note and the Subordination Agreement as set forth in the covenant described below under
"Certain CovenantsLimitation on Actions with respect to Existing Intercompany Obligations." The Parent Intercompany Note is subordinated on the same terms to the Existing
Proceeds Notes as the Parent Intercompany Note is subordinated to the Offering Proceeds Note. In addition, the Issuer and Level 3 LLC have entered into an offering proceeds note
subordination agreement that subordinates the right of the Issuer to payment under the Offering Proceeds Note to the right of the Issuer (in its capacity as borrower under the Existing Credit
Facility) to payment under the Loan Proceeds Note upon the liquidation, dissolution or winding up of Level 3 LLC or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Level 3 LLC or its property. The Existing Proceeds Notes are subordinated on the same terms to the Loan Proceeds Note as the Offering Proceeds Note is subordinated
to the Loan Proceeds Note. Accordingly, the right of the Issuer to payment under the Offering Proceeds Note is
pari passu
to the right of the Issuer to
payment under the Existing Proceeds Notes.
As
a condition to Incurring specified types of Debt pursuant to the covenants described below under "Certain CovenantsLimitation on Consolidated Debt,"
"Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" and "Certain CovenantsLimitation on Actions with respect to
Existing Intercompany Obligations," Restricted Subsidiaries will be required to guarantee (an "Offering Proceeds Note Guarantee") Level 3 LLC's obligations under the Offering Proceeds
Note and, in certain circumstances, subordinate the Debt that is Incurred to such Offering Proceeds Note Guarantee.
The
Offering Proceeds Note Guarantee of an Offering Proceeds Note Guarantor will be released (a) in connection with any sale or other disposition of all or substantially all of
the assets of that
Offering Proceeds Note Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Parent or a Restricted Subsidiary, if
the sale or other disposition of all or substantially all of the assets of that Offering Proceeds Note Guarantor complies with the covenant described under "Certain
CovenantsLimitation on Asset Dispositions" (or Parent certifies in an Officers' Certificate to the Trustee that it will comply with the requirements of such covenant relating to
application of the proceeds of such sale or disposition), (b) in connection with any sale of all of the Capital Stock of an Offering Proceeds Note Guarantor to a Person that is not (either
before or after giving effect to such transaction) Parent or a Restricted
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Subsidiary,
if the sale of all such Capital Stock of that Offering Proceeds Note Guarantor complies with the covenant described under "Certain CovenantsLimitation on Asset
Dispositions" (or Parent certifies in an Officers' Certificate to the Trustee that it will comply with the requirements of such covenant relating to application of the proceeds of such sale or
disposition), (c) if Parent properly designates any Restricted Subsidiary that is an Offering Proceeds Note Guarantor as an Unrestricted Subsidiary pursuant to the covenant described under
"Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" or (d) if the Issuer exercises the legal defeasance option or covenant defeasance option as
described under "Satisfaction and Discharge of the Indenture; Defeasance."
An
Offering Proceeds Note Guarantor and Level 3 LLC may enter into an agreement or arrangement that provides that the payment obligation on an Offering Proceeds Note
Guarantee (and in the case of Level 3 LLC, on the Offering Proceeds Note) of an Offering Proceeds Note Guarantor (other than Parent or any Sister Restricted Subsidiary) be expressly
subordinated in any bankruptcy, liquidation or winding up proceeding of such Offering Proceeds Note Guarantor to the prior payment in full in cash of all obligations of such Offering Proceeds Note
Guarantor or Level 3 LLC, as applicable, under any Guarantee of, or obligation as borrower under, any Qualified Credit Facility Incurred by Parent or a Restricted Subsidiary in
accordance with clause (ii) of paragraph (b) of the covenant described under "Certain CovenantsLimitation on Consolidated Debt" or clause (ii) of
paragraph (b) of the covenant described under "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries;"
provided,
however,
that (x) the terms of the subordination of an Offering Proceeds Note Guarantee, or in the case of Level 3 LLC, the Offering Proceeds Note, to any
such Guarantee of or obligation as borrower under a Qualified Credit Facility may not eliminate or otherwise adversely affect the subordination of the payment obligation on any other Debt of such
Offering Proceeds Note Guarantor or Level 3 LLC, as applicable, to the payment obligation of the Offering Proceeds Note Guarantee of such Offering Proceeds Note Guarantor, or in the case
of Level 3 LLC, the Offering Proceeds Note, and (y) any Guarantee (other than a Guarantee of such Qualified Credit Facility) by such Offering Proceeds Note Guarantor or
Level 3 LLC, as applicable, of the 6.125% Senior Notes due 2021, the Floating Rate Senior Notes due 2018, the 5.375% Senior Notes due 2022, the 5.625% Senior Notes due 2023, the 5.125%
Senior Notes due 2023, the 5.375% Senior Notes due 2024, the 5.375% Senior Notes due 2025 or any other Debt of Parent or any Sister Restricted Subsidiary also shall be expressly subordinated in any
bankruptcy, liquidation or winding up proceeding of such Offering Proceeds Note Guarantor or Level 3 LLC, as applicable, to the prior
payment in full in cash of all obligations of such Offering Proceeds Note Guarantor or Level 3 LLC, as applicable, under its Guarantee of such Qualified Credit Facility to at least the
same extent and on the same terms and conditions as the subordination provisions applicable to such Offering Proceeds Note Guarantor's Offering Proceeds Note Guarantee or Level 3 LLC's
obligation on the Offering Proceeds Note.
Certain Covenants
Covenant Suspension.
Set forth below are summaries of certain covenants contained in the Indenture. During any period of time (any such
period, a
"Suspension Period") that (i) the ratings assigned to the Notes by two or more of the Rating Agencies are Investment Grade Ratings and (ii) no Default or Event of Default has occurred
and is continuing under the Indenture, Parent and the Restricted Subsidiaries will not be subject to the covenants of the Indenture described below under "Limitation on Consolidated
Debt," "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries," "Limitation on Restricted Payments," "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries," clause (i)(a) of "Limitation on Sale and Leaseback Transactions," "Limitation on Asset Dispositions,"
"Limitation on Issuance and Sales of Capital Stock of Restricted Subsidiaries" (other than the first two sentences thereof), "Transactions with Affiliates," clause (b)
of "Limitation on Designations of Unrestricted Subsidiaries," and clause (c) of
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the
first and second paragraphs of "Mergers, Consolidations and Certain Sales of Assets" (collectively, the "Suspended Covenants"). In the event that Parent and the Restricted
Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the preceding sentence and, on any subsequent date (the "Reversion Date"), two or more of the Rating
Agencies withdraw their ratings or no longer assign Investment Grade Ratings to the Notes or a Default or Event of Default occurs and is continuing, then Parent and the Restricted Subsidiaries will
thereafter again be subject to the Suspended Covenants and calculations of the amount available to be made as Restricted Payments under the covenant described under "Limitation on
Restricted Payments" will be made as though the covenant described under "Limitation on Restricted Payments" had been in effect during the entire period of time from the Measurement Date.
On the Reversion Date, all Debt Incurred during the Suspension Period will be classified to have been Incurred pursuant to paragraph (a) or one of the clauses set forth in
paragraph (b) of the covenant described under "Limitation on Consolidated Debt" or paragraph (a) or one of the clauses set forth in paragraph (b) of the covenant
described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" (in each case to the extent such Debt would be permitted to be Incurred thereunder as of the
Reversion Date and after giving effect to Debt Incurred prior to the Suspension Period and outstanding on the Reversion Date). To the extent such Debt would not be permitted to be Incurred pursuant to
paragraph (a) or one of the clauses set forth in paragraph (b) of the covenant described under "Limitation on Consolidated Debt" or paragraph (a) or one of the
clauses set forth in paragraph (b) of the covenant described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries," such Debt will be deemed to have been
outstanding on the Measurement Date, so that it is classified as permitted under clause (v) of paragraph (b) of the covenant described under "Limitation on Consolidated
Debt" or clause (iii) of paragraph (b) of the covenant described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries." If the Incurrence of any Debt
by a Restricted Subsidiary during the Suspension Period would have been prohibited or conditioned upon such Restricted Subsidiary entering into a Note Guarantee and an Offering Proceeds Note Guarantee
had the covenants described under "Limitation on Consolidated Debt" and "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" been in effect at the time of
such Incurrence, such Restricted Subsidiary shall enter into a Note Guarantee and an Offering Proceeds Note Guarantee that are senior to or rank equal with such Debt within ten days after the
Reversion Date. For purposes of determining compliance with the covenant described under "Limitation on Asset Dispositions," on the Reversion Date, the Net Available Proceeds from all
Asset Sales not applied in accordance with the covenant will be deemed to be reset to zero. Notwithstanding the foregoing, neither (a) the continued existence, after the date of such withdrawal
or downgrade, of facts and circumstances or obligations that were Incurred or otherwise came into existence during a Suspension Period nor (b) the performance of any such obligations, shall
constitute a breach of any covenant set forth in the Indenture or cause a Default or Event of Default thereunder;
provided
,
however
, that (1) Parent
and its Restricted Subsidiaries did not Incur or otherwise cause such facts and circumstances or obligations to exist in
anticipation of a withdrawal or downgrade below Investment Grade Ratings, (2) Parent reasonably believed that such Incurrence or actions would not result in such a withdrawal or downgrade and
(3) if so required each Restricted Subsidiary shall have entered into a Note Guarantee and an Offering Proceeds Note Guarantee within the specified time period. For purposes of
clauses (1) and (2) in the preceding sentence, anticipation and reasonable belief may be determined by Parent and shall be conclusively evidenced by a resolution to such effect adopted
in good faith by the board of directors of Parent or a duly authorized committee thereof. In reaching their determination, the board of directors or board committee may, but need not, consult with the
Rating Agencies.
The
Indenture contains, among others, the following covenants:
Limitation on Consolidated Debt.
(a) Parent may not, and may not permit any Restricted Subsidiary (other than to the extent permitted
by
paragraph (b) of the covenant described under
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"Limitation
on Debt of the Issuer and Issuer Restricted Subsidiaries") to, directly or indirectly, Incur any Debt;
provided, however,
that
Parent or any Restricted Subsidiary (subject, in the case of the Issuer and any Issuer Restricted Subsidiary, to the covenant described under "Limitation on Debt of the Issuer and Issuer
Restricted Subsidiaries") may Incur any Debt if, after giving pro forma effect to such Incurrence and the receipt and application of the net proceeds thereof, no Default or Event of Default would
occur as a consequence of such Incurrence or be continuing following such Incurrence and either (i) the ratio of (A) the aggregate consolidated principal amount (or, in the case of Debt
issued at a discount, the then-Accreted Value) of Debt of Parent and its Restricted Subsidiaries outstanding as of the most recent available quarterly or annual balance sheet, after giving pro forma
effect to the Incurrence of such Debt and any other Debt Incurred or repaid since such balance sheet date and the receipt and application of the net proceeds thereof, to (B) Pro Forma
Consolidated Cash Flow Available for Fixed Charges for Parent and its Restricted Subsidiaries for the four full fiscal quarters next preceding the Incurrence of such Debt for which consolidated
financial statements are available, would be less than 5.0 to 1.0, or (ii) Parent's Consolidated Capital Ratio as of the most recent available quarterly or annual balance sheet, after giving
pro forma effect to (x) the Incurrence of such Debt and any other Debt Incurred or repaid since such balance sheet date, (y) the issuance of any Capital Stock (other than Disqualified
Stock) of Parent since such balance sheet date, including the issuance of any Capital Stock to be issued concurrently with the Incurrence of such Debt, and (z) the receipt and application of
the net proceeds of such Debt or Capital Stock, as the case may be, is less than 2.25 to 1.0.
-
(b)
-
Notwithstanding
the foregoing limitation, Parent or any Restricted Subsidiary (other than the Issuer or any Issuer Restricted Subsidiary, except to the
extent permitted by the covenant described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries") may Incur any and all of the following (each of which shall be
given independent effect):
-
(i)
-
Debt
under the Notes issued on the Issue Date (including any New Notes issued in exchange therefor), any Note Guarantee in respect of the Notes issued on
the Issue Date or any Offering Proceeds Note Guarantee in respect of the Offering Proceeds Note;
-
(ii)
-
Debt
under Credit Facilities in an aggregate principal amount outstanding or available (together with the sum of (A) the amount of any outstanding
Debt Incurred pursuant to clause (ii) of paragraph (b) of the covenant described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries," plus
(B) the amount of all refinancing Debt outstanding or available pursuant to clause (vi) of paragraph (b) of the covenant described under "Limitation on Debt of the
Issuer and Issuer Restricted Subsidiaries" in respect of Debt previously Incurred pursuant to clause (ii) of paragraph (b) of the covenant described under "Limitation on
Debt of the Issuer and Issuer Restricted Subsidiaries," plus (C) the amount of all refinancing Debt outstanding or available pursuant to clause (viii) below in respect of Debt previously
Incurred pursuant to this clause (ii)) at any one time not to exceed the greater of (x) $5.011 billion and (y) 4.0 times Pro Forma Consolidated Cash Flow Available for
Fixed Charges of Parent and its Restricted Subsidiaries for the four full fiscal quarters next preceding the Incurrence of such Debt for which consolidated financial statements are available, which
amount shall be permanently reduced by the amount of Net Available Proceeds used to repay Debt under the Credit Facilities or any refinancing Debt in respect of the Credit Facilities Incurred pursuant
to clause (vi) of paragraph (b) of the covenant described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" or clause (viii) below, and not
reinvested in Telecommunications/IS Assets or used to purchase Notes or repay other Debt, pursuant to and as permitted by the covenant described under "Limitation on Asset Dispositions;"
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-
(iii)
-
Purchase
Money Debt;
provided
,
however
, that the amount of
such Purchase Money Debt does not exceed 100% of the cost of the construction, installation, acquisition, lease, development or improvement of the applicable Telecommunications/IS Assets;
-
(iv)
-
Subordinated
Debt of Parent;
provided
,
however
, that the
aggregate principal amount (or, in the case of Debt issued at a discount, the Accreted Value) of such Debt, together with any other outstanding Debt Incurred pursuant to this clause (iv), shall
not exceed $500 million at any one time (which amount shall be permanently reduced by the amount of Net Available Proceeds used to repay Subordinated Debt of Parent, and not reinvested in
Telecommunications/IS Assets or used to purchase Notes or repay other Debt, pursuant to and as permitted by the covenant described under "Limitation on Asset Dispositions"), except to the
extent such Debt in excess of $500 million (A) is subordinated to all other Debt of Parent other than Debt Incurred pursuant to this clause (iv) in excess of such
$500 million limitation, (B) does not provide for the payment of cash interest on such Debt prior to the Stated Maturity of the Notes and (C) (1) does not provide for payments of
principal of such Debt at stated maturity or by way of a sinking fund applicable thereto or by way of any mandatory redemption, defeasance, retirement or repurchase thereof by Parent (including any
redemption, retirement or repurchase which is contingent upon events or circumstances, but excluding any retirement required by virtue of the acceleration of any payment with respect to such Debt upon
any event of default thereunder), in each case on or prior to the Stated Maturity of the Notes, and (2) does not permit redemption or other retirement (including pursuant to an offer to
purchase made by Parent but excluding through conversion into capital stock of Parent, other than Disqualified Stock, without any payment by Parent or its Restricted Subsidiaries to the holders
thereof) of such Debt at the option of the holder thereof on or prior to the Stated Maturity of the Notes;
-
(v)
-
Debt
outstanding on the Measurement Date;
-
(vi)
-
Debt
owed by Parent to any Restricted Subsidiary or Debt owed by a Restricted Subsidiary to Parent or a Restricted Subsidiary;
provided
,
however
, that
(A) any Person that Incurs Debt owed to Parent or a Sister Restricted
Subsidiary pursuant to this clause (vi) is a Guarantor and an Offering Proceeds Note Guarantor, (B) (x) upon the transfer, conveyance or other disposition by such Restricted Subsidiary
or Parent of any Debt so permitted to a Person other than Parent or another Restricted Subsidiary of Parent or (y) if for any reason such Restricted Subsidiary ceases to be a Restricted
Subsidiary, the provisions of this clause (vi) shall no longer be applicable to such Debt and such Debt shall be deemed to have been Incurred by the issuer thereof at the time of such transfer,
conveyance or other disposition or when such Restricted Subsidiary ceases to be a Restricted Subsidiary and (C) the payment obligation of such Debt (if clause (A) above applies) is
expressly subordinated in any bankruptcy, liquidation or winding up proceeding of the obligor to the prior payment in full in cash of all obligations with respect to the Offering Proceeds Note
Guarantee of such Offering Proceeds Note Guarantor; and
provided further, however,
that a Foreign Restricted Subsidiary need not become a Guarantor or
an Offering Proceeds Note Guarantor pursuant to clause (A) above until such time and only so long as such Foreign Restricted Subsidiary Guarantees any other Debt of Parent or any Domestic
Restricted Subsidiary;
-
(vii)
-
Debt
Incurred by a Person prior to the time (A) such Person became a Restricted Subsidiary, (B) such Person merges into or consolidates with
a Restricted Subsidiary or (C) another Restricted Subsidiary merges into or consolidates with such Person (in a
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after
closing, or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any such obligations of Parent or any of its Restricted Subsidiaries pursuant
to such agreements, Incurred in connection with the disposition of any business, assets or Restricted Subsidiary of Parent (other than Guarantees of Indebtedness Incurred by any Person acquiring all
or any portion of such business, assets or Restricted Subsidiary of Parent for the purpose of financing such acquisition) and in an aggregate principal amount not to exceed the gross proceeds actually
received by Parent or any Restricted Subsidiary in connection with such disposition;
-
(x)
-
Debt
consisting of Permitted Hedging Agreements;
-
(xi)
-
Debt
not otherwise permitted to be Incurred pursuant to clauses (i) through (x) above or clause (xii) below, which, together with any
other outstanding Debt Incurred pursuant to this clause (xi), has an aggregate principal amount not to exceed the greater of (A) $250 million and (B) 7.5% of Parent's
Consolidated Tangible Assets measured at the time of the Incurrence thereof based on the most recent financial statements that are available for Parent; and
-
(xii)
-
Issue
Date Purchase Money Debt and Debt under the Existing Notes and the related indentures and any restricted subsidiary guarantees issued prior to the
Issue Date in accordance with such related indentures.
Notwithstanding
any other provision of this "Limitation on Consolidated Debt" covenant, the maximum amount of Debt that Parent or any Restricted Subsidiary may Incur
pursuant to this "Limitation on Consolidated Debt" covenant shall not be deemed to be exceeded due solely to the result of fluctuations in the exchange rates of currencies.
For
purposes of determining any particular amount of Debt under this "Limitation on Consolidated Debt" covenant, (1) Guarantees, Liens or obligations with respect to
letters of credit supporting Debt otherwise included in the determination of such particular amount shall not be
included and (2) any Liens granted for the benefit of the Notes pursuant to the provisions referred to in the "Limitation on Liens" covenant described below shall not be treated as
Debt. For purposes of determining compliance with this "Limitation on Consolidated Debt" covenant, in the event that an item of Debt meets the criteria of more than one of the types of
Debt described in the above clauses, Parent, in its sole discretion, shall classify such item of Debt and only be required to include the amount and type of such Debt in one of such clauses.
Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries.
(a) The Issuer may not, and may not permit any Issuer Restricted
Subsidiary to,
directly or indirectly, Incur any Debt;
provided, however,
that (i) the Issuer or (ii) any Issuer Restricted Subsidiary may incur any Debt
if, after giving pro forma effect to such Incurrence and the receipt and application of the net proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be
continuing following such Incurrence and the Issuer Debt Ratio would be less than 5.75 to 1.0;
provided, however,
that any Issuer Restricted Subsidiary
that Incurs Debt pursuant to this paragraph (a) is a Guarantor and an Offering Proceeds Note Guarantor.
-
(b)
-
Notwithstanding
the foregoing limitation, the Issuer or any Issuer Restricted Subsidiary may Incur any and all of the following (each of which shall be
given independent effect):
-
(i)
-
Debt
of the Issuer or any Issuer Restricted Subsidiary under the Notes issued on the Issue Date (including any New Notes issued in exchange therefor), any
Note Guarantee in respect of the Notes issued on the Issue Date or any Offering Proceeds Note Guarantee in respect of the Offering Proceeds Note;
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-
(ii)
-
Debt
of the Issuer or any Issuer Restricted Subsidiary under Credit Facilities in an aggregate principal amount outstanding or available (together with the
sum of (A) the amount of any outstanding Debt Incurred pursuant to clause (ii) of paragraph (b) of the covenant described under "Limitation on Consolidated Debt,"
plus
(B) the
amount of all refinancing Debt outstanding or available pursuant to clause (viii) of paragraph (b) of the covenant
described under "Limitation on Consolidated Debt" in respect of Debt previously Incurred pursuant to clause (ii) of paragraph (b) of the covenant described under
"Limitation on Consolidated Debt,"
plus
(C) the amount of all refinancing Debt outstanding or available pursuant to
clause (vi) below in respect of Debt previously Incurred pursuant to this clause (ii)) at any one time not to exceed the greater of (x) $5.011 billion and (y) 4.0
times Pro Forma Consolidated Cash Flow Available for Fixed Charges of Parent and its Restricted Subsidiaries for the four full fiscal quarters next preceding the Incurrence of such Debt for which
consolidated financial statements are available, which amount shall be permanently reduced by the amount of Net Available Proceeds used to repay Debt under the Credit Facilities (or any refinancing
Debt in respect of the Credit Facilities Incurred pursuant to clause (viii) of paragraph (b) of the covenant described under "Limitation on Consolidated Debt" or
clause (vi) below), and not reinvested in Telecommunications/IS Assets or used to purchase Notes or repay other Debt, pursuant to and as permitted by the covenant described under
"Limitation on Asset Dispositions;"
-
(iii)
-
Debt
of the Issuer or any Issuer Restricted Subsidiary outstanding on the Measurement Date;
-
(iv)
-
Debt
owed by the Issuer to a Restricted Subsidiary, Debt owed by an Issuer Restricted Subsidiary to Parent or a Restricted Subsidiary (including Debt owed
by an Issuer Restricted Subsidiary to another Issuer Restricted Subsidiary), and Debt with an aggregate principal amount not in excess of $50 million at any time outstanding owed by the Issuer
to Parent or any Sister Restricted Subsidiary;
provided, however,
that (A) any Issuer Restricted Subsidiary that Incurs Debt owed to Parent or a
Sister Restricted Subsidiary pursuant to this clause (iv) is a Guarantor and an Offering Proceeds Note Guarantor, (B) (x) upon the transfer, conveyance or other disposition by such
Issuer Restricted Subsidiary or the Issuer of any Debt so permitted to a Person other than the Issuer or another Issuer Restricted Subsidiary or (y) if for any reason such Issuer Restricted
Subsidiary ceases to be an Issuer Restricted Subsidiary, the provisions of this clause (iv) shall no longer be applicable to such Debt and such Debt shall be deemed to have been Incurred by the
issuer thereof at the time of such transfer, conveyance or other disposition or when such Issuer Restricted Subsidiary ceases to be an Issuer Restricted Subsidiary and (C) the payment
obligation of such Debt (if clause (A) above applies) is expressly subordinated in any bankruptcy, liquidation or winding up proceeding of the obligor to the prior payment in full in cash of
all obligations with respect to the Notes or the Offering Proceeds Note Guarantee of such Offering Proceeds Note Guarantor, respectively; and
provided further,
however,
that a Foreign Restricted Subsidiary need not become a Guarantor or an Offering Proceeds Note Guarantor pursuant to clause (A) above until such time and only so
long as such Foreign Restricted Subsidiary Guarantees any other Debt of Parent or any Domestic Restricted Subsidiary;
-
(v)
-
Debt
Incurred by a Person (other than Parent or any Sister Restricted Subsidiary) prior to the time (A) such Person became an Issuer Restricted
Subsidiary, (B) such Person merges into or consolidates with an Issuer Restricted Subsidiary or (C) an Issuer Restricted Subsidiary merges into or consolidates with such Person (in a
transaction in
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which
such Person becomes an Issuer Restricted Subsidiary), which Debt was not Incurred in anticipation of such transaction and was outstanding prior to such transaction;
provided
,
however
, that after giving effect to the Incurrence of any Debt pursuant to this
clause (v), (A) either (1) the Issuer could Incur at least $1.00 of additional Debt pursuant to paragraph (a) above computed using "6.0 to
1.0" rather than "5.75 to 1.0" as it appears therein or (2) the ratio computed pursuant to paragraph (a) above would be no higher than before giving effect to the Incurrence of such Debt
and (B) such Person or the Issuer Restricted Subsidiary into which such Person merges or consolidates is a Guarantor and an Offering Proceeds Note Guarantor;
-
(vi)
-
Debt
of the Issuer or any Issuer Restricted Subsidiary Incurred to renew, extend, refinance, defease, repay, prepay, repurchase, redeem, retire, exchange
or refund (each, a "refinancing") Debt of the Issuer or any Issuer Restricted Subsidiary Incurred pursuant to paragraph (a) above or clause (i), (ii), (iii), (v), (x) or
(xi) of this paragraph (b) or this clause (vi), in an aggregate principal amount (or if issued at a discount, the then-Accreted Value) not to exceed the aggregate principal amount
(or if issued at a discount, the then-Accreted Value) of and accrued interest on the Debt so refinanced plus the amount of any premium required to be paid in connection with such refinancing pursuant
to the terms of the Debt so refinanced or the amount of any premium reasonably determined by the board of directors of Parent or a duly authorized committee thereof as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated repurchase, plus the expenses of the Issuer Incurred in connection with such refinancing;
provided
,
however
, that (A) if the Person that originally Incurred the Debt to be refinanced
became, or would have been required to become if not already, a Guarantor or an Offering Proceeds Note Guarantor as a result of the Incurrence of the Debt being refinanced in accordance with this
covenant, (1) the Person that Incurs the refinancing Debt pursuant to this clause (vi) (if not the Issuer) shall be a Guarantor and an Offering Proceeds Note Guarantor and (2) if
the Debt to be refinanced is subordinated to the Offering Proceeds Note Guarantee of such Offering Proceeds Note Guarantor, the refinancing Debt shall be subordinated to the same extent to the
Offering Proceeds Note Guarantee of the Offering Proceeds Note Guarantor Incurring such refinancing Debt, (B) the refinancing Debt shall not be senior in right of payment to the Debt that is
being refinanced and (C) in the case of any refinancing of Debt Incurred pursuant to paragraph (a) above or clause (i), (v), (x) or (xi) or, if such Debt previously
refinanced Debt Incurred pursuant to any such clause, this clause (vi), the refinancing Debt by its terms, or by the terms of any agreement or instrument pursuant to which such Debt is issued,
(x) does not provide for payments of principal of such Debt at stated maturity or by way of a sinking fund applicable thereto or by way of any mandatory redemption, defeasance, retirement or
repurchase thereof by the Issuer or any Issuer Restricted Subsidiary (including any redemption, retirement or repurchase which is contingent upon events or circumstances, but excluding any retirement
required by virtue of the acceleration of any payment with respect to such Debt upon any event of default thereunder), in each case prior to the time the same are required by the terms of the Debt
being refinanced and (y) does not permit redemption or other retirement (including pursuant to an offer to purchase made by the Issuer or an Issuer Restricted Subsidiary) of such Debt at the
option of the holder thereof prior to the time the same are required by the terms of the Debt being refinanced, other than, in the case of clause (x) or (y), any such payment, redemption or
other retirement (including pursuant to an offer to purchase made by the Issuer) which is conditioned upon a change of control pursuant to provisions substantially
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Notwithstanding any other provision of this "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" covenant, the maximum amount of
Debt the Issuer or any Issuer Restricted Subsidiary may Incur pursuant to this "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" covenant shall not be deemed to be
exceeded due solely to the result of fluctuations in the exchange rates of currencies.
For
purposes of determining any particular amount of Debt under this "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" covenant, (1) Guarantees
(other than Guarantees of Debt of Parent or any Sister Restricted Subsidiary that are not Guarantees of Debt Incurred by Parent or any Sister Restricted Subsidiary pursuant to clause (ii) of
paragraph (b) of the covenant described under "Limitation on Consolidated Debt"), Liens or obligations with respect to letters of credit supporting Debt otherwise included in the
determination of such particular amount shall not be included and (2) any Liens granted for the benefit of the Notes pursuant to the provisions referred to in the "Limitation on
Liens" covenant described below shall not be treated as Debt. For purposes of determining compliance with this "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries"
covenant, (1) any Debt outstanding under the Existing Credit Facility will be treated as Incurred on the Issue Date pursuant to clause (ii) of paragraph (b) of this covenant and
(2) in the
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event
that an item of Debt meets the criteria of more than one of the types of Debt described in the above clauses, the Issuer, in its sole discretion, shall classify such item of Debt and only be
required to include the amount and type of such Debt in one of such clauses.
Limitation on Restricted Payments.
(a) Parent (i) may not, and may not permit any Restricted Subsidiary to, directly or indirectly,
declare or
pay any dividend, or make any distribution, in respect of its Capital Stock or to the holders thereof, excluding any dividends or distributions which are made solely to Parent or a Restricted
Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the other stockholders of such Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt
by Parent or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis) or any dividends or distributions payable solely in shares of Capital
Stock of Parent (other than Disqualified Stock) or in options, warrants or other rights to acquire Capital Stock of Parent (other than Disqualified Stock); (ii) may not, and may
not permit any Restricted Subsidiary to, purchase, redeem, or otherwise retire or acquire for value (x) any Capital Stock of Parent or any Restricted Subsidiary of Parent or (y) any
options, warrants or rights to purchase or acquire shares of Capital Stock of Parent or any Restricted Subsidiary or any securities convertible or exchangeable into shares of Capital Stock of Parent
or any Restricted Subsidiary, except, in any such case, any such purchase, redemption or retirement or acquisition for value (A) paid to Parent or a Restricted Subsidiary (or, in the case of
any such purchase, redemption or other retirement or acquisition for value with respect to a Restricted Subsidiary that is not a Wholly Owned Subsidiary, to the other stockholders of such Restricted
Subsidiary on a pro rata basis or on a basis that results in the receipt by Parent or a Restricted Subsidiary of payments of greater value than it would receive on a pro rata basis) or (B) paid
solely in shares of Capital Stock (other than Disqualified Stock) of Parent; (iii) may not make, or permit any Restricted Subsidiary to make, any Investment (other than an Investment in Parent
or a Restricted Subsidiary or a Permitted Investment) in any Person, including the Designation of any Restricted Subsidiary as an Unrestricted Subsidiary, or the Revocation of any such Designation,
according to the covenant described under "Limitation on Designations of Unrestricted Subsidiaries;" (iv) may not, and may not permit any Restricted Subsidiary to, redeem, defease,
repurchase, retire or otherwise acquire or retire for value, prior to any scheduled maturity, repayment or sinking fund payment, Debt of Parent which is subordinate in right of payment to the Parent
Guarantee or Debt of any Restricted Subsidiary which is subordinate in right of payment to the Notes (in the case of the Issuer) or the Note Guarantee (in the case of Restricted Subsidiaries other
than the Issuer) of such Restricted Subsidiary (other than any redemption, defeasance, repurchase, retirement or other acquisition or retirement for value made in anticipation of satisfying a
scheduled maturity, repayment or sinking fund obligation due within one year thereof); and (v) may not, and may not permit any Restricted Subsidiary to, issue, transfer, convey, sell or
otherwise dispose of Capital Stock of any Restricted Subsidiary to a Person other than Parent or another Restricted Subsidiary if the result thereof is that such Restricted Subsidiary shall cease to
be a Restricted Subsidiary, in which event the amount of such "Restricted Payment" shall be the Fair Market Value of the remaining interest, if any, in such former Restricted Subsidiary held by Parent
and the other Restricted Subsidiaries (each of clauses (i) through (v) being a "Restricted Payment") if: (1) an Event of Default, or an event that with the passing of time or the
giving of notice, or both, would constitute an Event of Default, shall have occurred and be continuing, or (2) upon giving effect to such Restricted Payment, Parent could not Incur at least
$1.00 of additional Debt pursuant to the terms of the Indenture described in paragraph (a) of "Limitation on Consolidated Debt" above, or (3) upon giving effect to such
Restricted Payment, the aggregate of all Restricted Payments made on or after the Measurement Date, including Restricted Payments made pursuant to clause (A) or (B) of the proviso at the
end of this sentence, and Permitted Investments made on or after the Measurement Date pursuant to clause (i) or (j) of the definition thereof (the amount of any such Restricted Payment
or Permitted Investment, if made other than in cash, to be based upon Fair Market Value) exceeds the sum of:
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(a) the
result of (i) Consolidated Cash Flow Available for Fixed Charges of Parent and its Restricted Subsidiaries since October 1, 2015 through the last day of the last full
fiscal quarter ending prior to the date of such Restricted Payment for which consolidated financial statements are available, less (ii) 1.5 times Consolidated Interest Expense of Parent and its
Restricted Subsidiaries for such period and (b) plus, in the case of any Revocation made after the Measurement Date, an amount equal to the lesser of the portion (proportionate to Parent's
equity interest in the Subsidiary to which such Revocation relates) of the Fair Market Value of the net assets of such Subsidiary at the time of
Revocation and the amount of Investments previously made (and treated as a Restricted Payment) by Parent or any Restricted Subsidiary in such Subsidiary;
provided,
however,
that Parent or a Restricted Subsidiary of Parent may, without regard to the limitations in clause (3) but subject to clauses (1) and (2), make
(A) Restricted Payments in an aggregate amount not to exceed the sum of: (a) the greater of (i) $150 million and (ii) 5% of Parent's Consolidated Tangible Assets
measured based on the most recent financial statements that are available for Parent; and (b) the aggregate net cash proceeds received after the Measurement Date (i) as capital
contributions to Parent, from the issuance (other than to a Subsidiary or an employee stock ownership plan or trust established by Parent or any such Subsidiary for the benefit of their employees) of
Capital Stock (other than Disqualified Stock) of Parent, and (ii) from the issuance or sale of Debt of Parent or any Restricted Subsidiary (other than to a Subsidiary, Parent or an employee
stock ownership plan or trust established by Parent or any such Subsidiary for the benefit of their employees) that after the Measurement Date has been converted into or exchanged for Capital Stock
(other than Disqualified Stock) of Parent and (B) Investments in Persons engaged in the Telecommunications/IS Business in an aggregate amount not to exceed the after-tax gain on the sale, after
the Measurement Date, of Special Assets to the extent sold for cash, Cash Equivalents, Telecommunications/IS Assets or the assumption of Debt of Parent or any Restricted Subsidiary (other than Debt
that is subordinated to the Notes, the Offering Proceeds Note or any applicable Note Guarantee or Offering Proceeds Note Guarantee) and release of Parent and all Restricted Subsidiaries from all
liability on the Debt assumed. The aggregate net cash proceeds referred to in the immediately preceding clauses (A)(i) and (A)(ii) shall not be utilized to make Restricted Payments pursuant to
such clauses to the extent such proceeds have been utilized to make Permitted Investments under clause (i) of the definition of "Permitted Investments."
-
(b)
-
Notwithstanding
the foregoing limitation, (i) Parent may pay any dividend on Capital Stock of any class of Parent within 60 days after the
declaration thereof if, on the date when the dividend was declared, Parent could have paid such dividend in accordance with the foregoing provisions;
provided,
however,
that at the time of such payment of such dividend, no other Event of Default shall have occurred and be continuing (or result therefrom); (ii) Parent may
repurchase any shares of its Common Stock or options to acquire its Common Stock from Persons who were formerly directors, officers or employees of Parent or any of its Subsidiaries or other
Affiliates in an amount not to exceed $50 million in any 12-month period; (iii) Parent and any Restricted Subsidiary may refinance any Debt otherwise permitted by clause (viii) of
paragraph (b) under "Limitation on Consolidated Debt" above or clause (vi) of paragraph (b) under "Limitation on Debt of the Issuer and Issuer Restricted
Subsidiaries" above; (iv) Parent and any Restricted Subsidiary may retire or repurchase any Capital Stock of Parent or of any Restricted Subsidiary or any Subordinated Debt of Parent in
exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Subsidiary of Parent or an employee stock ownership plan or trust established by Parent or any such
Subsidiary for the benefit of their employees) of, Capital Stock (other than Disqualified Stock) of Parent;
provided, however,
that the proceeds from
any such exchange or sale of Capital Stock shall be excluded from any calculation pursuant to clause (A)(i) in the proviso at the end of paragraph (a) above or pursuant to
clause (b) of the definition of "Invested Capital"; and (v) Parent may pay cash
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dividends
in any amount not in excess of $50 million in any 12-month period in respect of Preferred Stock of Parent (other than Disqualified Stock). The Restricted Payments described in the
foregoing clauses (i), (ii) and (v) shall be included in the calculation of Restricted Payments; the Restricted Payments described in clauses (iii) and (iv) shall be
excluded in the calculation of Restricted Payments.
-
(c)
-
The
Issuer may not, and may not permit any Issuer Restricted Subsidiary to, pay any dividend or make any distribution in respect of shares of its Capital
Stock held by Parent or a Sister Restricted Subsidiary (whether in cash, securities or other Property) or any payment (whether in cash, securities or other Property) on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such shares of Capital Stock (all such dividends, distributions and payments being referred to herein as "Parent Transfers"),
other than (i) Parent Transfers at such times and in such amounts as shall be necessary to permit Parent to pay administrative expenses attributable to the operations of its Restricted
Subsidiaries, (ii) Parent Transfers at such times and in such amounts as are sufficient for Parent to make the timely payment of interest, premium (if any) and principal (whether at stated
maturity, by way of a sinking fund applicable thereto, by way of any mandatory redemption, defeasance, retirement or repurchase thereof, including upon the occurrence of designated events or
circumstances or by virtue of acceleration upon an event of default, or by way of redemption or retirement at the option of the holder of the Debt of Parent, including pursuant to offers to purchase)
according to the terms of any Debt of Parent, (iii) Parent Transfers (A) to permit Parent to satisfy its obligations in respect of stock option plans or other benefit plans for
management or employees of Parent and its Subsidiaries, (B) to permit Parent to pay dividends on Preferred Stock of Parent in an amount not to exceed the aggregate net cash proceeds received by
Parent (1) after September 30, 1999, from the issuance of Capital Stock, and (2) from the issuance or sale of Debt of Parent or any Restricted Subsidiary that after
September 30, 1999, has been converted into or exchanged for Capital Stock of Parent, (C) in an annual amount not to exceed 50% of Parent's Consolidated Net Income for the prior fiscal
year and (D) Parent Transfers in amounts not to exceed the amount required by Parent to pay accrued and unpaid interest on any Debt of Parent due upon the conversion, exchange or purchase of
such Debt into, for or with Capital Stock of Parent and (iv) additional Parent Transfers after October 1, 2003 in a principal amount not to exceed $50 million in the aggregate.
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encumbrance
or restriction pursuant to an agreement relating to any Acquired Debt, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other
than the Person so acquired, (iv) any encumbrance or restriction pursuant to an agreement relating to any Debt of an Issuer Restricted Subsidiary that is a Foreign Restricted Subsidiary
Incurred pursuant to clause (ix) of paragraph (b) of the covenant described under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" that is applicable
only to such Issuer Restricted Subsidiary that is a Foreign Restricted Subsidiary and its Subsidiaries, (v) any encumbrance or restriction pursuant to an agreement effecting a refinancing of
Debt Incurred pursuant to an agreement referred to in clause (i), (ii) or (iii) of this paragraph (b);
provided, however,
that the provisions contained in such agreement relating to such encumbrance or restriction are no more restrictive (as so determined) in any material respect than the provisions contained in the
agreement the subject thereof, (vi) in the case of clause (iii) of paragraph (a) above, any encumbrance or restriction contained in any security agreement (including a Capital
Lease Obligation) securing Debt of Parent or a Restricted Subsidiary otherwise permitted under the Indenture, but only to the extent such restrictions restrict the transfer of the Property subject to
such security agreement, (vii) in the case of clause (iii) of paragraph (a) above, customary provisions (A) that restrict the subletting, assignment or transfer of any
Property that is a lease, license, conveyance or similar contract,
(B) contained in asset sale or other asset disposition agreements limiting the transfer of the Property being sold or disposed of pending the closing of such sale or disposition or
(C) arising or agreed to in the ordinary course of business, not relating to any Debt, and that do not, individually or in the aggregate, detract from the value of Property of Parent or any
Restricted Subsidiary in any manner material to Parent or any Restricted Subsidiary, (viii) any encumbrance or restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or Property of such Restricted Subsidiary;
provided,
however,
that the consummation of such transaction would not result in a Default or an Event of Default, that such restriction terminates if such transaction is abandoned and
that the consummation or abandonment of such transaction occurs within one year of the date such agreement was entered into, and (ix) any encumbrance or restriction pursuant to the Indenture
and the Notes.
Limitation on Liens.
Parent may not, and may not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist
any Lien on or
with respect to any Property now owned or acquired after the Issue Date to secure any Debt without making, or causing such Restricted Subsidiary to make, effective provision for securing the
Notes (x) equally and ratably with such Debt as to such Property for so long as such Debt will be so secured or (y) in the event such Debt is Debt of the Issuer, Parent or a Restricted
Subsidiary that is a Guarantor and such Debt is subordinate in right of payment to the Notes, the Parent Guarantee or the applicable Note Guarantee, prior to such Debt as to such Property for so long
as such Debt will be so secured. The holders of such other secured Debt may exclusively control the disposition of the property subject to the Lien.
The
foregoing restrictions shall not apply to: (i) Liens existing on the Issue Date and securing Debt outstanding on the Issue Date or Liens Incurred on or after the Issue Date
pursuant to any Credit Facility to secure Debt permitted to be Incurred pursuant to clause (ii) of paragraph (b) under "Limitation on Consolidated Debt" or
clause (ii) of paragraph (b) under "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries"; (ii) Liens Incurred on or after the Measurement Date
securing Debt of Parent or any Restricted Subsidiary (other than the Issuer or any Issuer Restricted Subsidiary) in an amount which, together with the aggregate amount of Debt then outstanding or
available under all Credit Facilities (together with all refinancing Debt then outstanding or available pursuant to clause (viii) of paragraph (b) of "Limitation on
Consolidated Debt" or clause (vi) of
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paragraph (b)
of "Limitation on Debt of the Issuer and Issuer Restricted Subsidiaries" in respect of Debt previously Incurred under Credit Facilities), does not exceed 4.0 times
Pro Forma Consolidated Cash Flow Available for Fixed Charges of Parent and its Restricted Subsidiaries for the four full fiscal quarters preceding the Incurrence of such Lien for which Parent's
consolidated financial statements are available, determined on a pro forma basis as if such Debt had been Incurred and the proceeds thereof had been applied at the beginning of such four fiscal
quarters;
(iii) Liens in favor of Parent or any Restricted Subsidiary;
provided, however,
that any subsequent issue or transfer of Capital Stock or other
event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of the Debt secured by any such Lien (except to Parent or a Restricted Subsidiary)
shall be deemed, in each case, to constitute the Incurrence of such Lien by the Issuer thereof; (iv) Liens outstanding on the Issue Date securing Purchase Money Debt and Liens to secure
Purchase Money Debt Incurred after the Issue Date pursuant to clause (iii) of paragraph (b) under "Limitation on Consolidated Debt,"
provided
that any such Lien may not extend to any
Property other than the Telecommunications/IS Assets installed, constructed, acquired, leased,
developed or improved with the proceeds of such Purchase Money Debt and any improvements or accessions thereto (it being understood that all Debt to any single lender or group of related lenders or
outstanding under any single credit facility, and in any case relating to the same group or collection of Telecommunications/IS Assets financed thereby, shall be considered a single Purchase Money
Debt, whether drawn at one time or from time to time); (v) Liens to secure Acquired Debt,
provided
that (a) such Lien attaches to the
acquired Property prior to the time of the acquisition of such Property and (b) such Lien does not extend to or cover any other Property; (vi) Liens to secure Debt Incurred to refinance,
in whole or in part, Debt secured by any Lien referred to in the foregoing clauses (i), (iv) and (v) or this clause (vi) so long as such Lien does not extend to any other
Property (other than improvements and accessions to the original Property) and the principal amount of Debt so secured is not increased except as otherwise permitted under clause (viii) of
paragraph (b) of "Limitation on Consolidated Debt" or clause (vi) of paragraph (b) of "Limitation on Debt of the Issuer and Issuer Restricted
Subsidiaries" above; (vii) Liens Incurred on or after the Measurement Date not otherwise permitted by the foregoing clauses (i) through (vi) (but including in the computations of
Liens permitted under this clause (vii) Liens existing on the Issue Date which remain existing at the time of computation which are otherwise permitted under clause (i)) securing Debt of
Parent or any Restricted Subsidiary (other than the Issuer or any Issuer Restricted Subsidiary) in an aggregate amount not to exceed the greater of (a) $250 million and (b) 7.5%
of Parent's Consolidated Tangible Assets measured based on the most recent financial statements that are available for Parent; (viii) Liens on Property of any Non-Telecommunications Subsidiary;
provided, however,
that the Incurrence of such Lien does not require the Person Incurring such Lien to secure any Debt of any Person other than a
Non-Telecommunications Subsidiary; (ix) Liens granted after the Issue Date to secure the Notes, the Existing Notes or any additional notes issued by the Issuer on or after the Issue Date
permitted to be incurred pursuant to the terms of the Indenture;
provided, however,
that no Lien may be granted to secure the Existing Notes or such
additional notes unless a
pari passu
Lien on the Property subject to such Lien is concurrently granted to secure the Notes and remains in effect for so
long as such Lien securing the Existing Notes or such additional notes; (x) Liens to secure Debt incurred pursuant to clause (viii) of paragraph (b) of "Limitation on
Debt of the Issuer and Issuer Restricted Subsidiaries" above; (xi) Liens to secure amounts deposited into an escrow account for the benefit of the holders of the Existing Notes or any
additional notes issued by the Issuer on or after the Issue Date permitted to be incurred pursuant to the terms of the Indenture, in connection with the prepayment of the Existing Proceeds Notes by
Level 3 LLC, or the prepayment by Level 3 LLC of any additional proceeds note issued in connection with the issuance of additional notes issued by the Issuer on or after
the Issue Date; (xii) Liens to secure amounts deposited into an escrow account for the benefit of the holders of the Notes in connection with the prepayment of the Offering Proceeds Note by
Level 3 LLC; (xiii) Liens on the Property of a Foreign Restricted Subsidiary and its Subsidiaries Incurred on or
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after
the Issue Date securing Debt of such Foreign Restricted Subsidiary Incurred pursuant to clause (ix) of paragraph (b) of the covenant described under "Limitation on
Debt of the Issuer and Issuer Restricted Subsidiaries"; and (xiv) Permitted Liens.
Limitation on Sale and Leaseback Transactions.
Parent may not, and may not permit any Restricted Subsidiary to, directly or indirectly,
enter into,
assume, Guarantee or otherwise become liable with respect to any Sale and Leaseback Transaction, unless (i) Parent or such Restricted Subsidiary would be entitled to Incur (a) Debt in an
amount equal to the Attributable Value of the Sale and Leaseback Transaction pursuant to the covenants described under "Limitation on Consolidated Debt" above or "Limitation
on Debt of the Issuer and Issuer Restricted Subsidiaries" above and (b) a Lien pursuant to the covenant described under "Limitation on Liens" above, equal in amount to the
Attributable Value of the Sale and Leaseback Transaction, without also securing the Notes, and (ii) the Sale and Leaseback Transaction is treated as an Asset Disposition and all of the
conditions of the Indenture described under "Limitation on Asset Dispositions" below (including the provisions concerning the application of Net Available Proceeds) are satisfied with
respect to such Sale and Leaseback Transaction, treating all of the consideration received in such Sale and Leaseback Transaction as Net Available Proceeds for purposes of such covenant.
Limitation on Asset Dispositions.
Parent may not, and may not permit any Restricted Subsidiary to, make any Asset Disposition unless:
(i) Parent or the Restricted Subsidiary, as the case may be, receives consideration for such disposition at least equal to the Fair Market Value for the Property sold or disposed of as
determined by Parent in good faith and evidenced by a resolution of the board of directors of Parent (or a duly authorized committee thereof) filed with the Trustee; and (ii) at least 75% of
the consideration for such disposition consists of cash or Cash Equivalents or the assumption of Debt of the Issuer or any Issuer Restricted Subsidiary (other than Debt of the Issuer that is
subordinated to the Notes or Debt of any Issuer Restricted Subsidiary that is subordinated to the Note Guarantee or Offering Proceeds Note Guarantee of such Issuer Restricted Subsidiary) and release
of the Issuer and all Issuer Restricted Subsidiaries from all liability on the Debt assumed (or if less than 75%, the remainder of such consideration consists of Telecommunications/IS Assets);
provided, however,
that, to the extent such disposition involves Special Assets, all or any portion of the consideration may, at Parent's election,
consist of Property other than cash, Cash Equivalents, the assumption of Debt or Telecommunications/IS Assets.
The
Net Available Proceeds (or any portion thereof) from Asset Dispositions may be applied by Parent or a Restricted Subsidiary, to the extent Parent or such Restricted Subsidiary elects
(or is required by the terms of any Debt): (1) to the permanent repayment or reduction of Debt then outstanding under any Qualified Credit Facility, to the extent such Qualified Credit Facility
would require such application or prohibit payments pursuant to the Offer to Purchase described in the
following paragraph (other than Debt owed to Parent or any Affiliate of Parent); or (2) to reinvest in Telecommunications/IS Assets (including by means of an Investment in Telecommunications/IS
Assets by a Restricted Subsidiary with Net Available Proceeds received by Parent or another Restricted Subsidiary).
Any
Net Available Proceeds from an Asset Disposition not applied in accordance with the preceding paragraph within 360 days (or, in the case of a disposition of Special Assets
identified in clause (a) of the definition thereof in which the Net Available Proceeds exceed $500 million, 540 days) from the date of the receipt of such Net Available Proceeds
shall constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $100 million, the Issuer (or, in the case of Debt of Parent required or permitted to be repurchased by
Parent, Parent) will be required to make an Offer to Purchase with such Excess Proceeds on a pro rata basis according to principal amount (or, in the case of Debt issued at a discount, the
then-Accreted Value) for (x) outstanding Notes at a price in cash equal to 100% of the principal amount of the Notes on the purchase date plus accrued and unpaid interest (if any) thereon
(subject to the right of holders of
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record
on the relevant record date to receive interest due on the relevant interest payment date) and (y) any other Debt of the Issuer that is
pari
passu
with the Notes, any Debt of a Guarantor that is
pari passu
with such Guarantor's Note Guarantee or any Debt of a
Restricted Subsidiary that is a subsidiary of the Issuer but not a Guarantor, at a price no greater than 100% of the principal amount thereof plus accrued and unpaid interest (if any) to the purchase
date (or 100% of the then-Accreted Value plus accrued and unpaid interest (if any) to the purchase date in the case of original issue discount Debt), to the extent, in the case of this
clause (y), required under the terms thereof (other than Debt owed to Parent or any Affiliate of Parent). To the extent there are any remaining Excess Proceeds following the completion of the
Offer to Purchase, the Issuer shall apply such Excess Proceeds to the repayment of other Debt of the Issuer or any Restricted Subsidiary that is a subsidiary of the Issuer, to the extent permitted or
required under the terms thereof. Any other remaining Excess Proceeds may be applied to any use as determined by Parent which is not otherwise prohibited by the Indenture, and the amount of Excess
Proceeds shall be reset to zero.
The
Issuer may not, and may not permit any Issuer Restricted Subsidiary to, sell, transfer, lease or otherwise dispose of any Property to Parent or any Sister Restricted Subsidiary
unless (i) the Issuer or such Issuer Restricted Subsidiary receives consideration for such sale, transfer, lease or other disposition at least equal to the Fair Market Value of such Property
(which, in the case of the Offering Proceeds Note or any other intercompany Debt, is the principal amount of the Offering Proceeds Note or such other Debt and any accrued and unpaid interest thereon)
and (ii) the consideration consists of either (A) 100% in cash or Cash Equivalents or (B) Debt of Parent or the Restricted Subsidiary to which the Property was transferred that is
secured by a Lien on such transferred Property. Parent or the Restricted Subsidiary to which Property was transferred for consideration consisting of Debt that is secured by a Lien on such Property in
accordance with clause (ii)(B) of the prior sentence may substitute the Lien on such Property with a Lien on other Property (including any Property owned by the Issuer or an Issuer Restricted
Subsidiary) that, as
determined by Parent in good faith and evidenced by a resolution of the board of directors of Parent (or a duly authorized committee thereof) filed with the Trustee, has a Fair Market Value of no less
than the Fair Market Value of the Property for which the substitution is made at the time of the substitution. Any such Lien may be second in priority to any Lien on such Property in favor of the
lenders under a Qualified Credit Facility. The provisions of this paragraph do not apply to (a) dividends and distributions (other than any dividend or distribution of the Offering Proceeds
Note or any other intercompany Debt), (b) loans or advances and (c) purchases of services or goods.
Limitation on Issuance and Sales of Capital Stock of Restricted Subsidiaries.
Parent shall at all times own all the issued and
outstanding Capital
Stock of the Issuer. The Issuer shall at all times own all the issued and outstanding Capital Stock of Level 3 LLC. Parent may not, and may not permit any Restricted Subsidiary to,
issue, transfer, convey, sell or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary or securities convertible or exchangeable into, or options, warrants, rights or any other
interest with respect to, Capital Stock of a Restricted Subsidiary to any Person other than Parent or a Restricted Subsidiary except (i) a sale of all of the Capital Stock of such Restricted
Subsidiary owned by Parent and any Restricted Subsidiary that complies with the provisions described under "Limitation on Asset Dispositions" above to the extent such provisions apply,
(ii) in a transaction that results in such Restricted Subsidiary becoming a Joint Venture,
provided
(x) such transaction complies with the
provisions described under "Limitation on Asset Dispositions" above to the extent such provisions apply and (y) the remaining interest of Parent or any other Restricted Subsidiary
in such Joint Venture would have been permitted as a new Restricted Payment or Permitted Investment under the provisions of "Limitation on Restricted Payments" above, (iii) the
issuance, transfer, conveyance, sale or other disposition of shares of such Restricted Subsidiary so long as after giving effect to such transaction such Restricted Subsidiary remains a Restricted
Subsidiary and such transaction complies with the provisions described under "Limitation on Asset Dispositions" to the extent such provisions apply, (iv) the transfer,
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conveyance,
sale or other disposition of shares required by applicable law or regulation, (v) if required, the issuance, transfer, conveyance, sale or other disposition of directors' qualifying
shares, (vi) Disqualified Stock issued in exchange for, or upon conversion of, or the proceeds of the issuance of which are used to refinance, shares of Disqualified Stock of such Restricted
Subsidiary,
provided
that the amounts of the redemption obligations of such Disqualified Stock shall not exceed the amounts of the redemption
obligations of, and such Disqualified Stock shall have redemption obligations no earlier than those required by, the Disqualified Stock being exchanged, converted or refinanced, (vii) in a
transaction where Parent or a Restricted Subsidiary acquires at the same time not less than its Proportionate Interest in such issuance of Capital Stock, (viii) Capital Stock issued and
outstanding on the Measurement Date, (ix) Capital Stock of a Restricted Subsidiary issued and outstanding prior to the time that such Person becomes a Restricted Subsidiary so long as such
Capital Stock was not issued in contemplation of such Person's becoming a Restricted Subsidiary or otherwise being acquired by Parent and (x) an issuance of Preferred Stock of a Restricted
Subsidiary
(other than Preferred Stock convertible or exchangeable into Common Stock of any Restricted Subsidiary) otherwise permitted by the Indenture.
Transactions with Affiliates.
Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, sell,
lease,
transfer, or otherwise dispose of any of its Property to, or purchase any Property from, or enter into any contract, agreement, understanding, loan, advance, Guarantee or transaction (including the
rendering of services) with or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving aggregate payments or consideration in excess of $65 million,
unless (a) such Affiliate Transaction or series of Affiliate Transactions is on terms that are no less favorable to Parent or such Restricted Subsidiary than those that would have been obtained
in a comparable arm's-length transaction by Parent 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 Parent or the relevant Restricted Subsidiary to apply for comparative purposes, is otherwise on terms that, taken as a whole, Parent has determined to be fair to Parent or
the relevant Restricted Subsidiary) and (b) Parent obtains (i) with respect to any Affiliate Transaction or series of Affiliate Transactions involving aggregate payments in excess of
$65 million but less than $150 million, a certificate of the chief executive, operating or financial officer of Parent evidencing such officer's determination that such Affiliate
Transaction or series of Affiliate Transactions complies with clause (a) above and (ii) with respect to any Affiliate Transaction or series of Affiliate Transactions involving aggregate
payments equal to or in excess of $150 million, a board resolution of Parent certifying that such Affiliate Transaction or series of Affiliate Transactions complies with clause (a) above
and that such Affiliate Transaction or series of Affiliate Transactions has been approved by the board of directors of Parent, including a majority of the disinterested members of the board of
directors;
provided
,
however
, that, in the event that there shall not be at least two disinterested
members of the board of directors of Parent with respect to the Affiliate Transaction, Parent shall, in addition to such board resolution, obtain a written opinion from an investment banking firm of
national standing in the United States which, in the good faith judgment of the board of directors of Parent, is independent with respect to Parent and its Affiliates and qualified to perform such
task, which opinion shall be to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to Parent or such
Restricted Subsidiary.
Notwithstanding
the foregoing, the following shall not be deemed Affiliate Transactions: (i) any employment agreement entered into by Parent 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 Parent or any Restricted
Subsidiary approved by a majority of the disinterested members of the board of directors of Parent and consistent with industry practice; (iii) transactions between or among Parent and its
Restricted Subsidiaries;
provided
,
however
, that no more than 5% of the Voting Stock (on a fully diluted
basis) of any such
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Restricted
Subsidiary is owned by an Affiliate of Parent (other than a Restricted Subsidiary); (iv) Restricted Payments and Permitted Investments permitted by the covenant described under
"Limitation on Restricted Payments" (other than Investments in Affiliates that are not Parent or Restricted Subsidiaries); (v) transactions pursuant to the terms of any agreement
or arrangement as in effect on the Measurement Date; and (vi) transactions with respect to wireline or wireless transmission capacity, the lease or sharing or other use of cable or fiber optic
lines, equipment, rights-of-way or other access rights, between Parent (or any Restricted Subsidiary) and any other Person;
provided
,
however
, that in the
case of this clause (vi), such transaction complies with clause (a) in the immediately preceding paragraph.
Change of Control Triggering Event.
Within 30 days of the occurrence of both a Change of Control and a Rating Decline with respect
to the
Notes (a "Change of Control Triggering Event"), the Issuer will be required to make an Offer to Purchase all outstanding Notes at a price in cash equal to 101% of the principal amount of the Notes on
the purchase date plus any accrued and unpaid interest (if any) to such purchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant
interest payment date).
A
"Change of Control" means the occurrence of any of the following events:
-
(A)
-
if
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the
foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one
or more of the Permitted Holders, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the total voting power
of the Voting Stock of Parent;
provided
,
however
, that the Permitted Holders are the "beneficial owners"
(as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or indirectly, in the aggregate of a lesser percentage of the total voting power of the Voting Stock of Parent than such
other person or group (for purposes of this clause (A), such person or group shall be deemed to beneficially own any Voting Stock of a corporation (the "specified corporation") held by any
other corporation (the "parent corporation") so long as such person or group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power of the Voting Stock of
such parent corporation); or
-
(B)
-
the
sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of (i) Parent
and the Restricted Subsidiaries, or (ii) the Issuer and the Issuer Restricted Subsidiaries, in each case considered as a whole (other than a disposition of such assets as an entirety or
virtually as an entirety to a Wholly Owned Restricted Subsidiary of Parent or the Issuer, respectively, or one or more Permitted Holders) shall have occurred; or
-
(C)
-
during
any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of Parent (together with any
new directors whose election or appointment by such board, or whose nomination for election by the shareholders of Parent, was approved by a vote of a majority of the directors then still in office
who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of
directors of Parent then in office; or
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-
(D)
-
the
shareholders of Parent or the Issuer shall have approved any plan of liquidation or dissolution of Parent or the Issuer, respectively.
In
the event that Holders of not less than 90% of the principal amount of the Notes accept an Offer to Purchase the Notes and the Issuer purchases all of the Notes held by such Holders,
the Issuer will have the right, on not less than 30 nor more than 60 days' prior notice, given not more than 30 days following the purchase pursuant to the Offer to Purchase, to redeem
all of the Notes that remain outstanding following such purchase at a price in cash equal to 101% of the principal amount of the Notes on the redemption date plus any accrued and unpaid interest (if
any) to (but not including) such redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
In
the event that the Issuer makes an Offer to Purchase the Notes, the Issuer intends to comply with any applicable securities laws and regulations, including any applicable requirements
of Section 14(e) of, and Rule 14e-1 under, the Exchange Act.
The
existence of the holders' right to require, subject to certain conditions, the Issuer to repurchase Notes upon a Change of Control Triggering Event may deter a third party from
acquiring Parent or the Issuer in a transaction that constitutes a Change of Control. If an Offer to Purchase is made, there can be no assurance that the Issuer will have sufficient funds to pay the
Purchase Price for all Notes tendered by holders seeking to accept the Offer to Purchase. In addition, instruments governing other Debt of Parent or the Issuer may prohibit the Issuer from purchasing
any Notes prior to their Stated Maturity, including pursuant to an Offer to Purchase, or require that such Debt be repurchased upon a Change of Control. Subject to certain exceptions, the Existing
Credit Facility requires the Issuer to prepay loans under the Existing Credit Facility within 60 days after the occurrence of a change of control triggering event (as defined in the Existing
Credit Facility). In the event that an Offer to Purchase occurs at a time when the Issuer does not have sufficient available funds to pay the Purchase Price for all Notes tendered pursuant to such
Offer to Purchase or a time when the Issuer is prohibited from purchasing the Notes (and the Issuer is unable either to obtain the consent of the holders of the relevant Debt or to repay such Debt),
an Event of Default would occur under the Indenture. In addition, one of the events that constitutes a Change of Control under the Indenture is a sale, transfer, assignment, lease, conveyance or other
disposition of all or substantially all of the assets of Parent or the Issuer. The Indenture is governed by New York law, and there is no established definition under New York law of "substantially
all" of the assets of a corporation. Accordingly, if Parent or the Issuer were to engage in a transaction in which it disposed of less than all of its assets, a question of interpretation could arise
as to whether such disposition was of "substantially all" of its assets and whether the Issuer was required to make an Offer to Purchase.
Except
as described herein with respect to a Change of Control, the Indenture does not contain any other provisions that permit holders of Notes to require that the Issuer repurchase or
redeem Notes in the event of a takeover, recapitalization or similar restructuring.
On
November 22, 2016, the Issuer, Parent and the Trustee entered into a Supplemental Indenture that provides that the acquisition of Parent by CenturyLink as contemplated by the
Merger Agreement will not constitute a "Change of Control" under the Indenture, subject to delivery of an officers' certificate to the Trustee providing the certification required by the Supplemental
Indenture.
Reports.
Whether or not Parent is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto,
Parent shall file
with the Commission the annual reports, quarterly reports and other documents which Parent would have been required to file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if Parent were subject thereto, such documents to be filed with the Commission on or prior to the respective dates (the "Required Filing Dates") by which Parent would have
been required to file them. Parent or the
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Issuer
shall also in any event (a) within 15 days of each Required Filing Date (i) transmit by mail to all holders, as their names and addresses appear in the Security Register,
without cost to such holders, and (ii) file with the Trustee copies of the annual reports, quarterly reports and other documents (without exhibits) which Parent would have been required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act or any successor provisions thereto if Parent were subject thereto and (b) if filing such documents by Parent
with the Commission is not permitted under the Exchange Act, promptly upon written request, supply copies of such documents (without exhibits) to any prospective holder. Notwithstanding the foregoing,
Parent and the Issuer will be deemed to have furnished such reports referred to above to the Trustee and the holders if Parent has filed such reports with the Commission via the EDGAR filing system
(or any successor thereto) and such reports are publicly available.
Limitation on Designations of Unrestricted Subsidiaries.
The Indenture provides that Parent will not designate (1) the Issuer or
Level 3 LLC as an Unrestricted Subsidiary or (2) any other Subsidiary of Parent (other than a newly created Subsidiary in which no Investment has previously been made) as an
"Unrestricted Subsidiary" under the Indenture (a "Designation") unless:
-
(a)
-
no
Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such Designation;
-
(b)
-
immediately
after giving effect to such Designation, Parent would be able to Incur $1.00 of Debt under paragraph (a) of "Limitation on
Consolidated Debt;" and
-
(c)
-
Parent
would not be prohibited under the Indenture from making an Investment at the time of Designation (assuming the effectiveness of such Designation) in
an amount (the "Designation Amount") equal to the portion (proportionate to Parent's equity interest in such Restricted Subsidiary) of the Fair Market Value of the net assets of such Restricted
Subsidiary on such date.
In
the event of any such Designation, Parent shall be deemed to have made an Investment constituting a Restricted Payment pursuant to the covenant "Limitation on Restricted
Payments" for all purposes of the Indenture in the Designation Amount;
provided
,
however
, that, upon a
Revocation of any such Designation of a Subsidiary, Parent shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary of an amount (if positive) equal to
(i) Parent's "Investment" in such Subsidiary at the time of such Revocation less (ii) the portion (proportionate to Parent's equity interest in such Subsidiary) of the Fair Market Value
of the net assets of such Subsidiary at the time of such Revocation. At the time of any Designation of any Subsidiary as an Unrestricted Subsidiary, such Subsidiary shall not own any Capital Stock of
Parent or any Restricted Subsidiary. The Indenture further provides that neither Parent nor any Restricted Subsidiary shall at any time (x) provide credit support for, or a Guarantee of, any
Debt of any Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Debt);
provided
,
however
, that Parent or a
Restricted Subsidiary may pledge Capital Stock or Debt of any Unrestricted Subsidiary on a nonrecourse basis such that the
pledgee has no claim whatsoever against Parent other than to obtain such pledged Capital Stock or Debt, (y) be directly or indirectly liable for any Debt of any Unrestricted Subsidiary or
(z) be directly or indirectly liable for any Debt which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Debt, Lien or other obligation of any Unrestricted Subsidiary (including any right to
take enforcement action against such Unrestricted Subsidiary), except in the case of clause (x) or (y) to the extent permitted under "Limitation on Restricted Payments" and
"Transactions with Affiliates."
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Unless Designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of Parent will be classified as a Restricted Subsidiary;
provided
,
however
, that such Subsidiary shall not be designated as a Restricted Subsidiary and shall be
automatically classified as an Unrestricted Subsidiary if either of the requirements set forth in clauses (a) and (b) of the immediately following paragraph will not be satisfied
immediately following such classification. Except as provided in the first sentence of this "Limitation on Designations of Unrestricted Subsidiaries," no Restricted Subsidiary may be
redesignated as an Unrestricted Subsidiary.
The
Indenture further provides that a Designation may be revoked (a "Revocation") by a resolution of the board of directors of Parent (or a duly authorized committee thereof) delivered
to the Trustee,
provided
that Parent will not make any Revocation unless:
-
(a)
-
no
Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such Revocation; and
-
(b)
-
all
Liens and Debt of such Unrestricted Subsidiary outstanding immediately following such Revocation would, if Incurred at such time, have been permitted to
be Incurred at such time for all purposes of the Indenture.
All
Designations and Revocations must be evidenced by resolutions of the board of directors of Parent (or a duly authorized committee thereof) (i) certifying compliance with the
foregoing provisions and (ii) giving the effective date of such Designation or Revocation.
Limitation on Actions with respect to Existing Intercompany Obligations.
Without the consent of the holders of at least two-thirds in
principal
amount of the outstanding Notes:
-
(a)
-
the
Issuer may not forgive or waive or fail to enforce any of its rights under the Offering Proceeds Note, any Offering Proceeds Note Guarantee, the
Subordination Agreement or any other agreement with Parent or any Restricted Subsidiary to subordinate a payment obligation on any Debt to the prior payment in full in cash of all obligations with
respect to the Offering Proceeds Note or an Offering Proceeds Note Guarantee, and the Issuer and Level 3 LLC may not amend the Offering Proceeds Note in a manner adverse to the holders
of the Notes;
provided
,
however
, that nothing in this covenant shall compel the Issuer to demand payment
under the Offering Proceeds Note or any Offering Proceeds Note Guarantee except during a bankruptcy, insolvency or similar proceeding;
-
(b)
-
in
the event Level 3 LLC (or any successor obligor under the Offering Proceeds Note) repays all or a portion of the Offering Proceeds Note,
the Issuer must (i) deposit an amount of cash equal to the principal amount of the Offering Proceeds Note then repaid in an escrow account with an unaffiliated financial institution for the
benefit of the holders of the Notes, and as security for the prompt and complete payment and performance when due of the Issuer's obligations in respect of the Notes, until such time as the Notes are
no longer outstanding or such cash is used pursuant to clause (ii) or (iii) of this paragraph, (ii) redeem Notes having a principal amount equal to the principal amount of the
Offering Proceeds Note then repaid in accordance with, and if at such time permitted by, the first paragraph of the section entitled "Optional Redemption," or (iii) purchase Notes
in the open market having a principal amount equal to the principal amount of the Offering Proceeds Note then repaid;
provided
,
however
, that if at any
time the principal amount of the Offering Proceeds Note is greater than the principal amount of Notes that remain outstanding,
Level 3 LLC (or any successor obligor under the Offering Proceeds Note) may repay, or the Issuer may forgive or waive, an amount of the Offering Proceeds Note equal to such excess
without complying with clause (i), (ii) or (iii) above;
-
(c)
-
Parent
may not, and may not permit any Restricted Subsidiary to, provide any Lien on its Property for the benefit of, or any Guarantee (other than a
similarly subordinated
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Guarantee)
or other form of credit enhancement in respect of, (i) the Parent Intercompany Note or (ii) any other intercompany note required by clause (vi) of paragraph (b)
of the covenant described under "Limitation on Consolidated Debt" or clause (iv) of paragraph (b) of the covenant described under "Limitation on Debt of the
Issuer and Issuer Restricted Subsidiaries" to be subordinated to the prior payment in full in cash of all obligations with respect to the Offering Proceeds Note or an Offering Proceeds Note Guarantee,
or take any other action with the purpose or effect of making the Parent Intercompany Note senior to or equal in right of payment with the Offering Proceeds Note;
-
(d)
-
Parent
and Level 3 LLC may not amend the terms of the Parent Intercompany Note in a manner adverse to the holders of the Notes, the
determination of which shall be made by Parent in good faith and shall be evidenced by a resolution of the board of directors of Parent (or a duly authorized committee thereof) except to permit
subordination of Level 3 LLC's obligations under the Parent Intercompany Note to its obligations under a Qualified Credit Facility as described, and to the extent set forth, under
"Subordination of Existing Intercompany Obligations";
-
(e)
-
Parent,
the Issuer and Level 3 LLC may not amend the Subordination Agreement in a manner adverse to the holders of the Notes and Parent or any
Restricted Subsidiary and the Issuer may not amend any other agreement between Parent or any Restricted Subsidiary and the Issuer to subordinate a payment obligation on any Debt of Parent or any
Restricted Subsidiary to the prior payment in full in cash of all obligations with respect to the Offering Proceeds Note or any Offering Proceeds Note Guarantee, in each case, the determination of
which shall be made by Parent in good faith and shall be evidenced by a resolution of the board of directors of Parent (or a duly authorized committee thereof) except to permit subordination of their
respective obligations under the Offering Proceeds Note or any Offering Proceeds Note Guarantee to their respective obligations under a Qualified Credit Facility as described, and to the extent set
forth, under "Subordination of Existing Intercompany Obligations"; and
-
(f)
-
Parent
may not permit any Restricted Subsidiary to Guarantee any of the Existing Senior Notes or the Existing Proceeds Notes unless such Restricted
Subsidiary concurrently Guarantees the Notes and such Guarantee of the Notes remains in effect for so long as the Guarantee of the Existing Senior Notes or the Existing Proceeds Notes remains in
effect;
provided
,
however
, that this provision shall not be deemed to be violated by the Guarantee of
the Existing Senior Notes of Level 3 LLC outstanding on the Issue Date.
Mergers, Consolidations and Certain Sales of Assets
Parent may not, in a single transaction or a series of related transactions, (i) consolidate with or merge into any other Person
or Persons or permit any other Person to consolidate with or merge into Parent or (ii) directly or indirectly, transfer, sell, lease, convey or otherwise dispose of all or substantially all its
assets to any other Person or Persons unless: (a) in a transaction in which Parent is not the surviving Person or in which Parent transfers, sells, leases, conveys or otherwise disposes of all
or substantially all of its assets to any other Person, the successor entity is organized under the laws of the United States of America or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, all of Parent's obligations under the Indenture and the Parent Guarantee;
(b) immediately before and after giving effect to such transaction and treating any Debt which becomes an obligation of Parent (or the successor entity) or a Restricted Subsidiary as a result
of such transaction as having been Incurred by Parent or such Restricted Subsidiary at the time of the transaction, no Default or Event of Default shall have occurred and be continuing under the
Indenture; (c) immediately after giving effect to such transaction and treating any Debt which
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becomes
an obligation of Parent (or the successor entity) or a Restricted Subsidiary as a result of such transaction as having been Incurred by Parent or such Restricted Subsidiary at the time of the
transaction, Parent (or the successor entity) could Incur at least $1.00 of additional Debt pursuant to the provisions of the Indenture described in paragraph (a) under "Certain
CovenantsLimitation on Consolidated Debt" above; (d) if, as a result of any such transaction, Property of Parent (or the successor entity) or any Restricted Subsidiary would become
subject to a Lien prohibited by the provisions of the Indenture described under "Certain CovenantsLimitation on Liens" above, Parent or the successor entity to Parent shall
have secured the Notes as required by said covenant; (e) in the case of a transfer, sale, lease, conveyance or other disposition of all or substantially all of the assets of Parent, such assets
shall have been transferred as an entirety or virtually as an entirety to one
Person and such Person shall have complied with all the provisions of this paragraph; and (f) certain other conditions are met. The successor entity shall succeed to, and be substituted for,
and may exercise every right and power of, Parent under the Indenture and the Parent Guarantee, and the predecessor "Parent," except in the case of a lease, shall be released from all its obligations
under the Indenture and the Parent Guarantee.
The
Issuer may not, in a single transaction or a series of related transactions, (i) consolidate or merge into Parent or permit Parent to consolidate with or merge into the Issuer
or (ii) except to the extent permitted under "Certain CovenantsLimitation on Restricted Payments," directly or indirectly, transfer, sell, lease, convey or otherwise
dispose of all or substantially all its assets to Parent. Additionally, the Issuer may not, in a single transaction or a series of related transactions, (i) consolidate with or merge into any
other Person or Persons or permit any other Person to consolidate with or merge into the Issuer or (ii) (other than, to the extent permitted under "Certain
CovenantsLimitation on Restricted Payments," to a Restricted Subsidiary that is or becomes a Guarantor and an Offering Proceeds Note Guarantor or to Parent so long as Parent is a
Guarantor) directly or indirectly, transfer, sell, lease, convey or otherwise dispose of all or substantially all its assets to any other Person or Persons unless: (a) in a transaction in which
the Issuer is not the surviving Person or in which the Issuer transfers, sells, leases, conveys or otherwise disposes of all or substantially all of its assets to any other Person, the successor
entity is organized under the laws of the United States of America or any State thereof or the District of Columbia and shall expressly assume, by a supplemental indenture executed and delivered to
the Trustee in form satisfactory to the Trustee, all of the Issuer's obligations under the Indenture; (b) immediately before and after giving effect to such transaction and treating any Debt
which becomes an obligation of the Issuer (or the successor entity) or an Issuer Restricted Subsidiary as a result of such transaction as having been Incurred by the Issuer or such Issuer Restricted
Subsidiary at the time of the transaction, no Default or Event of Default shall have occurred and be continuing under the Indenture; (c) immediately after giving effect to such transaction and
treating any Debt which becomes an obligation of the Issuer (or the successor entity) or an Issuer Restricted Subsidiary as a result of such transaction as having been Incurred by the Issuer or such
Issuer Restricted Subsidiary at the time of the transaction, the Issuer (or the successor entity) could Incur at least $1.00 of additional Debt pursuant to the provisions of the Indenture described in
paragraph (a) under "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" above; (d) if, as a result of any such transaction,
Property of the Issuer (or the successor entity) or any Issuer Restricted Subsidiary would become subject to a Lien prohibited by the provisions of the Indenture described under "Certain
CovenantsLimitation on Liens" above, the Issuer or the successor entity to the Issuer shall have secured the Notes as required by said covenant; (e) in the case of a transfer,
sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer, such assets shall have been transferred as an entirety or virtually as an entirety to one Person
and such Person shall have complied with all the provisions of this paragraph; and (f) certain other conditions are met. The successor entity shall succeed to, and be substituted for, and may
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exercise
every right and power of the Issuer under the Indenture, and the predecessor "Issuer," except in the case of a lease, shall be released from all its obligations under the Indenture.
A
Guarantor (other than Parent) may not, in a single transaction or a series of related transactions, (i) consolidate with or merge into any other Person or Persons (other than,
with respect to a Guarantor that is an Issuer Restricted Subsidiary, the Issuer or another Guarantor that is an Issuer Restricted Subsidiary, and with respect to a Guarantor that is a Sister
Restricted Subsidiary, another Guarantor that is a Sister Restricted Subsidiary or Parent) or permit any other Person (other than, with respect to a Guarantor that is an Issuer Restricted Subsidiary,
another Guarantor that is an Issuer Restricted Subsidiary, and with respect to a Guarantor that is a Sister Restricted Subsidiary, Parent or another Guarantor that is a Sister Restricted Subsidiary)
to consolidate with or merge into such Guarantor or (ii) except to another Guarantor to the extent permitted under "Certain CovenantsLimitation on Restricted
Payments," directly or indirectly, transfer, sell, lease, convey or otherwise dispose of all or substantially all its assets to any other Person or Persons (other than, with respect to a Guarantor
that is an Issuer Restricted Subsidiary, the Issuer or another Guarantor that is an Issuer Restricted Subsidiary, and with respect to a Guarantor that is a Sister Restricted Subsidiary, another
Guarantor that is a Sister Restricted Subsidiary or Parent) unless (1) immediately before and after giving effect to such transaction and treating any Debt which becomes an obligation of such
Guarantor as a result of such transaction as having been Incurred by such Guarantor at the time of the transaction, no Default or Event of Default shall have occurred and be continuing under the
Indenture and (2) either (a) in a transaction in which such Guarantor is not the surviving Person or in which such Guarantor transfers, sells, leases, conveys or otherwise disposes of
all or substantially all of its assets to any other Person, the resulting surviving or transferee Person is organized under the laws of the United States of America or any State thereof or the
District of Columbia and shall expressly assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, all of such Guarantor's obligations under the
Indenture and its Note Guarantee; or (b) such transaction complies with the covenant described under "Certain CovenantsLimitation on Asset Dispositions" (or Parent
certifies in an Officers' Certificate to the Trustee that it will comply with the requirements of such covenant relating to application of the proceeds of such transaction).
An
Offering Proceeds Note Guarantor may not, in a single transaction or a series of related transactions, (i) consolidate with or merge into any other Person or Persons (other
than, with respect to an Offering Proceeds Note Guarantor that is an Issuer Restricted Subsidiary, the Issuer or another Offering Proceeds Note Guarantor that is an Issuer Restricted Subsidiary, and
with respect to an Offering Proceeds Note Guarantor that is a Sister Restricted Subsidiary, another Offering Proceeds Note Guarantor that is a Sister Restricted Subsidiary or Parent) or permit any
other Person (other than, with respect to an Offering Proceeds Note Guarantor that is an Issuer Restricted Subsidiary, another Offering Proceeds Note Guarantor that is an Issuer Restricted Subsidiary,
and with respect to an Offering Proceeds Note Guarantor that is a Sister Restricted Subsidiary, Parent or another Offering Proceeds Note Guarantor that is a Sister Restricted Subsidiary) to
consolidate with or merge into such Offering Proceeds Note Guarantor or (ii) except to another Offering Proceeds Note Guarantor to the extent permitted under "Certain
CovenantsLimitation on Restricted Payments," directly or indirectly, transfer, sell, lease, convey or otherwise dispose of all or substantially all its assets to any other Person or
Persons (other than, with respect to an Offering Proceeds Note Guarantor that is an Issuer Restricted Subsidiary, the Issuer or another Offering Proceeds Note Guarantor that is an Issuer Restricted
Subsidiary, and with respect to an Offering Proceeds Note Guarantor that is a Sister Restricted Subsidiary, another Offering Proceeds Note Guarantor that is a Sister Restricted Subsidiary or Parent)
unless (1) immediately before and after giving effect to such transaction and treating any Debt which becomes an obligation of such Offering Proceeds Note Guarantor as a result of such
transaction as having been Incurred by such Offering Proceeds Note Guarantor at the time of the transaction, no Default or Event of Default shall have
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occurred
and be continuing under the Indenture and (2) either (a) in a transaction in which such Offering Proceeds Note Guarantor is not the surviving Person or in which such Offering
Proceeds Note Guarantor transfers, sells, leases, conveys or otherwise disposes of all or substantially all of its assets to any other Person, the resulting surviving or transferee Person is organized
under the laws of the United States of America or any State thereof or the District of Columbia and shall expressly assume all of such Offering Proceeds Note Guarantor's obligations under the Offering
Proceeds Note Guarantee and any subordination agreements between the Issuer and such Offering Proceeds Note Guarantor relating to the Offering Proceeds Note; or (b) such transaction complies
with the covenant described under "Certain CovenantsLimitation on Asset Dispositions" (or Parent certifies in an Officers' Certificate to the Trustee that it will comply with
the requirements of such covenant relating to application of the proceeds of such transaction).
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full
definition of all such terms, as well as any other terms used herein for which no definition is provided.
"Accreted
Value" of any Debt issued at a price less than the principal amount at stated maturity means, as of any date of determination, an amount equal to the sum of (a) the
issue price of such Debt as determined in accordance with Section 1273 of the Code or any successor provisions plus (b) the aggregate of the portions of the original issue discount (the
excess of the amounts considered as part of the "stated redemption price at maturity" of such Debt within the meaning of Section 1273(a)(2) of the Code or any successor provisions, whether
denominated as principal or interest, over the issue price of such Debt) that shall theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7) of
the Code) from the date of issue of such Debt to the date of determination, minus all amounts theretofore paid in respect of such Debt, which amounts are considered as part of the "stated redemption
price at maturity" of such Debt within the meaning of Section 1273(a)(2) of the Code or any successor provisions (whether such amounts paid were denominated as principal or interest).
"Acquired
Debt" means, with respect to any specified Person, (i) Debt of any other Person existing at the time such Person merges with or into or consolidates with or becomes a
Subsidiary of such specified Person and (ii) Debt secured by a Lien encumbering any Property acquired by such
specified Person, which Debt was not incurred in anticipation of, and was outstanding prior to, such merger, consolidation or acquisition.
"Affiliate"
of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the covenants described under "Certain
CovenantsTransactions with Affiliates" and "Certain CovenantsLimitation on Asset Dispositions" and the definition of "Telecommunications/IS Assets" only, "Affiliate" shall
also mean any beneficial owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of Parent or of rights or warrants to purchase such Voting
Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Asset
Disposition" means any transfer, conveyance, sale, lease, issuance or other disposition by Parent or any Restricted Subsidiary in one or more related transactions (including a
consolidation or merger or other sale of any such Restricted Subsidiary with, into or to another Person in a
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transaction
in which such Restricted Subsidiary ceases to be a Restricted Subsidiary of Parent, but excluding a disposition by a Restricted Subsidiary to Parent or a Restricted Subsidiary or by Parent
to a Restricted Subsidiary) of (i) shares of Capital Stock or other ownership interests of a Restricted Subsidiary (other than as permitted by clause (v), (vi), (vii) or
(ix) of the covenant described under "Certain CovenantsLimitation on Issuance and Sales of Capital Stock of Restricted Subsidiaries"), (ii) substantially all of
the assets of Parent or any Restricted Subsidiary representing a division or line of business or (iii) other Property of Parent or any Restricted Subsidiary outside of the ordinary course of
business (excluding any transfer, conveyance, sale, lease or other disposition of equipment that is obsolete or no longer used by or useful to Parent);
provided
in each case that the aggregate
consideration for such transfer, conveyance, sale, lease or other disposition is equal to $25 million or
more in any 12-month period. The following shall not be Asset Dispositions: (i) Permitted Telecommunications Capital Asset Dispositions that comply with clause (i) of the first paragraph
under "Certain CovenantsLimitation on Asset Dispositions," (ii) when used with respect to Parent, any Asset Disposition permitted pursuant to "Mergers,
Consolidations and Certain Sales of Assets" which constitutes a disposition of all or substantially all of the assets of Parent and the Restricted Subsidiaries taken as a whole,
(iii) Receivables sales constituting Debt under Qualified Receivable Facilities permitted to be Incurred pursuant to "Certain CovenantsLimitation on Consolidated Debt"
or "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" and (iv) any disposition that constitutes a Permitted Investment or a
Restricted Payment permitted by the covenant described under "Certain CovenantsLimitation on Restricted Payments."
"Attributable
Value" means, as to any particular lease under which any Person is at the time liable other than a Capital Lease Obligation, and at any date as of which the amount thereof
is to be determined, the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof (including any period for which such lease has been extended) as
determined in accordance with generally accepted accounting principles, discounted from the last date of such remaining term to the date of determination at a rate per annum equal to the discount rate
which would be applicable to a Capital Lease Obligation with like term in accordance with generally accepted accounting principles. The net amount of rent required to be paid under any such lease for
any such period shall be the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of insurance, taxes, assessments,
utility, operating and labor costs and similar charges. In the case of any lease which is terminable by the lessee upon the payment of penalty, such net amount shall also include the lesser of the
amount of such penalty (in which case no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the rent which would
otherwise be required to be paid if such lease is not so terminated. "Attributable Value" means, as to a Capital Lease Obligation, the principal amount thereof.
"Business
Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the City of New York are authorized or obligated by law or
executive order to close.
"Capital
Lease Obligation" of any Person means the obligation to pay rent or other payment amount under a lease of (or other Debt arrangements conveying the right to use) Property of
such Person which is required to be classified and accounted for as a capital lease or a liability on the face of a balance sheet of such Person in accordance with generally accepted accounting
principles (a "Capital Lease"). The stated maturity of such obligation shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty. The principal amount of such obligation shall be the capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with generally accepted accounting principles.
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"Capital
Stock" of any Person means any and all shares, interests, participations or other equivalents (however designated) of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such Person.
"Cash
Equivalents" means (i) U.S. dollars or foreign currencies held from time to time in the ordinary course of business; (ii) Government Securities having maturities of
not more than one year from the date of acquisition; (iii) marketable general 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 within one year from the date of acquisition and, at the time of acquisition, having a long-term credit rating of "A" or better from S&P or "A2" or better
from Moody's or a short-term credit rating of "A-2" or better from S&P or "P-2" or better from Moody's; (iv) certificates of deposit, demand deposits, time deposits, eurodollar time deposits,
overnight bank deposits or bankers' acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at
the time of acquisition thereof at least "A" or the equivalent thereof by S&P or "A2" or the equivalent thereof by Moody's or any commercial bank ranking within the top ten of all commercial banks in
such bank's country of operation on the basis of consolidated assets, and, in each case, having consolidated assets with value in excess of $500 million; (v) repurchase obligations with
a term of not more than seven days for underlying securities of the types described in clauses (ii), (iii) and (iv) entered into with any bank meeting the qualifications specified
in clause (iv) above; (vi) commercial paper rated at the time of acquisition thereof at least "A" (long-term) or "A-2" (short-term) or the respective equivalent thereof by S&P or "A2"
(long-term) or "P-2" (short-term) or the respective equivalent thereof by Moody's or, if S&P and Moody's cease publishing ratings of investments, carrying an equivalent rating by a nationally
recognized rating agency (other than Moody's and S&P) that rates debt securities having a maturity at original issuance of at least one year and in any case maturing within one year after the date of
acquisition thereof; and (vii) interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (i)
through (vi) above.
"Change
of Control" has the meaning set forth under "Certain CovenantsChange of Control Triggering Event" above.
"Change
of Control Triggering Event" has the meaning set forth under "Certain CovenantsChange of Control Triggering Event" above.
"Code"
means the U.S. Internal Revenue Code of 1986, as amended.
"Commission"
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
"Common
Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated
Capital Ratio" means as of the date of determination the ratio of (i) the aggregate amount of Debt of Parent and its Restricted Subsidiaries on a consolidated basis
as at the date of determination to (ii) the sum of (a) $2.024 billion, (b) the aggregate net proceeds to Parent from the issuance or sale of any Capital Stock (including
Preferred Stock) of Parent other than Disqualified Stock subsequent to the Measurement Date, (c) the aggregate net proceeds from the issuance or
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sale
of Debt of Parent or any Restricted Subsidiary subsequent to the Measurement Date convertible or exchangeable into Capital Stock of Parent other than Disqualified Stock, in each case upon
conversion or exchange thereof into Capital Stock of Parent subsequent to the Measurement Date and (d) the after-tax gain on the sale, subsequent to the Measurement Date, of Special Assets to
the extent such Special Assets have been sold for cash, Cash Equivalents, Telecommunications/IS Assets or the assumption of Debt of Parent or any Restricted Subsidiary (other than Debt that is
subordinated to the Notes or any applicable Note Guarantee or Offering Proceeds Note Guarantee) and release of Parent and all Restricted Subsidiaries from all liability on the Debt assumed;
provided
,
however
, that for purposes of calculation of the Consolidated Capital Ratio, the net proceeds
from the issuance or sale of Capital Stock or Debt described in clause (b) or (c) above shall not be included to the extent (x) such proceeds have been utilized to make a
Permitted Investment under clause (i) of the definition thereof or a Restricted Payment or (y) such Capital Stock or Debt shall have been issued or sold to Parent, a Subsidiary of Parent
or an employee stock ownership plan or trust established by Parent or any such Subsidiary for the benefit of their employees.
"Consolidated
Cash Flow Available for Fixed Charges" for Parent and its Restricted Subsidiaries or for the Issuer and the Issuer Restricted Subsidiaries for any period means the
Consolidated Net Income of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, for such period increased by the sum of, to the extent reducing
such Consolidated Net Income for such period (or, with respect to clause (v) below, reduced by such amount to the extent increasing such Consolidated Net Income for such period),
(i) Consolidated Interest Expense of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, for such period, plus (ii) Consolidated
Income Tax Expense of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, for such period, plus (iii) consolidated depreciation and
amortization expense and any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period) for Parent
and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, (iv) other non-recurring or unusual losses or expenses of Parent and its Restricted
Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable (as determined by Parent in good faith, (v) non-recurring or unusual gains of Parent and its Restricted
Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable (as determined by Parent in good faith), (vi) acquisition-related costs and restructuring reserves incurred by
Parent or any of its Restricted Subsidiaries or the Issuer or any of the Issuer Restricted Subsidiaries, as applicable, in connection with the acquisition of, merger, amalgamation or consolidation
with, any Person expensed in computing such Consolidated Net Income to the extent the same would have been capitalized prior to the adoption of Statement of Financial Accounting Standards
No. 141R, Business Combinations, (vii) the amount of (a) any restructuring charges or reserves of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted
Subsidiaries, as applicable, and (b) any impairment charge or asset write-off or write-down of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as
applicable, in each case, pursuant to generally accepted accounting principles, and (viii) any non-recurring expenses or charges (other than depreciation or amortization expense) related to any
equity offering, Permitted Investment, acquisition, disposition, recapitalization or the Incurrence of Debt permitted to be Incurred under the Indenture (including a refinancing thereof) (whether or
not successful), including (a) such fees, expenses or charges related to the offering of the Notes (including breakages costs in connection with hedging obligations) and (b) any
amendment or other modification of the Notes, and, in each case, deducted (and not added back) in computing Consolidated Net Income;
provided
,
however
,
that there shall be excluded therefrom the Consolidated Cash Flow Available for Fixed Charges (if positive) of any Restricted Subsidiary or
Issuer Restricted Subsidiary, as applicable (calculated separately for such Restricted Subsidiary or
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Issuer
Restricted Subsidiary in the same manner as provided above for Parent or the Issuer, as applicable), that is subject to a restriction which prevents the payment of dividends or the making of
distributions to Parent or another Restricted Subsidiary or to the Issuer or another Issuer Restricted Subsidiary, as applicable, to the extent of such restrictions.
"Consolidated
Income Tax Expense" for Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries for any period means the aggregate amounts of the
provisions for income taxes of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, for such period calculated on a consolidated basis in
accordance with generally accepted accounting principles.
"Consolidated
Interest Expense" for Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries for any period means the interest expense included in a
consolidated income statement (excluding interest income) of Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, for such period in accordance
with generally accepted accounting principles, including, without limitation or duplication (or, to the extent not so included, with the addition of), (i) the amortization of Debt discounts and
issuance costs, including commitment fees; (ii) any payments or fees with respect to letters of credit, bankers' acceptances or similar facilities; (iii) net costs with respect to
interest rate swap or similar agreements or foreign currency hedge, exchange or similar agreements (including fees); (iv) Preferred Stock Dividends (other than dividends paid in shares of
Preferred Stock that is not Disqualified Stock) declared and paid or payable; (v) accrued Disqualified Stock Dividends, whether or not declared or paid; (vi) interest on Debt guaranteed
by Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable; (vii) the portion of any Capital Lease Obligation or Sale and Leaseback
Transaction paid during such period that is allocable to interest expense; (viii) interest Incurred in connection with investments in discontinued operations; and (ix) the cash
contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than Parent or a
Restricted Subsidiary or
the Issuer or an Issuer Restricted Subsidiary, as applicable) in connection with Debt Incurred by such plan or trust.
"Consolidated
Net Income" for Parent and its Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries for any period means the net income (or loss) of Parent and its
Restricted Subsidiaries or the Issuer and the Issuer Restricted Subsidiaries, as applicable, for such period determined on a consolidated basis in accordance with generally accepted accounting
principles;
provided
,
however
, that there shall be excluded therefrom (a) for purposes of the
covenant described under "Certain CovenantsLimitation on Restricted Payments" only, the net income (or loss) of any Person acquired by Parent or a Restricted Subsidiary or
the Issuer or an Issuer Restricted Subsidiary, as applicable, in a pooling-of-interests transaction for any period prior to the date of such transaction, (b) the net income (or loss) of any
Person that is not a Restricted Subsidiary or an Issuer Restricted Subsidiary, as applicable, except to the extent of the amount of dividends or other distributions actually paid to Parent or a
Restricted Subsidiary or to the Issuer or an Issuer Restricted Subsidiary, as applicable, by such Person during such period (except, for purposes of the covenant described under "Certain
CovenantsLimitation on Restricted Payments" only, to the extent such dividends or distributions have been subtracted from the calculation of the amount of Investments to support the
actual making of Investments), (c) gains or losses realized upon the sale or other disposition of any Property of Parent or its Restricted Subsidiaries or the Issuer or the Issuer Restricted
Subsidiaries, as applicable, that is not sold or disposed of in the ordinary course of business (it being understood that Permitted Telecommunications Capital Asset Dispositions shall be considered to
be in the ordinary course of business), (d) gains or losses realized upon the sale or other disposition of any Special Assets, (e) all extraordinary gains and extraordinary losses,
determined in accordance with generally
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accepted
accounting principles, (f) the cumulative effect of changes in accounting principles, (g) non-cash gains or losses resulting from fluctuations in currency exchange rates,
(h) any non-cash expense related to the issuance to employees or directors of Parent or any Restricted Subsidiary or the Issuer or any Issuer Restricted Subsidiary, as applicable, of
(1) options to purchase Capital Stock of Parent or such Restricted Subsidiary or the Issuer or such Issuer Restricted Subsidiary, as applicable, or (2) other compensatory rights;
provided
, in
either case, that such options or rights, by their terms can be redeemed at the option of the holder of such option or right only for
Capital Stock, (i) with respect to a Restricted Subsidiary or an Issuer Restricted Subsidiary, as applicable, that is not a Wholly Owned Subsidiary, any aggregate net income (or loss) in excess
of Parent's or any Restricted Subsidiary's or the Issuer's or any Issuer Restricted Subsidiary's, as applicable, pro rata share of the net income (or loss) of such Restricted Subsidiary or Issuer
Restricted Subsidiary, as applicable, that is not a Wholly Owned Subsidiary; (j) if the period is the second, third or fourth fiscal quarter of 2003 or the first fiscal quarter of 2004, an
aggregate of $293,686,650 for all such quarters; and (k) for purposes of calculating Pro Forma Consolidated Cash Flow Available for Fixed Charges in paragraphs (a) and (b) of the
covenant described under "Limitation on Consolidated Debt" and paragraphs (a) and (b) of the covenant described under "Limitation on Debt of the Issuer and
Issuer Restricted Subsidiaries" only, ordinary losses or gains (including related fees and expenses) on early extinguishment of Debt;
provided further
that there shall further be excluded therefrom the net income (but not net loss) of any
Restricted Subsidiary or any Issuer Restricted Subsidiary, as applicable, that is subject to a restriction which prevents the payment of dividends or the making of distributions to Parent or another
Restricted Subsidiary or to the Issuer or another Issuer Restricted Subsidiary, as applicable, to the extent of such restriction.
"Consolidated
Tangible Assets" of any Person means the total amount of assets (less applicable reserves and other properly deductible items) which under generally accepted accounting
principles would be included on a consolidated balance sheet of such Person and its Subsidiaries after deducting therefrom all goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, which in each case under generally accepted accounting principles would be included on such consolidated balance sheet.
"Credit
Facilities" means one or more credit agreements, including the Existing Credit Facility, loan agreements or similar facilities, secured or unsecured, providing for revolving
credit loans, term loans and/or letters of credit, including any Qualified Receivable Facility, entered into from time to time by Parent and its Restricted Subsidiaries, or Purchase Money Debt, or
Debt Incurred pursuant to Capital Lease Obligations, Sale and Leaseback Transactions, or senior secured note issuances, and including any related notes, Guarantees, collateral documents, instruments
and agreements executed in connection therewith, as the same may be amended, supplemented, modified, restated or replaced from time to time.
"Debt"
means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in
connection with the acquisition of Property, (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) every obligation of such Person issued or assumed as the deferred purchase price of Property or services (including securities repurchase agreements but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of business), (v) every Capital Lease Obligation of such Person and all Attributable Value in respect of Sale and
Leaseback Transactions entered into by such Person, (vi) all obligations to redeem or repurchase Disqualified Stock issued by such Person, (vii) the liquidation preference of any
Preferred Stock (other than Disqualified Stock, which is covered by the preceding clause (vi)) issued by any Restricted Subsidiary of such Person, (viii) every obligation
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under
Hedging Agreements of such Person and (ix) every obligation of the type referred to in clauses (i) through (viii) of another Person and all dividends of another Person the
payment of which, in either case, such Person has Guaranteed. The "amount" or "principal amount" of Debt at any time of determination as used herein represented by (a) any Debt issued at a
price that is less than the principal amount at maturity thereof shall be, except as otherwise set forth herein, the Accreted
Value of such Debt at such time or (b) in the case of any Receivables sale constituting Debt, the amount of the unrecovered purchase price (that is, the amount paid for Receivables that has not
been actually recovered from the collection of such Receivables) paid by the purchaser (other than Parent or a Wholly Owned Restricted Subsidiary of Parent) thereof. The amount of Debt represented by
an obligation under a Hedging Agreement shall be equal to (x) zero if such obligation has been Incurred pursuant to clause (x) of paragraph (b) of the covenant described under
"Certain CovenantsLimitation on Consolidated Debt" or clause (viii) of paragraph (b) of the covenant described under "Certain
CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" or (y) the notional amount of such obligation if not Incurred pursuant to such clause.
"Default"
means any event, act or condition the occurrence of which is, or after notice or the passage of time or both would be, an Event of Default.
"Disqualified
Stock" of any Person means any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in
whole or in part, on or prior to the final Stated Maturity of the Notes;
provided
,
however
, that any
Preferred Stock which would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require Parent or the Issuer, respectively, to repurchase or redeem such
Preferred Stock upon the occurrence of (i) a change of control occurring prior to the final Stated Maturity of the Notes shall not constitute Disqualified Stock if the change of control
provisions applicable to such Preferred Stock are no more favorable to the holders of such Preferred Stock than the provisions applicable to the Notes contained in the covenant described under
"Certain CovenantsChange of Control Triggering Event" or (ii) an asset sale occurring prior to the final Stated Maturity of the Notes shall not constitute Disqualified
Stock if the asset sale provisions applicable to such Preferred Stock are no more favorable to the holders of such Preferred Stock than the provisions applicable to the Notes contained in the covenant
described under "Limitation on Asset Dispositions" and, in each case, such Preferred Stock specifically provides that Parent or the Issuer, respectively, will not repurchase or redeem any
such stock pursuant to such provisions prior to the Issuer's repurchase of such Notes as are required to be repurchased pursuant to the covenant described under "Certain
CovenantsChange of Control Triggering Event" or "Limitation on Asset Dispositions."
"Disqualified
Stock Dividends" means all dividends with respect to Disqualified Stock of Parent held by Persons other than a Wholly Owned Restricted Subsidiary. The amount of any such
dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0)
applicable to Parent for the period during which such dividends were paid.
"Domestic
Restricted Subsidiary" means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary.
"Event
of Default" has the meaning set forth under "Events of Default" below.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and regulations thereunder (or respective successors thereto).
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"Existing Credit Facility" means the Credit Agreement dated as of March 13, 2007, among the Issuer, Parent, the lenders party thereto and Merrill Lynch
Capital Corporation, as Administrative Agent, as amended and restated as of May 8, 2015.
"Existing
Notes" means Parent's 5.75% Senior Notes due 2022 in an aggregate principal amount not to exceed $600 million, the Issuer's 7% Senior Notes due 2020 in an aggregate
principal amount not to exceed $775 million, the Issuer's 6.125% Senior Notes due 2021 in an aggregate principal amount not to exceed $640 million, the Issuer's Floating Rate Senior
Notes due 2018 in an aggregate principal amount not to exceed $300 million, the Issuer's 5.375% Senior Notes due 2022 in an aggregate principal amount not to exceed $1,000 million, the
Issuer's 5.625% Senior Notes due 2023 in an aggregate principal amount not to exceed $500 million, the Issuer's 5.125% Senior Notes due 2023 in an aggregate principal amount not to exceed
$700 million, the Issuer's 5.375% Senior Notes due 2024 in an aggregate principal amount not to exceed $900 million and the Issuer's 5.375% Senior Notes due 2025 in an aggregate
principal amount not to exceed $800 million.
"Fair
Market Value" means, with respect to any Property, the price that could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing
buyer, neither of
whom is under pressure or compulsion to complete the transaction. Unless otherwise specified in the Indenture, Fair Market Value shall be determined by Parent in good faith.
"Fitch"
means Fitch Inc., a subsidiary of Fimalac, S.A. or, if Fitch Inc. shall cease rating debt securities having a maturity at original issuance of at least one
year and such ratings business shall have been transferred to a successor Person, such successor Person.
"5.375%
due 2022 Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations".
"5.375%
due 2024 Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations".
"5.375%
Senior Notes due 2022" means the Issuer's 5.375% Senior Notes due 2022 issued pursuant to the Indenture dated as of August 12, 2014 between Level 3 Escrow
II, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the First Supplemental Indenture dated October 31, 2014, among Level 3 Escrow
II, Inc., the Issuer, Parent, Level 3 LLC and The Bank of New York Mellon Trust Company, N.A., as trustee, under which the Issuer assumed all obligations of Level 3 Escrow
II, Inc. under the indenture and securities issued thereunder and each of Parent and Level 3 LLC guaranteed the Issuer's obligations under such indenture and securities.
"5.375%
Senior Notes due 2024" means the Issuer's 5.375% Senior Notes due 2024 issued pursuant to the Indenture dated as of November 16, 2015, among the Issuer, Parent and The
Bank of New York Mellon Trust Company, N.A., as trustee.
"5.75%
Senior Notes due 2022" means Parent's 5.75% Senior Notes due 2022 issued pursuant to the Indenture dated as of December 1, 2014, between Parent and The Bank of New York
Mellon Trust Company, N.A., as trustee.
"5.625%
Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
"5.625%
Senior Notes due 2023" means the Issuer's 5.625% Senior Notes due 2023 issued pursuant to the Indenture dated as of January 29, 2015, among the Issuer, Parent and The Bank
of New York Mellon Trust Company, N.A., as trustee.
"5.125%
Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
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"5.125%
Senior Notes due 2023" means the Issuer's 5.125% Senior Notes due 2023 issued pursuant to the Indenture dated as of April 28, 2015, among the Issuer, Parent and The Bank
of New York Mellon Trust Company, N.A., as trustee.
"5.375%
due 2025 Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
"5.375%
Senior Notes due 2025" means the Issuer's 5.375% Senior Notes due 2025 issued pursuant to the Indenture dated as of April 28, 2015, among the Issuer, Parent and The Bank
of New York Mellon Trust Company, N.A., as trustee.
"Foreign
Restricted Subsidiary" means any Restricted Subsidiary that is not organized under the laws of the United States of America or any State thereof or the District of Columbia.
"Governmental
Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Government
Securities" means direct obligations of, or obligations fully and unconditionally guaranteed or insured by, the United States of America or any agency or instrumentality
thereof which are not callable or redeemable at the issuer's option (unless, for purposes of the definition of "Cash Equivalents" only, the obligations are redeemable or callable at a price not less
than the purchase price paid by Parent or the applicable Restricted Subsidiary, together with all accrued and unpaid interest (if any) on such Government Securities).
"Guarantee"
by any Person means any obligation, direct or indirect, contingent or otherwise, of such Person guaranteeing, or having the economic effect of guaranteeing, any Debt of any
other Person (the "primary obligor") in any manner, whether directly or indirectly, and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt, including any such obligations arising by virtue
of partnership arrangements or by agreements to keep-well, (ii) to purchase Property or services or to take-or-pay for the purpose of assuring the holder of such Debt of the payment of such
Debt, (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or
(iv) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof, in whole or in part (and "Guaranteed," "Guaranteeing" and "Guarantor" shall have
meanings correlative to the foregoing);
provided
,
however
, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case, in the ordinary course of business.
"Guarantor"
means (1) Parent and (2) any other Person that becomes a Guarantor pursuant to the covenants described under "Certain
CovenantsLimitation on Consolidated Debt," "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries," "Certain
CovenantsLimitation on Actions with respect to Existing Intercompany Obligations," "Mergers, Consolidations and Certain Sales of Assets" or any other provision of the
Indenture.
"Hedging
Agreement" of any Person means any forward contract, futures contract, swap, option, other financial agreement or arrangement (including caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest rates, currency exchange rates, commodities or indices or other expenses of Parent and its Subsidiaries.
"Incur"
means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume, Guarantee or otherwise become liable in
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respect
of such Debt or other obligation including the recording, as required pursuant to generally accepted accounting principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the foregoing);
provided
,
however
, that a change in
generally accepted accounting principles that results in an obligation of such Person that exists at such time becoming Debt
shall not be deemed an Incurrence of such Debt and that neither the accrual of interest nor the accretion of original issue discount shall be deemed an Incurrence of Debt. Debt otherwise incurred by a
Person before it becomes a Subsidiary of Parent shall be deemed to have been Incurred at the time at which it becomes a Subsidiary.
"Invested
Capital" means the sum of (a) $500 million, (b) the aggregate net proceeds received by Parent from the issuance or sale of any Capital Stock, including
Preferred Stock, of Parent but excluding Disqualified Stock, subsequent to the Measurement Date, and (c) the aggregate net proceeds from the issuance or sale of Debt of Parent or any Restricted
Subsidiary subsequent to the Measurement Date convertible or exchangeable into Capital Stock of Parent other than Disqualified Stock, in each case upon conversion or exchange thereof into Capital
Stock of Parent subsequent to the Measurement Date;
provided
,
however
, that the net proceeds from the
issuance or sale of Capital Stock or Debt described in clause (b) or (c) shall be excluded from any computation of Invested Capital to the extent (i) utilized to make a Restricted
Payment or (ii) such Capital Stock or Debt shall have been issued or sold to Parent, a Subsidiary of Parent or an employee stock ownership plan or trust established by Parent or any such
Subsidiary for the benefit of their employees.
"Investment"
by any Person means any direct or indirect loan, advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or
payments for Property or services for the account or use of others, or otherwise) to, purchase, redemption, retirement or acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, or Incurrence of, or payment on, a Guarantee of any obligation of, any other Person;
provided
,
however
, that Investments shall
exclude commercially reasonable extensions of trade credit. The amount, as of any date of determination, of any
Investment shall be the original cost of such Investment, plus the cost of all additions, as of such date, thereto and minus the amount, as of such date, of any portion of such Investment repaid to
such Person in cash as a repayment of principal or a return of capital, as the case may be (except to the extent such repaid amount has been included in Consolidated Net Income of Parent and its
Restricted Subsidiaries to support the actual making of Restricted Payments), but without any other adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment. In determining the amount of any Investment involving a transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such
transfer.
"Investment
Grade Rating" means a rating equal to or higher than (a) in the case of Moody's, Baa3 (or the equivalent), (b) in the case of S&P, BBB (or the
equivalent), (c) in the case of Fitch, BBB (or the equivalent) and (d) in the case of any other Rating Agency, the equivalent rating by such Rating Agency to the ratings
described in clauses (a), (b) and (c).
"Issue
Date" means March 22, 2016.
"Issue
Date Purchase Money Debt" means Purchase Money Debt outstanding on the Issue Date;
provided
,
however
, that the amount of such Purchase Money Debt when
Incurred did not exceed 100% of the cost of the construction, installation, acquisition,
lease, development or improvement of the applicable Telecommunications/IS Assets.
"Issue
Date Rating" means the respective ratings assigned to the Notes issued in the initial offering by the Rating Agencies on the Issue Date.
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"Issuer
Debt Ratio" means the ratio of (a) the aggregate consolidated principal amount (or, in the case of Debt issued at a discount, the then-Accreted Value) of Debt of the
Issuer and the Issuer Restricted Subsidiaries (other than Debt owed to Parent or a Sister Restricted Subsidiary that is subordinated to the Offering Proceeds Note (if Level 3 LLC is the
obligor on such Debt) or to an Offering Proceeds Note Guarantee of the obligor on such Debt), on a consolidated basis, outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the proposed Incurrence of Debt giving rise to such calculation and any other Debt Incurred or repaid since such balance sheet date and the receipt and application of
the net proceeds thereof, to (b) the sum of, without duplication, (x) Consolidated Cash Flow Available for Fixed Charges of the Issuer and the Issuer Restricted Subsidiaries for the four
full fiscal quarters next preceding such proposed Incurrence of Debt for which consolidated financial statements are available and (y) Consolidated Cash Flow Available for Fixed Charges of
Parent and the Sister Restricted Subsidiaries to the extent attributable to Sister Restricted Subsidiaries that are Guarantors for such four full fiscal quarters;
provided
,
however
, that if (A) since the beginning of such four full fiscal quarter period the
Issuer, any Issuer Restricted Subsidiary, Parent or any Sister Restricted Subsidiary shall have made one or more Asset Dispositions or an Investment (by merger or otherwise) in any Issuer Restricted
Subsidiary or Sister Restricted Subsidiary (or any Person which becomes an Issuer Restricted Subsidiary or a Sister Restricted Subsidiary) or an acquisition, merger or consolidation of Property, or
(B) since the beginning of such period any Person (that subsequently became an Issuer Restricted Subsidiary or a Sister Restricted Subsidiary or was merged with or into the Issuer, any Issuer
Restricted Subsidiary or any Sister Restricted Subsidiary since the beginning of such period) shall have made such an Asset Disposition, Investment, acquisition, merger or consolidation, then
Consolidated Cash Flow Available for Fixed Charges for such four full fiscal quarter period shall be calculated after giving pro forma effect to such Asset Dispositions, Investments, acquisitions,
mergers or consolidations as if such Asset Dispositions, Investments, acquisitions, mergers or consolidations occurred on the first day of such period. For purposes of this definition, whenever "pro
forma" effect is to be given to any Asset Disposition, Investment, acquisition, merger or consolidation, the calculations shall be performed in accordance with Article 11 of
Regulation S-X promulgated under the Securities Act, as interpreted in good faith by the chief financial officer of Parent, except that any such pro forma calculation may include operating
expense reductions for such period attributable to the transaction to which pro forma effect is being given (including, without limitation, operating expense reductions attributable to execution or
termination of any contract, reduction of costs related to administrative functions, the termination of any employees or the closing (or the approval by the board of directors of Parent of the
closing) of any facility) that have been realized or for which all steps necessary for the realization of which have been taken or are reasonably expected to be taken within twelve months following
such transaction;
provided
that such adjustments are set forth in an Officers' Certificate which states (i) the amount of such adjustment or
adjustments and (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the Officers executing such Officers' Certificate.
"Issuer
Restricted Subsidiaries" means the Subsidiaries of the Issuer that are Restricted Subsidiaries.
"Joint
Venture" means a Person in which Parent or a Restricted Subsidiary holds not more than 50% of the shares of Voting Stock.
"Lien"
means, with respect to any Property, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than
any easement not materially impairing usefulness), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such
Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing and any Sale and
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Leaseback
Transaction). For purposes of this definition, the sale, lease, conveyance or other transfer by Parent or any of its Subsidiaries of, including the grant of indefeasible rights of use or
equivalent arrangements with respect to, dark or lit communications fiber capacity or communications conduit shall not constitute a Lien. For the sake of clarity, subordination and setoff rights do
not constitute Liens.
"Measurement
Date" means April 28, 1998.
"Moody's"
means Moody's Investors Service, Inc. or, if Moody's Investors Service, Inc. shall cease rating debt securities having a maturity at original issuance of at least
one year and such ratings business shall have been transferred to a successor Person, such successor Person.
"Net
Available Proceeds" from any Asset Disposition by any Person means cash or cash equivalents received (including amounts received by way of sale or discounting of any note,
installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquirer of Debt or other obligations relating to such Property) therefrom
by such Person, net of (i) all legal, title and recording taxes, expenses and commissions and other fees and expenses (including appraisals, brokerage commissions and investment banking fees)
Incurred and all federal, state, provincial, foreign and local taxes required to be accrued as a liability as a consequence of such Asset Disposition, (ii) all payments made by such Person or
its Subsidiaries on any Debt which is secured by such Property in accordance with the terms of any Lien upon or with respect to such Property or which must by the terms of such Lien, or in order to
obtain a necessary consent to such Asset Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or Joint Ventures of such Person as a result of such Asset Disposition and (iv) appropriate amounts to be provided by such Person or any
Subsidiary thereof, as the case may be, as a reserve in accordance with generally accepted accounting principles against any liabilities
associated with such Property and retained by such Person or any Subsidiary thereof, as the case may be, after such Asset Disposition, including liabilities under any indemnification obligations and
severance and other employee termination costs associated with such Asset Disposition, in each case, as determined by such Person in its reasonable good faith judgment;
provided, however,
that any
reduction in such reserve within twelve months following the consummation of such Asset Disposition will be, for all
purposes of the Indenture and the Notes, treated as a new Asset Disposition at the time of such reduction with Net Available Proceeds equal to the amount of such reduction;
provided further, however,
that, in the event that any consideration for a transaction (which would otherwise constitute Net Available Proceeds) is
required to be held in escrow pending determination of whether a purchase price adjustment will be made, at such time as such portion of the consideration is released to such Person or its Restricted
Subsidiary from escrow, such portion shall be treated for all purposes of the Indenture and the Notes as a new Asset Disposition at the time of such release from escrow with Net Available Proceeds
equal to the amount of such portion of consideration released from escrow.
"Non-Telecommunications
Subsidiary" means any Issuer Restricted Subsidiary not engaged in any material respect in the Telecommunications/IS Business.
"Note
Guarantee" means an unconditional Guarantee of the due and punctual payment of the principal of and premium, if any, and interest on the Notes, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and all other monetary obligations of the Issuer under the Indenture and the Notes, and the due and punctual
performance of all covenants, agreements, obligations and liabilities of the Issuer under or pursuant to the Indenture and the Notes, including the Parent Guarantee.
"Offer
to Purchase" means a written offer (the "Offer") sent by the Issuer electronically or by first-class mail, postage prepaid, to each holder of Notes at its address appearing in the
Note
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Register
on the date of the Offer offering to purchase up to the principal amount of Notes specified in such Offer at the purchase price specified in such Offer (as determined pursuant to the
Indenture). Unless otherwise required by applicable law, the Offer shall specify an expiration date (the "Expiration Date") of the Offer to Purchase which shall be, subject to any contrary
requirements of applicable law, not less than 30 days or more than 60 days after the date of such Offer and a settlement date (the "Purchase Date") for purchase of Notes within five
Business Days after the Expiration Date. The Issuer shall notify the Trustee at least 15 Business Days (or such shorter period as is acceptable to the Trustee) prior to the delivery of the Offer of
the obligation to make an Offer to Purchase, and the Offer shall be delivered by the Issuer or, at the Issuer's request and the provision of such notice information, by the Trustee in the name and at
the expense of the Issuer. The Offer shall contain information concerning the business of Parent and its Subsidiaries which the Issuer in good faith believes will enable such holders to make an
informed decision with respect to
the Offer to Purchase. The Offer shall contain all instructions and materials necessary to enable such holders to tender Notes pursuant to the Offer to Purchase. The Offer shall also
state:
-
a.
-
the
Section of the Indenture pursuant to which the Offer to Purchase is being made;
-
b.
-
the
Expiration Date and the Purchase Date;
-
c.
-
the
aggregate principal amount of the outstanding Notes offered to be purchased by the Issuer pursuant to the Offer to Purchase (including, if less than
100%, the manner by which such has been determined pursuant to the section of the Indenture requiring the Offer to Purchase) (the "Purchase Amount");
-
d.
-
the
purchase price to be paid by the Issuer for $1,000 aggregate principal amount of Notes accepted for payment (as specified pursuant to the Indenture) (the
"Purchase Price");
-
e.
-
that
the holder may tender all or any portion of the Notes registered in the name of such holder and that any portion of a Note tendered must be tendered in
an integral multiple of $1,000 principal amount;
-
f.
-
the
place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase;
-
g.
-
that
any Notes not tendered or tendered but not purchased by the Issuer will continue to accrue interest;
-
h.
-
that
on the Purchase Date the Purchase Price will become due and payable upon each Note being accepted for payment pursuant to the Offer to Purchase and that
interest thereon, if any, shall cease to accrue on and after the Purchase Date;
-
i.
-
that
each holder electing to tender a Note pursuant to the Offer to Purchase will be required to surrender such Note at the place or places specified in the
Offer prior to the close of business on the Expiration Date (such Note being, if the Issuer or the Trustee so requires, duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee duly executed by, the holder thereof or his attorney duly authorized in writing);
-
j.
-
that
holders will be entitled to withdraw all or any portion of Notes tendered if the Issuer (or the Paying Agent) receives, not later than the close of
business on the Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount of the Note the holder tendered, the certificate number
of the Note the holder tendered and a statement that such holder is withdrawing all or a portion of his tender;
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-
k.
-
that
(i) if Notes in an aggregate principal amount less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer
to Purchase, the Issuer shall purchase all such Notes and (ii) if Notes in an aggregate principal amount in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to
Purchase, the Issuer shall purchase Notes having an aggregate principal amount equal to the Purchase Amount on a pro rata basis, in accordance with applicable depositary procedures (with such
adjustments as may be deemed appropriate so that only Notes in denominations of $1,000 or integral multiples thereof shall be purchased); and
-
l.
-
that
in the case of any holder whose Note is purchased only in part, the Issuer shall execute, and the Trustee shall authenticate and deliver to the holder
of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such holder, in an aggregate principal amount equal to and in exchange for the unpurchased
portion of the Note so tendered.
Any
Offer to Purchase shall be governed by and effected in accordance with the Offer for such Offer to Purchase.
"Offering
Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
"Offering
Proceeds Note Guarantee" means an unconditional Guarantee of the due and punctual payment of the principal of and premium, if any, and interest on the Offering Proceeds Note,
when and as due, whether on demand, at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and all other monetary obligations of Level 3 LLC under the
Offering Proceeds Note.
"Offering
Proceeds Note Guarantor" means any Restricted Subsidiary that provides an Offering Proceeds Note Guarantee pursuant to the covenant described under "Certain
CovenantsLimitation on Consolidated Debt" and "Certain CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" or any other provision of
the Indenture.
"Officers'
Certificate" of any Person means a certificate signed by the Chairman of the board of directors of such Person, a Vice Chairman of the board of directors of such Person, the
President or a Vice President, and by the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary of such
Person and delivered to the Trustee, which shall comply with the Indenture.
"Opinion
of Counsel" means an opinion of counsel of Parent or the Issuer, including an employee of Parent or the Issuer.
"Parent
Guarantee" means the Note Guarantee of Parent.
"Permitted
Hedging Agreement" of any Person means any Hedging Agreement entered into with one or more financial institutions in the ordinary course of business, not for purposes of
speculation, that is designed to protect such Person against fluctuations in interest rates, currency exchange rates, commodities prices or other expenses of Parent and its Subsidiaries.
"Permitted
Holders" means the members of Parent's board of directors on the Measurement Date and their respective estates, spouses, ancestors, and lineal descendants, the legal
representatives of any of the foregoing and the trustees of any bona fide trusts of which the foregoing are the sole
beneficiaries or the grantors, or any Person of which the foregoing "beneficially owns" (as defined in Rule 13d-3 under the Exchange Act) at least 66
2
/
3
% of the total voting
power of the Voting Stock of such Person.
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"Permitted
Investments" means (a) Cash Equivalents; (b) investments in prepaid expenses; (c) negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits; (d) loans, advances or extensions of credit to employees and directors made in the ordinary course of business and consistent with
past practice; (e) obligations under Permitted Hedging Agreements; (f) bonds, notes, debentures and other securities received as a result of Asset Dispositions pursuant to and in
compliance with "Certain CovenantsLimitation on Asset Dispositions"; (g) Investments in any Person as a result of which such Person becomes a Restricted Subsidiary;
(h) Investments made prior to the Measurement Date; (i) Investments made after the Measurement Date in Persons engaged in the Telecommunications/IS Business in an aggregate amount not to
exceed Invested Capital; and (j) additional Investments in an aggregate amount not to exceed $200 million.
"Permitted
Liens" means (a) Liens for taxes, assessments, governmental charges, levies or claims which are not yet delinquent or which are being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any, as shall be required in conformity with generally accepted accounting principles shall have been made therefor;
(b) other Liens incidental to the conduct of Parent's and its Restricted Subsidiaries' businesses or the ownership of its Property not securing any Debt, and which do not in the aggregate
materially detract from the value of Parent's and its Restricted Subsidiaries' Property when taken as a whole, or materially impair the use thereof in the operation of its business; (c) Liens,
pledges and deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of statutory obligations; (d) Liens, pledges or
deposits made to secure the performance of tenders, bids, leases, public or statutory obligations, sureties, stays, appeals, indemnities, performance or other similar bonds and other obligations of
like nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money, the obtaining of advances or credit or the payment of the deferred purchase price
of Property and which do not in the aggregate materially impair the use of Property in the operation of the business of Parent and the Restricted Subsidiaries taken as a whole); (e) zoning
restrictions, servitudes, easements, rights-of-way, restrictions and other similar charges or encumbrances incurred in the ordinary course of business which, in the aggregate, do not materially
detract from the value of the Property subject thereto or materially interfere with the ordinary conduct of the business of Parent or its Restricted Subsidiaries; and (f) any interest or title
of a lessor in the Property subject to any lease other than a Capital Lease.
"Permitted
Telecommunications Capital Asset Disposition" means the transfer, conveyance, sale, lease or other disposition of optical fiber and/or conduit and any related equipment used
in a Segment (as defined) of Parent's communications network that (i) constitute capital assets in accordance with generally accepted accounting principles and (ii) after giving effect
to such
disposition, would result in Parent retaining at least either (A) 24 optical fibers per route mile on such Segment as deployed at the time of such disposition or (B) 12 optical fibers
and one empty conduit per route mile on such Segment as deployed at such time "Segment" means (x) with respect to Parent's intercity network, the through-portion of such network between two
local networks (i.e., Omaha to Denver) and (y) with respect to a local network of Parent (i.e., Dallas), the entire through-portion of such network, excluding the spurs which
branch off the through-portion.
"Person"
means any individual, corporation, company, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof or any other entity.
"Preferred
Stock" of any Person means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution
of assets upon any voluntary or involuntary liquidation, dissolution or winding-up of such Person, to shares of Capital Stock of any other class of such Person.
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"Preferred
Stock Dividends" means all dividends with respect to Preferred Stock of Restricted Subsidiaries held by Persons other than Parent or the Issuer or a Wholly Owned Restricted
Subsidiary of Parent or the Issuer, respectively. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory
federal income rate (expressed as a decimal number between 1 and 0) applicable to the issuer of such Preferred Stock for the period during which such dividends were paid.
"Pro
Forma Consolidated Cash Flow Available for Fixed Charges" for Parent and its Restricted Subsidiaries for any period means Consolidated Cash Flow Available for Fixed Charges of
Parent and its Restricted Subsidiaries for such period, calculated in accordance with the definition thereof;
provided
,
however
, that if (A) since the
beginning of the applicable period Parent or one of its Restricted Subsidiaries shall have made one or more Asset
Dispositions or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition, merger or consolidation of Property which
constitutes all or substantially all of an operating unit of a business or a line of business, or (B) since the beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into Parent or any Restricted Subsidiary since the beginning of such period) shall have made such an Asset Disposition, Investment, acquisition, merger or
consolidation, then Consolidated Cash Flow Available for Fixed Charges for such four full fiscal quarter period shall be calculated after giving pro forma effect to such Asset Dispositions,
Investments, acquisitions, mergers or consolidations as if such Asset Dispositions, Investments, acquisitions, mergers or consolidations occurred on the first day of such period. For purposes of this
definition, whenever "pro forma" effect is to be given to any Asset Disposition, Investment, acquisition, merger or consolidation, the calculations shall be
performed in accordance with Article 11 of Regulation S-X promulgated under the Securities Act, as interpreted in good faith by the chief financial officer of Parent, except that any
such pro forma calculation may include operating expense reductions for such period attributable to the transaction to which pro forma effect is being given (including, without limitation, operating
expense reductions attributable to execution or termination of any contract, reduction of costs related to administrative functions, the termination of any employees or the closing (or the approval by
the board of directors of Parent of the closing) of any facility) that have been realized or for which all steps necessary for the realization of which have been taken or are reasonably expected to be
taken within twelve months following such transaction,
provided
that such adjustments are set forth in an Officers' Certificate which states
(i) the amount of such adjustment or adjustments and (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the Officers executing such Officers'
Certificate.
"Property"
means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital
Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to the Indenture, the value of any Property shall be its Fair Market Value.
"Proportionate
Interest" in any issuance of Capital Stock of a Restricted Subsidiary means a ratio (i) the numerator of which is the aggregate amount of all Capital Stock of such
Restricted Subsidiary beneficially owned by Parent and the Restricted Subsidiaries and (ii) the denominator of which is the aggregate amount of Capital Stock of such Restricted Subsidiary
beneficially owned by all Persons (excluding, in the case of this clause (ii), any Investment made in connection with such issuance).
"Purchase
Money Debt" means Debt (including Acquired Debt and Capital Lease Obligations, mortgage financings and purchase money obligations) incurred for the purpose of financing all or
any part of the cost of construction, installation, acquisition, lease, development or improvement by Parent or any Restricted Subsidiary of any Telecommunications/IS Assets of Parent or any
Restricted Subsidiary and including any related notes, Guarantees, collateral documents, instruments
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and
agreements executed in connection therewith, as the same may be amended, supplemented, modified, restated or replaced from time to time.
"Qualified
Credit Facility" means one or more credit agreements, loan agreements or similar facilities, secured or unsecured, providing for revolving credit loans, term loans and/or
letters of credit, including any Qualified Receivable Facility, entered into from time to time by Parent and its Restricted Subsidiaries, or senior secured note issuances, and including any related
notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, as
the same may be amended, supplemented, modified, restated or replaced from time to time, including, without limitation, the Existing Credit Facility.
"Qualified
Receivable Facility" means Debt of Parent or any Subsidiary Incurred from time to time pursuant to either (x) credit facilities secured by Receivables or
(y) Receivables purchase facilities, and including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, as the same may be amended,
supplemented, modified or restated from time to time.
"Rating
Agencies" means (1) each of Moody's, S&P and Fitch and (2) if any of Moody's, S&P or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly
available for reasons outside of Parent's control, a "nationally recognized statistical rating organization", within the meaning of Section 3(a)(62) of the Exchange Act, selected by Parent (as
certified by a resolution of the board of directors of Parent) as a replacement agency for Moody's, S&P, Fitch or each of them, as the case may be.
"Rating
Date" means the date of public notice of the occurrence of a Change of Control.
"Rating
Decline" shall be deemed to have occurred if, no later than 90 days after the Rating Date (which period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating Agencies), the Rating Agencies assign or reaffirm a rating to the Notes that is lower than the applicable Issue Date Rating
(or the equivalent thereof). If, prior to the Rating Date, the ratings assigned to the Notes by the Rating Agencies are lower than the applicable Issue Date Rating, then a Rating Decline will be
deemed to have occurred if such ratings are not changed to a rating that is equal to or higher than the applicable Issue Date Rating by the 90th day following the Rating Date. If, prior to the
Rating Date, one or more of the ratings assigned to the Notes by the Rating Agencies are lower than the applicable Issue Date Rating, then a Rating Decline will be deemed to have occurred if
(a) one or more of such ratings are not changed to a rating that is equal to or higher than the applicable Issue Date Rating by the 90th day following the Rating Date and (b) all
of the other Rating Agencies assign or reaffirm a rating to the Notes that is lower than the applicable Issue Date Rating by the 90th day following the Rating Date. A downgrade within rating
categories, as well as between rating categories, will be considered a Rating Decline. A "Rating Decline" also shall be deemed to have occurred if a Rating Decline (as defined in any indenture
governing any of the Existing Notes) shall have occurred in respect of any of the Existing Notes so long as any of the Existing Notes remain outstanding.
"Receivables"
means receivables, chattel paper, instruments, documents or intangibles evidencing or relating to the right to payment of money and proceeds and products thereof in each
case generated in the ordinary course of business.
"Restricted
Subsidiary" means (a) a Subsidiary of Parent or of a Restricted Subsidiary, including the Issuer, that has not been designated or classified as an Unrestricted
Subsidiary pursuant to and in
compliance with "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and (b) an Unrestricted Subsidiary that is redesignated as a Restricted
Subsidiary pursuant to such covenant.
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"S&P" means Standard & Poor's Ratings Service or, if Standard & Poor's Ratings Service shall cease rating debt securities having a maturity at
original issuance of at least one year and such ratings business shall have been transferred to a successor Person, such successor Person.
"Sale
and Leaseback Transaction" of any Person means any direct or indirect arrangement pursuant to which any Property is sold or transferred by such Person or a Restricted Subsidiary of
such person and is thereafter leased back from the purchaser or transferee thereof by such Person or one of its Restricted Subsidiaries;
provided
,
however
,
that a transaction shall be treated as a Sale and Leaseback Transaction only to the extent that, in each case, the Attributable Value of the
resulting lease or Capital Lease Obligation is greater than 75% of the Net Available Proceeds resulting from the related Asset Disposition. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to the first date on which such arrangement may be terminated by the lessee without payment of a penalty.
"7%
Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
"7%
Senior Notes due 2020" means the Issuer's 7.000% Senior Notes due 2020 issued pursuant to the Indenture dated as of August 6, 2012, among the Issuer, Parent and The Bank of
New York Mellon Trust Company, N.A., as trustee.
"Significant
Subsidiary" means any Subsidiary that would be a "Significant Subsidiary" of Parent within the meaning of Rule 1-02 under Regulation S-X promulgated by the
Commission.
"Sister
Restricted Subsidiary" means a Restricted Subsidiary that is not the Issuer or an Issuer Restricted Subsidiary.
"6.125%
Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
"6.125%
Senior Notes due 2021" means the Issuer's 6.125% Senior Notes due 2021 issued pursuant to the Indenture dated as of November 14, 2013, among the Issuer, Parent and The
Bank of New York Mellon Trust Company, N.A., as trustee.
"Special
Assets" means (a) the Capital Stock or assets of RCN Corporation and Commonwealth Telephone Enterprises, Inc. (and any intermediate holding companies or other
entities formed solely for the purpose of owning such Capital Stock or assets) owned, directly or indirectly, by Parent or any Restricted Subsidiary on the Measurement Date, and (b) any
Property, other than cash, Cash Equivalents and Telecommunications/IS Assets, received as consideration for the disposition after the Measurement Date of Special Assets (as contemplated by the first
proviso under "Certain CovenantsLimitation on Asset Dispositions").
"Stated
Maturity" when used with respect to a Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or
such installment of interest is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such Note at the option of the
holder thereof upon the happening of any contingency beyond the control of the Issuer unless such contingency has occurred).
"Subordinated
Debt" means Debt of Parent (a) that is not secured by any Lien on or with respect to any Property now owned or acquired after the Measurement Date and (b) as
to which the payment of principal of (and premium, if any) and interest and other payment obligations in respect of such Debt shall be subordinate to the prior payment in full in cash of the Parent
Guarantee to at least the following extent: (i) no payments of principal of (or premium, if any) or interest on or otherwise due (including by acceleration or for additional amounts) in respect
of, or repurchases, redemptions or other retirements of, such Debt (collectively, "payments of such Debt") may be
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permitted
for so long as any default (after giving effect to any applicable grace periods) in the payment of principal (or premium, if any) or interest on the Notes exists, including as a result of
acceleration; (ii) in the event that any other Default exists with respect to the Notes, upon notice by holders of 25% or more in aggregate principal amount of the Notes to the Trustee, the
Trustee shall have the right to give notice to Parent and the holders of such Debt (or trustees or agents therefor) of a payment blockage, and thereafter no payments of such Debt may be made for a
period of 179 days from the date of such notice;
provided
,
however
, that not more than one such
payment blockage notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to the Notes during such period; (iii) if payment of such Debt is
accelerated when any Notes are outstanding, no payments of such Debt may be made until three Business Days after the Trustee receives notice of such acceleration and, thereafter, such payments may
only be made to the extent the terms of such Debt permit payment at that time; and (iv) such Debt may not (x) provide for payments of principal of such Debt at the stated maturity
thereof or by way of a sinking fund applicable thereto or by way of any mandatory redemption, defeasance, retirement or repurchase thereof by Parent (including any redemption, retirement or repurchase
which is contingent upon events or circumstances but excluding any retirement required by virtue of acceleration of such Debt upon an event of default thereunder), in each case prior to the final
Stated Maturity of the Notes or (y) permit redemption or other retirement (including pursuant to an offer to purchase made by Parent) of such other Debt at the option of the holder thereof
prior to the final Stated Maturity of the Notes, other than, in the case of clause (x) or (y), any such payment, redemption or other retirement (including pursuant to an offer to purchase made
by Parent) which is conditioned upon (A) a change of control of Parent pursuant to provisions substantially similar to those described under "Certain CovenantsChange
of Control Triggering Event" (and which shall provide that such Debt will not be repurchased pursuant to such provisions prior to the Issuer's repurchase of the Notes required to be repurchased by the
Issuer pursuant to the provisions described under "Certain CovenantsChange of Control Triggering Event") or (B) a sale or other disposition of assets pursuant to
provisions substantially similar to those described under "Certain CovenantsLimitation on Asset Dispositions" (and which shall provide that such Debt will not be repurchased
pursuant to such provisions prior to the Issuer's repurchase of the Notes required to be repurchased by the Issuer pursuant to the provision described under "Certain
CovenantsLimitation on Asset Dispositions").
"Subsidiary"
of any Person means (i) a corporation more than 50% of the combined voting power of the outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or
one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Telecommunications/IS
Assets" means (a) any Property (other than cash, cash equivalents and securities) to be owned by Parent or any Restricted Subsidiary and used in the
Telecommunications/IS Business; (b) for purposes of the covenants described under "Certain CovenantsLimitation on Consolidated Debt," "Certain
CovenantsLimitation on Debt of the Issuer and Issuer Restricted Subsidiaries" and "Certain CovenantsLimitation on Liens" only, Capital Stock of any Person; or
(c) for all other purposes of the Indenture, Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by Parent or another Restricted
Subsidiary from any Person other than an Affiliate of Parent;
provided
,
however
, that, in the case of
clause (b) or (c), such Person is primarily engaged in the Telecommunications/IS Business.
"Telecommunications/IS
Business" means the business of (i) transmitting, or providing services relating to the transmission of, voice, video or data through owned or leased
transmission facilities,
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(ii) constructing,
creating, developing or marketing communications networks, related network transmission equipment, software and other devices for use in a communications business,
(iii) computer outsourcing, data center management, computer systems integration, reengineering of computer software for any purpose or (iv) evaluating, participating or pursuing any
other activity or opportunity that is primarily related to those identified in (i), (ii) or (iii) above;
provided
,
however
, that the
determination of what constitutes a Telecommunications/IS Business shall be made in good faith by the board of directors of Parent or
a duly authorized committee thereof.
"2018
Floating Rate Notes" means the Issuer's Floating Rate Senior Notes due 2018 issued pursuant to the Indenture dated as of November 26, 2013, among the Issuer, Parent and The
Bank of New York Mellon Trust Company, N.A., as trustee.
"2018
Floating Rate Proceeds Note" has the meaning set forth under "Subordination of Existing Intercompany Obligations" above.
"Unrestricted
Subsidiary" means (a) 91 Holding Corp. (the subsidiary that holds indirectly Parent's interests in the SR91 tollroad), SR 91 Holding LLC, SR91 Corp,
SR LP, Express Lanes, Inc., California Private Transportation Company LP, CPTC LLC and 85 Tenth Avenue LLC; (b) any Subsidiary of an Unrestricted Subsidiary;
and (c) any Subsidiary of Parent designated as such pursuant to and in compliance with "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and
not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto. For the sake of clarity, actions taken by an Unrestricted Subsidiary will not be deemed to have been taken,
directly or indirectly, by Parent or any Restricted Subsidiary.
"Voting
Stock" of any Person means Capital Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person,
whether at all times or only for so long as no senior class of securities has such voting power by reason of any contingency.
"Wholly
Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Voting Stock or other ownership interests (other than directors' qualifying shares) of
which shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.
Events of Default
The following will be Events of Default under the Indenture: (a) failure to pay principal of (or premium, if any, on) any Note
when due; (b) failure to pay any interest on any Note when due, continued for 30 days; (c) default in the payment of principal and interest on Notes required to be purchased
pursuant to an Offer to Purchase as described under "Certain CovenantsChange of Control Triggering Event" when due and payable; (d) failure to perform or comply with
the provisions described under "Mergers, Consolidations and Certain Sales of Assets" or "Certain CovenantsLimitation on Asset Dispositions;" (e) failure
to perform any other covenant or agreement of Parent, the Issuer or any Restricted Subsidiary in the Notes or in the Indenture continued for 60 days after written notice to the Issuer by the
Trustee or holders of at least 25% in aggregate principal amount of the outstanding Notes; (f) default under the terms of any mortgage, indenture or instrument evidencing or securing Debt for
borrowed money of Parent or any Restricted Subsidiary (or the payment of which is guaranteed by Parent or any Restricted Subsidiary) having an outstanding principal amount of not less than
$200 million or its foreign currency equivalent at the time individually or in the aggregate which default results in the acceleration of the payment of such indebtedness or constitutes the
failure to pay such indebtedness when due (after expiration of any applicable grace period); (g) the rendering of a judgment or judgments against Parent or any Restricted Subsidiary in an
aggregate amount in excess of $200 million or its foreign currency equivalent at the time and shall not be waived, satisfied or discharged for any period of 45
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consecutive
days during which a stay of enforcement shall not be in effect; (h) any Note Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Note
Guarantee) or any Guarantor denies or disaffirms its obligations under its Note Guarantee; and
(i) certain events of bankruptcy, insolvency or reorganization affecting Parent, the Issuer or any Significant Subsidiary. Subject to the provisions of the Indenture relating to the duties of
the Trustee in case an Event of Default shall occur and be continuing, the Trustee will not be under any obligation to exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders of the Notes, unless such holders shall have offered to the Trustee indemnity reasonably satisfactory to it. Subject to such provisions for the indemnification of the
Trustee, the holders of a majority in aggregate principal amount of the outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee.
If
any Event of Default (other than an Event of Default described in clause (i) above with respect to Parent or the Issuer) shall occur and be continuing, either the Trustee or
the holders of at least 25% in aggregate principal amount of the outstanding Notes may accelerate the maturity of all Notes;
provided
,
however
, that after
such acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of
the outstanding Notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal, have been cured or waived as
provided in the Indenture. If an Event of Default specified in clause (i) above occurs with respect to Parent or the Issuer, all the outstanding Notes will ipso facto become immediately due and
payable without any declaration or other act on the part of the Trustee or any holder. For information as to waiver of defaults, see "Amendment, Supplement and Waiver."
No
holder of any Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such holder shall have previously given to the
Trustee written notice of a continuing Event of Default and unless also the holders of at least 25% in aggregate principal amount of the outstanding Notes shall have made written request and offered
indemnity reasonably satisfactory to the Trustee to institute such proceeding as trustee, and the Trustee shall not have received from the holders of a majority in aggregate principal amount of the
outstanding Notes a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a holder of a Note for enforcement of payment of the principal of and premium, if any, or interest on such Note on or after the respective due dates expressed in such Note.
The
Issuer shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any event which with the giving of
notice and the lapse of time would become an Event of Default, its status and what action the Issuer is taking or proposes to take with respect thereto. Parent and the Issuer also will be required to
deliver to the Trustee annually a statement as to the performance by Parent and the Issuer of certain of their obligations under the Indenture and as to any default in such performance.
Amendment, Supplement and Waiver
The Issuer, the Guarantors and the Trustee may, at any time and from time to time, without notice to or consent of any holders of
Notes, enter into one or more indentures supplemental to the Indenture (1) to evidence the succession of another Person to the Issuer, Parent or any other Guarantor and the assumption by such
successor of the covenants of the Issuer, Parent or such other Guarantor, respectively, in the Indenture, the Notes and the applicable Note Guarantee; (2) to add to the covenants of Parent, the
Issuer or any of their respective Subsidiaries, for the benefit of the holders, or to surrender any right or power conferred upon Parent, the Issuer or any other Guarantor by the Indenture;
(3) to add any additional Events of Default; (4) to provide for
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uncertificated
Notes in addition to or in place of certificated Notes; (5) to evidence and provide for the acceptance of appointment under the Indenture of a successor Trustee; (6) to
secure the Notes; (7) to comply with the Trust Indenture Act or the Securities Act (including Regulation S promulgated thereunder); (8) to add additional Note Guarantees or to
release any Guarantors from Note Guarantees as provided by the terms of the Indenture; (9) to cure any ambiguity in the Indenture, to correct or supplement any provision in the Indenture which
may be inconsistent with any other provision therein or to add any other provision with respect to matters or questions arising under the Indenture;
provided
such actions shall not adversely affect the
interests of the holders in any material respect; or (10) to conform the Indenture or the
Securities to any provision of the "Description of the Notes" in the Offering Memorandum relating to the offer of the Notes to the extent such provision is intended to be a verbatim recitation
thereof. The Issuer, a Guarantor and the Trustee may, at any time and from time to time, without notice to or consent of any holders of Notes, enter into one or more indentures supplemental to the
Indenture, or amend one or more indentures supplemental to the Indenture, in each case as set forth in the fifth paragraph under the heading "Note Guarantees."
With
the consent of the holders of not less than a majority in principal amount of the outstanding Notes, the Issuer, the Guarantors and the Trustee may enter into one or more indentures
supplemental to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or modifying in any manner the rights of the
holders;
provided
,
however
, that no such supplemental indenture shall, without the consent of the holder
of each outstanding Note (1) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon that
would be due and payable upon the Stated Maturity thereof, or change the place of payment where, or the coin or currency in which, any Note or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof; (2) reduce the percentage in principal amount of the outstanding Notes, the consent of
whose holders is necessary for any such supplemental Indenture or required for any waiver of
compliance with certain provisions of the Indenture or certain Defaults thereunder; (3) subordinate in right of payment, or otherwise subordinate, the Notes or any Note Guarantee to any other
Debt (other than as set forth in the fifth paragraph under the heading "Note Guarantees"); (4) except as otherwise required by the Indenture, release any security interest that may
have been granted in favor of the holders of the Notes; (5) reduce the premium payable upon the redemption of any Note nor change the time at which any Note may be redeemed, as described under
"Optional Redemption"; (6) reduce the premium payable upon a Change of Control Triggering Event or, at any time after a Change of Control Triggering Event has occurred, change the
time at which the Offer to Purchase relating thereto must be made or at which the Notes must be repurchased pursuant to such Offer to Purchase; (7) at any time after the Issuer is obligated to
make an Offer to Purchase with the Net Available Proceeds from Asset Dispositions, change the time at which such Offer to Purchase must be made or at which the Notes must be repurchased pursuant
thereto; (8) make any change in any Note Guarantee that would adversely affect the holders of the Notes (other than as set forth in the fifth paragraph under the heading "Note
Guarantees"); or (9) modify any provision of this paragraph (except to increase any percentage set forth herein); and
provided further
,
however
, that
without the consent of at least two-thirds in principal amount of the outstanding Notes, no such supplemental indenture shall amend the
covenant described under "Certain CovenantsLimitation on Actions with respect to Existing Intercompany Obligations."
The
holders of not less than a majority in principal amount of the outstanding Notes may, on behalf of the holders of all the Notes, waive any past Default under the Indenture and its
consequences, except Default (1) in the payment of the principal of (or premium, if any) or interest on any Note, (2) in respect of a covenant or provision hereof which under the first
proviso to the prior paragraph cannot be modified or amended without the consent of the holder of each
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outstanding
Note affected, or (3) in respect of the covenant which under the second proviso to the prior paragraph cannot be modified or amended without the consent of at least two-thirds in
principal amount of the outstanding Notes.
Satisfaction and Discharge of the Indenture; Defeasance
The Issuer and the Guarantors may terminate their obligations under the Indenture when (i) either (A) all outstanding
Notes have been delivered to the Trustee for cancellation or (B) all such Notes not theretofore delivered to the Trustee for cancellation have become due and payable, will become due and
payable within one year or are to be called for redemption within one year under irrevocable arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name and at the expense of the Issuer, and the Issuer has irrevocably deposited or caused to deposited with the Trustee funds in an amount sufficient to
pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of (or premium, if any, on), and interest on, the Notes; (ii) the
Issuer has paid or caused to be paid all other sums payable by the Issuer under the Indenture; and (iii) the Issuer has delivered an Officers' Certificate and an Opinion of Counsel relating to
compliance with the conditions set forth in the Indenture.
The
Issuer, at its election, shall (a) in the case of legal defeasance, be deemed to have paid and discharged its debt on the Notes and the Indenture shall cease to be of further
effect as to all outstanding Notes (except as to (i) rights of registration of transfer, substitution and exchange of the Notes and the Issuer's right of optional redemption, (ii) rights
of holders to receive payment of principal of, premium, if any, and interest on such Notes (but not the Purchase Price referred to under "Certain CovenantsChange of Control
Triggering Event" or under "Certain CovenantsLimitation on Asset Dispositions") and any rights of the holders with respect to such amount, (iii) the rights,
obligations and immunities of the Trustee under the Indenture and (iv) certain other specified provisions in the Indenture), or (b) in the case of covenant defeasance, cease to be under
any obligation to comply with certain restrictive covenants, including those described under "Certain Covenants," and terminate the operation of certain Events of Default, after the
irrevocable deposit by the Issuer with the Trustee, in trust for the benefit of the holders of Notes, at any time prior to the maturity of the Notes, of (A) money in an amount,
(B) Government Securities which through the payment of interest and principal will provide, not later than one day before the due date of payment in respect of the Notes, money in an amount, or
(C) a combination thereof, sufficient in the opinion of a certified public accountant (selected by the Issuer or Parent in its sole discretion) expressed in a written certification delivered to
the Trustee, to pay and discharge the principal of (premium, if any, on), and interest on, the Notes then outstanding on the dates on which any such payments are due in accordance with the terms of
the Indenture and of the Notes. Such legal defeasance or covenant defeasance shall be deemed to occur only if certain conditions are satisfied, including among other things, delivery by the Issuer to
the Trustee of an Opinion of Counsel acceptable to the Trustee to the effect that such deposit, defeasance and discharge will not be deemed, or result in, a taxable event for U.S. federal income tax
purposes with respect to the holders (and, in the case of legal defeasance only, such Opinion of Counsel must state that the Issuer has received from, or there has been published by, the U.S. Internal
Revenue Service (the "IRS") a ruling or there has been a change in the applicable U.S. federal income tax law to such effect).
Governing Law
The Indenture, the Notes and the Note Guarantees are governed by the laws of the State of New York, without reference to principles of
conflicts of law.
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The Trustee
The Bank of New York Mellon Trust Company, N.A. is the Trustee under the Indenture and has been appointed by the Issuer as Paying Agent
with regard to the Notes. The Trustee may become the owner or pledgee of Notes and, subject to Sections 310(b) and 311 of the Trust Indenture Act of 1939, may otherwise deal with Parent or the
Issuer with the same rights it would have if it were not Trustee or Paying Agent; however, if it acquires any conflicting interest (as defined in Section 310(b) of the Trust Indenture Act of
1939), after written request by the Issuer or by any Holder who has been a bona fide Holder of a Note for at least six months, then (i) the Issuer, by a resolution of its board of directors or
a duly authorized committee thereof, may remove the Trustee or (ii) subject to Section 3.15(e) of the Trust Indenture Act of 1939, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The
Holders of a majority in aggregate principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the Trustee, subject to certain exceptions. The Indenture provides that, in case an Event of Default has occurred and is
continuing, the Trustee will exercise its rights and powers under the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. The Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the Holders
pursuant to the Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be
incurred by the Trustee in compliance with such request or direction.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Issuer or the Guarantors, as such, shall have any liability for any
obligations of the Issuer or the Guarantors, respectively, under the Notes or the Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation, solely by reason of its status as director, officer, employee, incorporator or stockholder of such Person. By accepting a Note each holder waives
and releases all such liability (but only such liability). The waiver and release are part of the consideration for issuance of the Notes. Nevertheless, such waiver may not be effective to waive
liabilities under the federal securities laws and it has been the view of the Commission that such a waiver is against public policy.
Transfer and Exchange
A holder may transfer or exchange Notes in accordance with the Indenture. The Issuer, the Registrar and the Trustee may require a
holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a holder to pay any taxes and fees required by law or permitted by the Indenture.
Book-Entry, Delivery and Form
The New Notes will initially be issued in the form of one or more global securities registered in the name of The Depository Trust
Company ("DTC") or its nominee.
The
New Notes initially will be represented by one or more notes in registered, global form without interest coupons (collectively, the "Global Notes"). The Global Notes will be
deposited upon issuance with the Trustee as custodian for DTC, in New York, New York, and registered in the name
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of
DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.
Except
as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in
the Global
Notes may not be exchanged for Notes in certificated form except in the limited circumstances described below. See "Exchange of Global Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of Notes in certificated form.
Depositary Procedures.
The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely
as a matter
of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Issuer takes no responsibility for these
operations and procedures and urges investors to contact the systems or their participants directly to discuss these matters.
DTC
has advised the Issuer that DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "banking organization"
within the meaning of the New York Banking Law, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered under the Exchange Act. DTC was
created to hold the securities of its participating organizations ("participants") and to facilitate the clearance and settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and
dealers (which may include the initial purchasers of the original notes), banks, trust companies, clearing corporations and certain other organizations, some of whom (or their representatives) have
ownership interests in DTC. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies ("indirect participants"), that clear through or maintain
a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own Notes held by or on behalf of DTC only through the participants or the
indirect participants. The ownership interests in, and transfers of ownership interests in, each Note held by or on behalf of DTC are recorded on the records of the participants and indirect
participants.
Upon
the issuance of a Global Note, DTC or its nominee will credit the accounts of participants with the respective principal amounts of the Notes represented by such Global Note
purchased by such participants in the exchange offer. Such accounts shall be designated by the initial purchasers. Investors in the Rule 144A Global Notes who are participants in DTC's system
may hold their interests therein directly through DTC. Investors in the Rule 144A Global Notes who are not participants may hold their interests therein indirectly through the organizations
(including Euroclear and Clearstream) which are participants in such system. Euroclear and Clearstream will hold interests in the Regulation S Global Notes on behalf of their participants
through customers' securities accounts in their respective names on the books of their respective depositories, which are Euroclear Bank S.A./N.V., as operator of Euroclear, and Citibank, N.A.,
as operator of Clearstream. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held
through Euroclear or Clearstream also may be subject to the procedures and requirements of such systems. Ownership of beneficial interests in a Global Note will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by DTC (with respect to participants' interests) or by the participants and the indirect participants (with respect to the owners
of beneficial interests in such Global Note other than participants).
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The
laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Note. Because DTC, Euroclear and Clearstream can act only on behalf of their respective participants, which in turn act on behalf of indirect
participants and certain banks, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons or entities that do not participate in the DTC, Euroclear or
Clearstream system, as applicable, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.
Payment
of principal of and interest on Notes represented by a Global Note will be made in immediately available funds to DTC or its nominee, as the case may be, as the sole registered
owner and the sole holder of the Notes represented thereby for all purposes under the Indenture. Under the terms of the Indenture, the Issuer and the Trustee will treat the Persons in whose names the
Notes, including the Global Notes, are registered as the owners of the Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Issuer, the Trustee nor any
agent of the Issuer or the Trustee has or will have any responsibility or liability for:
-
(1)
-
any
aspect of DTC's records or any participant's or indirect participant's records relating to or payments made on account of beneficial ownership interest
in the Global Notes or for maintaining, supervising or reviewing any of DTC's records or any participant's or indirect participant's records relating to the beneficial ownership interests in the
Global Notes; or
-
(2)
-
any
other matter relating to the actions and practices of DTC or any of its participants or indirect participants.
The
Issuer has been advised by DTC that upon receipt of any payment of principal of or interest on any Global Note, DTC will immediately credit, on its book-entry registration and
transfer system, the accounts of participants with payments in amounts proportionate to their respective beneficial interests in the principal or face amount of such Global Note as shown on the
records of DTC. The Issuer expects that payments by participants or indirect participants to owners of beneficial interests in a Global Note held through such participants or indirect participants
will be governed by standing instructions and customary practices as is now the case with securities held for customer accounts
registered in "street name" and will be the sole responsibility of such participants and indirect participants.
Neither
the Issuer nor the Trustee will be liable for any delay by DTC or any of its participants in identifying the beneficial owners of the Notes, and the Issuer and the Trustee may
conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.
Transfers
between participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and
Clearstream will be effected in accordance with their respective rules and operating procedures.
Subject
to compliance with the transfer restrictions applicable to the Notes described herein, cross-market transfers between the participants in DTC, on the one hand, and Euroclear or
Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to effect final settlement on its behalf of delivering or receiving interests in the relevant Global Note in DTC, and making or receiving
payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.
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DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more participants to whose
account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such participant or participants has or have
given such direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Notes for legended Notes in certificated form, and to distribute such
Notes to its participants.
So
long as DTC or any successor depositary for a Global Note, or any nominee, is the registered owner of such Global Note, DTC or such successor depositary or nominee, as the case may
be, will be considered the sole owner or holder of the Notes represented by such Global Note for all purposes under the Indenture and the Notes. Except as set forth above, owners of beneficial
interests in a Global Note will not be entitled to have the Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of
certificated Notes in definitive form and will not be considered to be the owners or holders of any Notes under such Global Note. Accordingly, each Person owning a beneficial interest in a Global Note
must rely on the procedures of DTC or any successor depositary, and, if such Person is not a participant, on the procedures of the participant through which such Person owns its interest, to exercise
any rights of a holder under the Indenture. The Issuer understands that under existing industry practices, in the event that the Issuer requests any action of holders or that an owner of a beneficial
interest in a
Global Note desires to give or take any action which a holder is entitled to give or take under the Indenture, DTC or any successor depositary would authorize the participants holding the relevant
beneficial interest to give or take such action, and such participants would authorize beneficial owners owning through such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Although
DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in Global Notes among participants of DTC, it is under no obligation to perform or
continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, the Trustee or the initial purchasers of the original notes will have any responsibility
for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
Exchange of Global Notes for Certificated Notes.
A Global Note is exchangeable for certificated Notes only if:
-
(a)
-
DTC
notifies the Issuer that it is unwilling or unable to continue as a depositary for such Global Note or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act and, in either case, the Issuer fails to appoint a successor depositary within 90 days after the date of such notice;
-
(b)
-
the
Issuer in its discretion at any time determines not to have all the Notes represented by such Global Note; or
-
(c)
-
there
shall have occurred and be continuing a Default or an Event of Default with respect to the Notes represented by such Global Note.
Any
Global Note that is exchangeable for certificated Notes pursuant to the preceding sentence will be exchanged for certificated Notes in authorized denominations and registered in such
names as DTC or any successor depositary holding such Global Note may direct. Subject to the foregoing, a Global Note is not exchangeable, except for a Global Note of like denomination to be
registered in the name of DTC or any successor depositary or its nominee. In the event that a Global Note becomes exchangeable for certificated Notes:
-
(a)
-
certificated
Notes will be issued only in fully registered form in denominations of $1,000 or integral multiples thereof;
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-
(b)
-
payment
of principal of, and premium, if any, and interest on, the certificated Notes will be payable, and the transfer of the certificated Notes will be
registerable, at the office or agency of the Issuer maintained for such purposes; and
-
(c)
-
no
service charge will be made for any registration of transfer or exchange of the certificated Notes, although the Issuer may require payment of a sum
sufficient to cover any tax or governmental charge imposed in connection therewith.