Document:

Exhibit
4(c)(vi)

 

INDENTURE (this “Indenture”)
dated as of March 26, 2003, by and among BROADWING INC., an Ohio corporation
(the “Company”), the Guarantors (as hereinafter defined) listed on the
signature pages hereof as Guarantors; and The Bank of New York, a New York
banking corporation, as trustee (the “Trustee”).

 

Each party agrees as
follows for the benefit of the other parties and for the equal and ratable
benefit of the Holders of (a) the Company’s Senior Subordinated Discount Notes
due 2009 issued on the date hereof (such notes, the “Initial Notes”) and
(b) if and when issued as provided in the Exchange and Registration Rights
Agreement (as defined in Appendix A hereto (the “Appendix”)) or
in this Indenture, the Company’s Senior Subordinated Discount Notes due 2009
issued in the Registered Exchange Offer in exchange for any Initial Notes or
otherwise as provided in this Indenture (the “Exchange Notes” and
together with the Initial Notes issued hereunder, the “Notes,” such term
to include any such notes issued in exchange or replacement therefor).  Except as otherwise provided herein, the
Notes shall be limited to $441,628,051.27 in aggregate principal amount at
Maturity.

 

ARTICLE 1.

 

DEFINITIONS
AND ACCOUNTING TERMS

 

SECTION 1.01.              Definitions.  As used herein, the following terms shall
have the meanings specified herein unless the context otherwise requires:

 

“Accredited
Investor” means any Person that is an “accredited investor” within the
meaning of Rule 501(a) under the Securities Act.

 

“Accreted Value”
means, with respect to the Initial Notes and the Exchange Notes of the same
series, as of any date (the “Specified Date”), the amount provided below for
each $1,000 principal amount at Maturity of such Notes:

 

(a)           if the Specified Date occurs on one of the following dates
(each, an “Accrual Date”), the Accreted Value shall equal the amount set
forth below under the “Accreted Value” column for such Accrual Date:

 

	
  Accrual Date

  	
   

  	
  Accreted
  Value

  	
   

  
	
  June
  30, 2003

  	
   

  	
  $

  	
  800.54

  	
   

  
	
  December
  31, 2003

  	
   

  	
  $

  	
  816.55

  	
   

  
	
  June
  30, 2004

  	
   

  	
  $

  	
  832.88

  	
   

  
	
  December
  31, 2004

  	
   

  	
  $

  	
  849.54

  	
   

  
	
  June
  30, 2005

  	
   

  	
  $

  	
  866.53

  	
   

  
	
  December
  31, 2005

  	
   

  	
  $

  	
  883.86

  	
   

  
	
  June
  30, 2006

  	
   

  	
  $

  	
  901.53

  	
   

  
	
  December
  31, 2006

  	
   

  	
  $

  	
  919.56

  	
   

  
	
  June
  30, 2007

  	
   

  	
  $

  	
  937.96

  	
   

  
	
  January
  20, 2008

  	
   

  	
  $

  	
  958.96

  	
   

  
	
  Stated
  Maturity (January 20, 2009)

  	
   

  	
  $

  	
  1,000.00

  	
   

  

 

1

 

; or

 

(b)           if the Specified Date occurs before the first Accrual
Date, the Accreted Value shall equal the sum of (A) the original issue price of
$792.52 per $1,000 of
principal amount at Maturity of the Notes and (B) an amount equal to the
product of (1) the Accreted Value for the first Accrual Date less such original
issue price multiplied by (2) a fraction, the numerator of which is the number
of days elapsed from the Closing Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is the number of
days from the Closing Date to the first Accrual Date using a 360-day year of
twelve 30-day months.  In the event the
Trustee is required to take any action which requires the calculation described
in the preceding sentence, upon request by the Trustee, the Company shall
calculate such Accreted Value and set forth such amount in an Officers’
Certificate; or

 

(c)           if the Specified Date occurs between two Accrual Dates,
the Accreted Value shall equal the sum of (A) the Accreted Value for the
Accrual Date immediately preceding such Specified Date and (B) an amount equal
to the product of (1) the Accreted Value for the immediately following Accrual Date
less the Accreted Value for the immediately preceding Accrual Date multiplied
by (2) a fraction, the numerator of which is the number of days elapsed from
the immediately preceding Accrual Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is 180.  In the event the Trustee is required to take
any action which requires the calculation described in the preceding sentence,
upon request by the Trustee, the Company shall calculate such Accreted Value
and set forth such amount in an Officers’ Certificate; or

 

(d)           if the Specified Date occurs after the last Accrual Date,
the Accreted Value will equal $1,000.

 

If an
Event of Default has occurred and is continuing on or prior to the Specified
Date, the Accreted Value on such date shall be increased (until such time as no
Event of Default is continuing) by an amount equal to the product of (A) a
fraction, the numerator of which is the number of days, using a 360-day year of
twelve 30-day months, since the immediately preceding Accrual Date during which
such Event of Default occurred and was continuing and the denominator of which
is 360, multiplied by (B) 0.0075.

 

“Acquired
Indebtedness” means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness Incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Restricted Subsidiary of such specified Person, and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person at the time such asset is acquired by such specified Person.

 

2

 

“Adjusted
EBITDA” means for the applicable period of measurement of the Company and
its Restricted Subsidiaries, (i) Consolidated EBITDA for such period minus
(ii) Capital Expenditures of the Company and its Restricted Subsidiaries for
such period, on a consolidated basis.

 

“Affiliate”
means, with respect to any specified Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.  For
purposes of this definition, “control” (including, with correlative
meanings, the terms “controlling,” “controlled by” and “under
common control with”), as used with respect to any specified Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that, for purposes of Section 5.06 only, in the case of the Company or
any of its Subsidiaries beneficial ownership of 10% or more of the Voting Stock
in the Company or such Subsidiary, as the case may be, shall be deemed to be
control.  Notwithstanding the foregoing,
in no event will the Purchasers or any Holder, any lender under the Credit
Agreement, any holder of Convertible Subordinated Notes or any holder of Senior
Notes, or any of their respective Affiliates be deemed to be an Affiliate of
the Company or any of its Subsidiaries solely by virtue of purchasing or
holding any Notes or being such a lender, or holding any Convertible
Subordinated Notes or Senior Notes.

 

“Affiliate
Transaction” is defined in Section 5.06.

 

“Alternative
Mezzanine Debt” is defined in Section 5(l) of the Purchase Agreement.

 

“Appendix”
is defined in the recitals.

 

“Applicable
Capital Lease Amount” means $41,300,000 as of September 30, 2002, which
amount shall increase by $30,000,000 on the Closing Date and on December 31,
2003 and by $15,000,000 on December 31, 2004, up to a maximum aggregate amount
of $116,300,000.

 

“Applicable
Law” means all laws, statutes, rules, regulations and orders of, and
legally binding interpretations by, any Governmental Authority and judgments,
decrees, injunctions, writs, permits, orders or like governmental action of any
Governmental Authority applicable to the Company or any of its Subsidiaries or
any of their properties, assets or operations, excluding Environmental Laws.

 

“Applicable
Percentage” means for purposes of Section 5.02(C), (a) prior to the
Distribution Date, 25% and (b) after the Distribution Date, 50%.

 

“Asset
Disposition” means the disposition by the Company or any Restricted
Subsidiary of the Company whether by sale, issuance, lease (as lessor (other
than under operating leases)), transfer, loss, damage, destruction,
condemnation or other transaction (including any merger or consolidation) or
series of related transactions of any of the following:  (a) any of the Capital Stock of any of the
Company’s Restricted Subsidiaries, (b) all or substantially all of the assets of
the Company or any of its Restricted Subsidiaries (it being

 

3

 

understood and agreed that the disposition of the BCI
Group or any assets of the BCI Group does not constitute a disposition of all
or substantially all of the assets of the Company or any of its Restricted
Subsidiaries) or (c) any other assets of the Company or any of its Restricted
Subsidiaries.  Notwithstanding the
foregoing, Asset Dispositions shall be deemed not to include (i) a
transfer of assets by (x) the Company to a Wholly Owned Restricted Subsidiary
of the Company, or by a Restricted Subsidiary of the Company to the Company or
to another Wholly Owned Restricted Subsidiary of the Company or (y) the Company
or a Restricted Subsidiary to CBW, or by CBW to the Company or to another
Wholly Owned Restricted Subsidiary of the Company; provided that the
aggregate amount of all such transfers to CBW, together with the amount of all
Permitted Investments made pursuant to clause (i)(A)(y) of the definition
thereof, shall not exceed 5% of Consolidated Total Assets, (ii) an
issuance of Capital Stock by a Subsidiary of the Company to the Company or to a
Restricted Subsidiary of the Company, (iii) a Restricted Payment that is
permitted by the provisions of Section 5.02, (iv) a Permitted
Investment, (v) any conversion of Cash Equivalents into cash or any other
form of Cash Equivalents, (vi) any foreclosure on assets, (vii) sales or
dispositions of past due accounts receivable or notes receivable in the
Ordinary Course of Business, (viii) transactions permitted under Article 6
hereof, (ix) grants of credits and allowances in the Ordinary Course of
Business, (x) operating leases or the sublease of real or personal property or
licenses of intellectual property, in each case, on commercially reasonable
terms entered into in the Ordinary Course of Business, (xi) trade-ins or
exchanges of equipment or other fixed assets, (xii) the sale and leaseback of
any assets within 180 days of the acquisition thereof, (xiii) sales of damaged,
worn-out or obsolete equipment or assets that, in the Company’s reasonable
judgment, are no longer either used or useful in the business of the Company or
its Subsidiaries, (xiv) dispositions of inventory in the Ordinary Course
of Business; (xv) the disposition of cash or investment securities in the
ordinary course of management of the investment portfolio of the Company and
its applicable Subsidiaries; (xvi) sales of assets with a fair market value of
less than $250,000; or (xvii) sales of other assets with a fair market value
not to exceed $10,000,000 in the aggregate in any fiscal year.

 

“Asset
Sale Offer” is defined in Section 4.10(a).

 

“Attributable
Debt” in respect of a Sale and Leaseback Transaction means, at the time of
determination, the present value (discounted at the implicit rate of interest
borne by the Notes including any pay-in-kind interest and amortization
discount) determined in accordance with GAAP of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
Sale and Leaseback Transaction (including any period for which such lease has
been extended or may, at the option of the lessor, be extended).

 

“Bankruptcy
Law” means Title 11 of the United States Code or any similar federal or
state bankruptcy, insolvency, reorganization or other law for the relief of
debtors.

 

“BCI”
means Broadwing Communications Inc., a Delaware corporation.

 

“BCI
Group” means BCI and its Subsidiaries.

 

“BCSI”
means Broadwing Communications Services Inc., a Subsidiary of BCI.

 

4

 

“Blockage
Notice” is defined in Section 8.03.

 

“Blockage
Period” is defined in Section 8.03.

 

“Board”
and “Board of Directors” means, as to any Person, the board of directors,
the board of advisors (or similar governing body) of such Person.

 

“Business
Day” means any day other than a Legal Holiday.

 

“Capital
Expenditures” means, for any period and with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing of fixed or capital assets or additions to fixed or
capital assets (including replacements, capitalized repairs and improvements
during such period) which should be capitalized under GAAP on a consolidated
balance sheet of such Person and its Subsidiaries.

 

“Capitalized
Lease Obligation” means, at the time any determination thereof is to be
made, an obligation that is required to be classified and accounted for as a
capitalized lease for financial reporting purposes in accordance with GAAP, and
the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease.

 

“Capital
Stock” of any Person means any and all shares, interests, warrants,
options, participations or other equivalents of or interests in (however
designated) equity of such Person, including any Preferred Stock but excluding
any debt securities including those convertible into such equity.

 

“Cash
Equivalents” means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date of
acquisition and, issued by a corporation organized under the laws of the United
States that has a rating of at least A-1 from S&P or at least P-1 from
Moody’s; (iii) time deposits maturing no more than thirty (30) days from the
date of creation, certificates of deposit, money market deposits or bankers’
acceptances maturing within one (1) year from the date of acquisition thereof
issued by, or overnight reverse repurchase agreements from, any commercial bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia having combined capital, surplus and undivided
profits of not less than $250,000,000; (iv) repurchase obligations with a term
of not more than 30 days for underlying securities of the types described
in clause (i) above entered into with a bank meeting the qualifications
described in clause (iii) above; (v) deposits or investments in mutual or
similar funds offered or sponsored by brokerage or other companies having
membership in the Securities Investor Protection Corporation and having combined
capital and surplus of not less than $250,000,000; and (vi) other money market
accounts or mutual funds which invest primarily in the securities described
above.

 

“CBT”
means Cincinnati Bell Telephone Company, an Ohio corporation.

 

5

 

“CBT
Assets” means any assets of CBT (including Capital Stock of the
Subsidiaries of CBT) and any of its Subsidiaries (including Capital Stock of
the Subsidiaries of such Subsidiaries). 
To the extent any CBT Asset is transferred to another Restricted
Subsidiary of the Company in a transaction that does not constitute an Asset
Disposition, such asset shall remain a CBT Asset for purposes of this
Indenture.

 

“CBW”
means Cincinnati Bell Wireless LLC, an Ohio limited liability company.

 

“CBW
Assets” means any assets of CBW Co. (including Capital Stock of the
Subsidiaries of CBW and Spectrum Assets) and any of its Subsidiaries (including
Capital Stock of the Subsidiaries of such Subsidiaries). To the extent any CBW
Asset is transferred to another Restricted Subsidiary of the Company in a
transaction that does not constitute an Asset Disposition, such asset shall
remain a CBW Asset for purposes of this Indenture.

 

“CBW
Co.” means Cincinnati Bell Wireless Company, an Ohio corporation.

 

“Centralized
Cash Management System” means the cash management system referred to in
Section 5.02(f)(ix) of the Credit Agreement as in effect on the date hereof and
described in Schedule 5.01(r) thereof.

 

“Change
of Control” means the occurrence of any of the following:  (a) the sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or more related transactions, of all or substantially all of the
properties and assets of the Company and its Subsidiaries, taken as a whole (it
being understood and agreed that the disposition of the BCI Group does not
constitute a disposition of all or substantially all of the properties and
assets of the Company and its Subsidiaries, taken as a whole), to any Person unless:
(x) pursuant to such transaction such assets are changed into or exchanged for,
in addition to any other consideration, securities of such Person that
represent immediately after such transaction at least a majority of the
aggregate voting power of the Voting Stock of such Person and (y) no “person”
(as such term is used in Section 13(d)(3) of the Exchange Act) or “group”
(within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) is the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that such person or group shall be deemed to have “beneficial ownership”
of all shares that any such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage of time), directly
or indirectly, of more than 35% of either the total economic value of such
Person or the total voting power of the Voting Stock of such Person;
(b) the adoption of a plan relating to the liquidation or dissolution of
the Company; (c) any “person” (as such term is used in Section 13(d)(3) of the
Exchange Act) or “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such person or group shall be deemed
to have “beneficial ownership” of all shares that any such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 35% of either
the total economic value of the Company’s outstanding Capital Stock or the
total voting power of the Voting Stock of the Company; (d) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors of the Company or whose
nomination for election by the shareholders of the Company, was approved

 

6

 

by a majority vote of the directors of the Company
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the
Company then in office; (e) the merger or consolidation of the Company with or
into another Person or the merger of another Person with or into the Company,
and the securities of the Company that are outstanding immediately prior to such
transaction and that represent 100% of the aggregate voting power of the Voting
Stock of the Company are changed into or exchanged for cash, securities or
property, unless: (x) pursuant to such transaction such securities are
changed into or exchanged for, in addition to any other consideration,
securities of the surviving Person or transferee that represent immediately
after such transaction, at least a majority of the aggregate voting power of
the Voting Stock of the surviving Person or transferee and (y) no “person” (as
such term is used in Section 13(d)(3) of the Exchange Act) or “group” (within
the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) is the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such
person or group shall be deemed to have “beneficial ownership” of all shares
that any such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of either the total economic value of such
surviving Person or transferee or the total voting power of the Voting Stock of
such surviving Person or transferee; or (f) any “change of control” as defined
in the Convertible Subordinated Indenture to the extent not waived by holders
of the Convertible Subordinated Notes.

 

“Change
of Control Offer” is defined in Section 4.09(a).

 

“Change
of Control Payment” is defined in Section 4.09(a).

 

“Change
of Control Payment Date” is defined in Section 4.09(b)(ii).

 

“Cincinnati
Bell Group” means the Company and its Restricted Subsidiaries.

 

“Closing
Date” is defined in the Purchase Agreement.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time.

 

“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 Exchange Act, the body performing such duties at such
time.

 

“Common
Stock” of any Person means any and all shares, units, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person’s common stock whether outstanding on the Closing
Date or issued after the Closing Date, and includes, without limitation, all
series and classes of such common stock.

 

“Company”
is defined in the preamble.

 

“Consolidated”
or “consolidated” (including the correlative term “consolidating”)
or on a “consolidated basis,” when used with reference to any financial
term in this Indenture

 

7

 

(but not when used with respect to any Tax Return or
tax liability), means the consolidation for two or more Persons of the amounts
signified by such term for all such Persons, with inter-company items
eliminated in accordance with GAAP.

 

“Consolidated Adjusted Debt” means the sum of
(a) Indebtedness of the Company and its Restricted Subsidiaries (exclusive of
Indebtedness under the Convertible Subordinated Notes and Indebtedness referred
to in clauses (iv) (unless such Indebtedness is required to be recorded as
liability on the consolidated balance sheet of the Company and its Restricted
Subsidiaries in accordance with GAAP) and (viii) of the definition thereof)
determined on a consolidated basis in accordance with GAAP, plus (b) the amount
of reserves of the Company and its Restricted Subsidiaries then outstanding in
excess of $35,000,000 against any income tax liabilities.

 

“Consolidated
Adjusted Debt to Adjusted EBITDA Ratio” means, as of any date of
determination, the ratio of (a) Consolidated Adjusted Debt as of such date to
(b) Adjusted EBITDA for the applicable four-quarter period ending on the last
day of the most recently ended quarter for which consolidated financial
statements of the Company and its Restricted Subsidiaries are, or should have
been, available in accordance with the Transaction Documents.

 

“Consolidated EBITDA”
means for the applicable period of measurement, the Consolidated Net Income of
the Company and its Restricted Subsidiaries on a consolidated basis, plus,
without duplication, the following for the Company and its Restricted
Subsidiaries to the extent deducted in calculating such Consolidated Net
Income:  (i) Consolidated Interest
Expense for such period, plus (ii)  provisions for taxes based on
income, plus (iii) total depreciation expense, plus (iv) total
amortization expense, plus (v) other non-cash items reducing
Consolidated Net Income (excluding any such non-cash item to the extent that it
represents an accrual or reserve for potential cash items in any future period
or amortization of a prepaid cash item) less other non-cash items
increasing Consolidated Net Income (excluding any such non-cash item to the
extent it represents the reversal of an accrual or reserve for potential cash
item in any prior period), plus (vi) charges taken in accordance with
SFAS 142, plus (vii) all net cash extraordinary losses less net
cash extraordinary gains, plus (vii) all restructuring charges set forth
on Schedule 1.1(a).

 

“Consolidated EBITDA
to Consolidated Interest Ratio” means as of any date of determination the
ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense, in each
case, for the applicable four-quarter period ending on the last day of the most
recently ended quarter for which consolidated financial statements of the
Company and its Restricted Subsidiaries are, or should have been, available in
accordance with the Transaction Documents.

 

“Consolidated
Interest Expense” means for the applicable period of measurement of the
Company and its Restricted Subsidiaries on a consolidated basis, the aggregate
interest expense for such period determined in accordance with GAAP (including
all commissions, discounts, fees and other charges in connection with standby
letters of credit and similar instruments) for the Company and its Restricted
Subsidiaries on a consolidated basis, but excluding all amortization of
financing fees and other charges incurred by the Company and its Restricted
Subsidiaries in connection with the issuance of Indebtedness.

 

8

 

“Consolidated
Net Income” means for any period the net income (or loss) before provision
for dividends on Preferred Stock of the Company and its Restricted Subsidiaries
on a consolidated basis for such period determined in conformity with GAAP, but
excluding, without duplication, the following clauses (a) through (f) to the
extent included in the computations thereof: 
(a) the income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary of the Company or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or that
Person’s assets are acquired by the Company or any of its Restricted
Subsidiaries; (b) the income (or loss) of any Person (other than the Company or
a Restricted Subsidiary) in which such Person has an interest except to the
extent of the amount of dividends or other distributions actually paid to the
Company or a Restricted Subsidiary (which amount shall be included in
Consolidated Net Income); (c) the income of any Restricted Subsidiary of the
Company to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary (except to the extent of the amount of
dividends or similar distributions actually lawfully paid to the Company or a
Restricted Subsidiary); (d) any after tax gains or losses attributable to Asset
Dispositions or returned surplus assets of any pension plan; (e) (to the extent
not included in clauses (a) through (d) above) (i) any net extraordinary gains
or net extraordinary losses or (ii) any net non-recurring gains or non-recurring
losses to the extent attributable to Asset Dispositions, the exercise of
options to acquire Capital Stock and the extinguishment of Indebtedness; and
(f) cumulative effect of a change in accounting principles.

 

“Consolidated
Total Assets” means, as at any date of determination, the aggregate amount
of assets reflected on the consolidated balance sheet of the Company and its
Restricted Subsidiaries (excluding, however, for the avoidance of doubt the
assets of the BCI Group) prepared in accordance with GAAP most recently
delivered to the Holders pursuant to Section 4.02 hereof or Section 9
of the Purchase Agreement.

 

“Convertible
Preferred Stock” means the 12 1⁄2% Series B Junior Exchangeable Preferred
Stock Due 2009 of BCI and the 6 3⁄4% Cumulative Convertible Preferred Stock of
the Company.

 

“Convertible
Subordinated Notes” means those certain 6 3⁄4% Convertible Subordinated Notes
due 2009 of the Company issued pursuant to the Convertible Subordinated
Indenture with an original aggregate issue price of $400,000,000, and any such
notes issued in exchange or replacement therefor.

 

“Convertible
Subordinated Indenture” means the indenture relating to the Convertible
Subordinated Notes dated as of July 21, 1999, between the Company and the Bank
of New York, as Trustee.

 

“Credit
Agreement” means the Amendment and Restatement of the Credit Agreement,
dated as of November 9, 1999, as amended and restated as of January 12, 2000
and as of the date hereof, as amended, by and among the Company, BCSI, the
lenders party thereto from time to time, Bank of America, N.A., as syndication
agent, Citicorp USA, Inc., as administrative agent and certain other agents,
together with the related documents thereto

 

9

 

(including, without limitation, any guarantee
agreements and security documents), in each case as such agreement or
agreements may be amended (including any amendment and restatement thereof),
restated, supplemented, replaced, restructured, waived, Refinanced or otherwise
modified from time to time, including any amendment, supplement, modification
or agreement adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder or extending the maturity of, Refinancing, replacing or
otherwise restructuring all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement, and whether by the same or
any other agent, lender or group of lenders or one or more agreements,
contracts, indentures or otherwise; provided
that, except as provided in the next proviso, in no event may such agreement be
amended (including any amendment and restatement thereof), supplemented,
replaced, restructured, Refinanced or otherwise modified to increase the amount
of borrowings permitted to be Incurred pursuant to Section 5.04(b)(vii);
and, provided, further, however,
that, in addition to the Indebtedness Incurred pursuant to Section
5.04(b)(vii), Other Senior Indebtedness (to the extent permitted to be
Incurred pursuant to the definition thereof) may be Incurred, in whole or in
part, under the Credit Agreement.

 

“Credit
Documents” means the Credit Agreement, any Secured Hedge Agreement that is
secured under (and as defined in) the Credit Agreement, and all certificates,
instruments, financial and other statements and other documents and agreements
made or delivered from time to time in connection therewith and related
thereto.

 

“Currency
Agreement” means any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect the Company or any
Subsidiary of the Company against fluctuations in currency values.

 

“Custodian”
is defined in Section 7.01.

 

“Definitive
Note” is defined in the Appendix.

 

“Default”
means any event, act or condition that is, or with the giving of notice, lapse
of time or both would constitute, an Event of Default.

 

“Depositary”
is defined in the Appendix.

 

“Designated
Senior Indebtedness” means (i) Indebtedness under or in respect of the
Credit Agreement and (ii) any other Indebtedness constituting Senior
Indebtedness which, at the time of determination, has an aggregate principal
amount of at least $25,000,000 and is specifically designated in the instrument
evidencing such Senior Indebtedness as “Designated Senior Indebtedness” by the
Company.

 

“Disqualified
Capital Stock” means that portion of any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable at the option of the holder thereof), or upon the happening of
any event (other than an event which would constitute a Change of Control or
Asset Disposition), matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
sole option of the holder thereof (except, in each case, upon the occurrence of
a Change of Control or Asset Disposition) on or prior to the Stated Maturity.

 

10

 

“Distribution
Date” means the date on which (a) the Notes become Widely Held or (b) a
Positive Credit Event occurs.

 

“Environmental
Laws” means all applicable foreign, federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters; including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation
and Recovery Act, the Toxic Substances Control Act, and the Emergency Planning
and Community Right-to-Know Act.

 

“Event
of Default” is defined in Section 7.01.

 

“Excess
Proceeds” is defined in Section 5.05(b).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Exchange
and Registration Rights Agreement” is defined in the Appendix.

 

“Exchange
Guarantees” means the Guarantees of the Exchange Notes issued in the
Registered Exchange Offer.

 

“Exchange
Notes” is defined in the recitals.

 

“Existing
BCSI Loan” means Indebtedness of BCSI Incurred under the Credit Agreement
prior to the date of this Indenture and any Indebtedness of BCSI Incurred under
the Credit Agreement for the purpose of making interest payments on (w) the
Existing BCSI Loan, (x) any Indebtedness of the BCI Group Incurred under the
Credit Agreement after the date of this Indenture subject to the limitations
set forth in Section 5.11(a), (y) BCI’s 9% Senior Subordinated Notes Due
2008 or (z) BCI’s 12 1⁄2% Senior Series B Notes due 2005.

 

“Existing
Indebtedness” all Indebtedness of the Company and its Restricted
Subsidiaries existing as of the Closing Date (after giving effect to the
redemption, repurchase, repayment or prepayment of Indebtedness out of the
proceeds of the Notes); provided
that for purposes of Section 5.04(b), Existing Indebtedness shall not
include Indebtedness of the type permitted to be Incurred by Section
5.04(b)(iii) and (v).

 

“fair
market value” means, with respect to any asset or property, the price which
could be negotiated in an arm’s-length transaction between a willing seller and
a willing and able buyer.  Unless otherwise expressly required elsewhere
in this Indenture, fair market value will be determined in good faith (i) for
transactions involving an aggregate consideration equal to or less than
$30,000,000, by a Responsible Officer of the Company, as evidenced, in the case
of any such transaction involving consideration greater than $3,000,000, by an
Officers’ Certificate and (ii) for transactions involving an aggregate
consideration in excess of $30,000,000, by the Board of Directors of the
Company, as evidenced by a resolution of the Board of Directors, and in the
case of both clause (i) and (ii), such determination shall be conclusive absent
a manifest error.

 

11

 

“fiscal
year” means a fiscal year of the Company and its Restricted Subsidiaries
ending on December 31 of any calendar year.

 

“GAAP”
means United States generally accepted accounting principles as of the Closing
Date set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession.

 

“Global
Notes Legend” is defined in the Appendix.

 

“Governmental
Authority” means (a) the government of the United States of America or
any State or other political subdivision thereof, (b) any government or
political subdivision of any other jurisdiction in which the Company or any of
its Subsidiaries conducts all or any part of its business, or which properly
asserts jurisdiction over any properties of the Company or any of its Subsidiaries
or (c) any entity properly exercising executive, legislative, judicial,
regulatory or administrative functions of any such government.

 

“Guarantee”
means a guarantee (other than by endorsement of negotiable instruments for
collection or deposit in the ordinary course of business), direct or indirect,
in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

 

“Guaranteed
Obligations” is defined in Section 11.01(a).

 

“Guarantor”
means any Restricted Subsidiary of the Company that has provided a guarantee of
the Obligations with respect to the Notes.

 

“Holder”
means a Person in whose name a Note is registered at the Registrar.

 

“Incur”
is defined in Section 5.04(a).

 

“Indebtedness”
means, with respect to any Person, without duplication:  (i) the principal of and premium (if any) in
respect of indebtedness of such Person for borrowed money (including, without
limitation, Senior Indebtedness); (ii) the principal of and premium (if any) in
respect of indebtedness of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) all Attributable Debt and all Capitalized
Lease Obligations of such Person; (iv) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all obligations under any title retention agreement, in each
case to the extent the purchase price is due more than six (6) months from the
date the obligation is Incurred (but excluding trade accounts payable and other
accrued liabilities arising in the Ordinary Course of Business); (v) all
obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction; (vi) Guarantees and other
contingent obligations in respect of Indebtedness referred to in clauses (i)
through (v) above and clause (viii) below; (vii) all obligations of any other
Person of the type referred to in clauses (i) through (v) which are secured by
any Lien on any property or asset of such Person, the amount of such obligation
being deemed to be the lesser of the fair market value of such property or
asset or the amount of the obligation so secured; (viii) all obligations under
Currency Agreements and

 

12

 

all Interest Swap Obligations of such Person; and (ix)
all obligations represented by a Disqualified Capital Stock of such
Person.  The Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or joint
venturer, but only to the extent to which there is recourse to such Person for
the payment of such Indebtedness.

 

“Indenture”
is defined in the preamble.

 

“Independent
Qualified Party” means an investment banking firm, accounting firm or
appraisal firm, in each case, of national standing; provided, however,
that such firm is not an Affiliate of the Company; and, provided, further,
that for transactions involving consideration of $100,000,000 or more, the term
“Independent Qualified Party” shall be limited to an investment banking
firm of national standing only, unless, with respect to any such
transaction, (x) the Company delivers to the Trustee and the Required Holders
an Officers’ Certificate to the effect that no investment bank will opine on
commercially reasonable terms on such transaction and that it proposes instead
to engage an accounting firm of national standing (and stating the identity of
such accounting firm) and (y) within fifteen (15) days after the delivery of
such Officers’ Certificate the Company does not receive a written notice from
the Required Holders reasonably objecting to the Company’s proposal set forth
in the Officers’ Certificate, in which case the term “Independent Qualified
Party” for such transaction may also include such accounting firm.

 

“Initial
Notes” is defined in the recitals.

 

“Institutional
Accredited Investor” is defined in the Appendix.

 

“Interest
Coverage Test” is defined in Section 5.04.

 

“Interest
Payment Date” is defined in Exhibit A.

 

“Interest
Swap Obligations” means the Obligations of any Person pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement or other similar agreement or arrangement to
which such Person is party or of which it is a beneficiary.

 

“Investment”
means (i) any direct or indirect purchase or other acquisition by the Company
or any of its Restricted Subsidiaries of any beneficial interest in, including
stock, partnership interest or other Capital Stock of, or ownership interest
in, any other Person; and (ii) any direct or indirect loan, advance or capital
contribution by the Company or any of its Restricted Subsidiaries to any other
Person, including all indebtedness and accounts receivable from that other
Person that did not arise from sales to or services provided to that other
Person in the Ordinary Course of Business. 
For purposes of Section 5.02: (i) “Investment” shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary of the

 

13

 

Company (to the extent of the Company’s percentage
ownership therein) at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary of the Company and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary of the Company (to the extent
of the Company’s percentage ownership therein) at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary of the Company;
and (ii) the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by the Company or any of
its Restricted Subsidiaries, without any adjustments for increases or decreases
in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced (other than for purposes of calculations under Section
5.11) by the payment of dividends or distributions in connection with such
Investment or any other amounts received in respect of such Investment; provided
that no such payment of dividends or distributions or receipt of any such other
amounts shall reduce the amount of any Investment if such payment of dividends
or distributions or receipt of any such amounts would be included in
Consolidated Net Income.

 

“Legal
Holiday” means a Saturday, a Sunday or a day on which banking institutions
in New York or Ohio or at a place of payment are authorized by law, regulation
or executive order to remain closed.  If
any payment date in respect of the Notes is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.

 

“Leverage
Test” is defined in Section 5.04.

 

“Lien”
means any lien, mortgage, pledge, security interest, charge, encumbrance or
governmental levy or assessment of any kind, whether voluntary or involuntary
(including any conditional sale or other title retention agreement and any
lease in the nature thereof).

 

“Material
Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Company and its Restricted Subsidiaries taken
as a whole or (b) the material impairment of the ability of the Company or any
Guarantor that constitutes a Material Restricted Subsidiary to perform in any
material respect its material obligations under any Transaction Document to
which it is a party or of any Holder to enforce any Transaction Document in any
material respect or collect any of the Obligations thereunder.

 

“Material
Restricted Subsidiary” means a Restricted Subsidiary that constitutes a
Material Subsidiary.

 

“Material
Subsidiary” means any Subsidiary that is or would be a “significant
subsidiary” of the Company within the meaning of Rule 1-02 of Regulation S-X
promulgated by the Commission.

 

“Maturity”,
when used with respect to any Note, means the date on which the principal of
such Note becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise (including in connection with any offer to purchase that this
Indenture requires the Company to make).

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

14

 

“Net
Proceeds” means cash proceeds actually received by the Company or any of
its Restricted Subsidiaries from any Asset Disposition (including insurance
proceeds, awards of condemnation, and payments under notes or other debt
securities received in connection with any Asset Disposition), net of (a) the
costs of such sale, issuance, lease, transfer or other disposition (including
all legal, title and recording tax expenses, commissions and other fees and
expenses incurred and all Taxes required to be paid or accrued as a liability
under GAAP as a consequence of such sale, lease or transfer), (b) amounts
applied to repayment of Indebtedness (other than revolving credit Indebtedness
under the Credit Agreement, without a corresponding reduction in the revolving
credit commitment) secured by a Lien on the asset or property disposed of, (c)
if such Asset Disposition involves the sale of a discrete business or product
line, any accrued liabilities of such business or product line required to be
paid or retained by the Company or any of its Restricted Subsidiaries as part
of such disposition, (d) appropriate amounts to be provided by the Company or a
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with an Asset Disposition and retained
by the Company or such Restricted Subsidiary, as the case may be, after such
Asset Disposition, including, without limitation, pension and benefit
liabilities, liabilities related to environmental matters or liabilities under
any indemnification obligations associated with such Asset Disposition and (e)
all distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, but only to the extent required by constituent documents of such
Subsidiary or such joint venture.

 

“Note
Amounts” means principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for post-filing
interest is allowed in such proceedings), fees and all other amounts owing
under the Notes or in respect of the Notes (whether under the Notes or under
the Indenture or the Purchase Agreement, as the case may be).

 

“Note
Registration” shall mean the first to occur of (i) the consummation of a
Registered Exchange Offer and (ii) the effectiveness of a Shelf Registration
Statement filed with the Commission.

 

“Notes”
is defined in the recitals.

 

“Notes
Custodian” is defined in the Appendix.

 

“Notice
of Default” is defined in Section 9.05.

 

“Obligations”
means all obligations for principal, premium (if any), interest, penalties,
fees, indemnification, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.

 

“Offer
Amount” is defined in Section 4.10(c).

 

“Offer
Period” is defined in Section 4.10(a).

 

“Officers’
Certificate” of the Company means a certificate signed on behalf of the
Company by two Persons, one of which shall be any of the following: the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief

 

15

 

Financial Officer, the Chief Accounting Officer or the
Treasurer (or any such other officer that performs similar duties) of the
Company, and the other one shall be any of the following: the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
any Vice President, the Chief Financial Officer, the Chief Accounting Officer,
the Treasurer, the Assistant Treasurer, Controller, the Secretary or an
Assistant Secretary (or any such other officer that performs similar duties) of
the Company.  One of the officers
signing an Officers’ Certificate given pursuant to Section 4.06
shall be the principal executive, financial or accounting officer or treasurer
of the Company.

 

“Opinion
of Counsel” means a written opinion from legal counsel who is acceptable to
the Trustee.  The counsel may be an
employee of or counsel to the Company or Guarantor or the Trustee.

 

“Ordinary
Course of Business” means, in respect of any transaction involving the
Company or any Restricted Subsidiary of the Company, the ordinary course of
such Person’s business, as conducted by any such Person in accordance with past
practice and undertaken by such Person in good faith.

 

“Other
Senior Indebtedness” means, (a) prior to the Distribution Date, any
Indebtedness of the Company which: (i) is Incurred after the date hereof; (ii)
is stated as being senior to the Notes; (iii) may be Incurred only if immediately
after the Incurrence of such Indebtedness, the Consolidated Adjusted Debt to
Adjusted EBITDA Ratio is less than 3.5 to 1.00; and (iv) when aggregated with
all Indebtedness Incurred and outstanding prior to the date such Indebtedness
is Incurred under the Credit Agreement (without regard to Indebtedness Incurred
pursuant to the second proviso to the definition thereof), the Senior Notes and
Other Senior Indebtedness, does not exceed $1,500,000,000; and (b) after the
Distribution Date, any Indebtedness of the Company Incurred after the
Distribution Date that does not constitute Indebtedness of the type described
in clauses (i) through (vii), inclusive, of the second sentence of the
definition of “Senior Indebtedness”.

 

“Paying
Agent” is defined in Section 2.03.

 

“Payment
in Full” for purposes of Articles 8 and 12, (a) when used
with respect to Senior Indebtedness under the Credit Agreement, means that such
Senior Indebtedness is paid in full in cash and (b) when used with respect to
any other Senior Indebtedness, means that such Senior Indebtedness is paid in
full in cash or Cash Equivalents; and the terms “Paid in Full” or Pay
in Full” shall have correlative meanings.

 

“Permits”
means all licenses, permits, certificates of need, approvals and authorizations
from all Governmental Authorities required to lawfully conduct a business.

 

“Permitted
Acquisition” means the purchase by the Company or a Restricted Subsidiary
of the Company of all or substantially all of the assets of a Person whose
primary business is the same, related, ancillary or complementary to the
business in which the Company and its Restricted Subsidiaries were engaged on
the date of this Indenture, or any Investment by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person and each Subsidiary of such Person becomes (x) a Restricted

 

16

 

Subsidiary of the Company whose primary business is
the same, related, ancillary or complementary to the business in which the
Company and its Restricted Subsidiaries were engaged on the date of this
Indenture and (y) a Guarantor hereunder or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, a Restricted Subsidiary of the
Company and whose primary business is the same, related, ancillary or
complementary to the business in which the Company and its Subsidiaries were
engaged in on the date of this Indenture; provided that at the time of such purchase
or Investment, (x) no Default or Event of Default exists or would be caused
upon the consummation thereof and (y) in the case of Permitted Acquisitions
involving any consideration other than the Common Stock of the Company, after
giving effect to such Permitted Acquisition, the Company can Incur $1.00 of
Indebtedness under Section 5.04(a).

 

“Permitted
Adjustments” means, for the purpose of calculating the Leverage Test and
the Interest Coverage Test, pro forma adjustments arising out of events
(including cost savings resulting from head count reduction, closure of
facilities and similar restructuring charges) which are directly attributable
to a specific transaction, are factually supportable and are expected to have a
continuing impact, which (a) would be permitted by Article 11 of
Regulation S-X promulgated under the Securities Act and as interpreted by
the staff of the Commission or (b) after the Distribution Date, have been
realized or are reasonably expected to be realized within six (6) months
following any such transaction; provided
that, in either case, such adjustments are set forth in an Officers’
Certificate signed by the Company’s chief financial officer and another officer
which states (i) the amount of such adjustment or adjustments, (ii) that such
adjustment or adjustments are based on the reasonable good faith beliefs of the
officers executing such Officers’ Certificate at the time of such execution and
(iii) that any related Incurrence of Indebtedness is permitted pursuant to the
Indenture.

 

“Permitted Asset Swap” means any transfer of
properties or assets by the Company or any of its Restricted Subsidiaries in
which the consideration received by the transferor consists of like properties or
assets to be used in the business of the Company or its Restricted Subsidiaries
in the same or similar manner as such transferred properties or assets; provided that (i) the fair market value
(determined in good faith by the Board of Directors of the Company) of
properties or assets received by the Company or any of its Restricted
Subsidiaries in connection with such Permitted Asset Swap is at least equal to
the fair market value (determined in good faith by the Board of Directors of
the Company) of properties or assets transferred by the Company or such
Restricted Subsidiary in connection with such Permitted Asset Swap and (ii) the
aggregate fair market value of assets transferred by the Company in connection
with all Permitted Asset Swaps after the Closing Date does not exceed 10% of
Consolidated Total Assets.

 

“Permitted
Investments” means:

 

(i)            (A) any Investment in (including,
without limitation, loans and advances to) (x) the Company or a Wholly Owned
Restricted Subsidiary of the Company and whose primary business is the same,
related, ancillary or complementary to the business in which the Company and
its Subsidiaries were engaged in on the date of such Investment and (y) CBW; provided
that the aggregate amount of all such investments in CBW, together with the
amount of all Asset Dispositions made pursuant to clause (i)(y)

 

17

 

of the second
sentence of the definition thereof, shall not exceed 5% of Consolidated Total
Assets and (B) any acquisition by the Company or a Wholly Owned Restricted
Subsidiary of the Company of beneficial interest in a Restricted Subsidiary of
the Company from another Restricted Subsidiary of the Company or the Company;

 

(ii)           any Investment in Cash Equivalents or
the Notes;

 

(iii)          any Investment related to or arising
out of a Permitted Acquisition;

 

(iv)          any Investment which results from the
receipt of non-cash consideration from an asset sale made pursuant to and in
compliance with the provisions of Section 5.05 or from any sale or other
disposition of assets not constituting an Asset Disposition hereunder;

 

(v)           payroll, travel and similar advances
to cover matters that are expected at the time of such advances ultimately to
be treated as expenses for accounting purposes and that are made in the
Ordinary Course of Business;

 

(vi)          receivables owing to the Company or
any Restricted Subsidiary if created or acquired in the Ordinary Course of
Business and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include
such concessionary trade terms as the Company or any such Restricted Subsidiary
deems reasonable under the circumstances;

 

(vii)         loans and advances to employees made in
the Ordinary Course of Business not to exceed $1,000,000 in the aggregate at
any time outstanding; provided, however, for purposes of this definition,
“advances” will not restrict advances for travel, moving or relocation expenses
to employees advanced and repaid in the Ordinary Course of Business;

 

(viii)        loans and advances not to exceed
$1,000,000 at any time outstanding to employees of the Company or its
Subsidiaries for the purpose of funding the purchase of Capital Stock of the
Company by such employees;

 

(ix)           any Investments received as part of
the settlement of litigation or in satisfaction of extensions of credit to any
Person otherwise permitted under this Indenture pursuant to the reorganization,
bankruptcy or liquidation of such Person or a good faith settlement of debts by
said Person;

 

(x)            any Investment existing on the date
of this Indenture, any Investment received as a distribution in respect of such
existing Investment and any Investment received in exchange for such existing
Investment; provided that, in the
case of an exchange, the fair market value (as determined in good faith by the
Board of Directors of the Company) of the Investment being exchanged is at
least equal to the fair market value (as determined in good faith by the Board
of Directors of the Company) of the Investment for which such Investment is
being exchanged;

 

18

 

(xi)           Investments of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of the Company or at the time such Person merges or consolidates with the
Company or any of its Restricted Subsidiaries, in either case in compliance
with this Indenture; provided such Investments were not made by such Person in
connection with or in anticipation or contemplation of such Person becoming a
Restricted Subsidiary of the Company or such merger or consolidation;

 

(xii)          Investments made in connection with
purchase price adjustments or contingent purchase price payments paid in
connection with Investments otherwise permitted under this Indenture;

 

(xiii)         Investments in stock, obligations or
securities received in settlement of debts created in the Ordinary Course of
Business or in satisfaction of judgments;

 

(xiv)        Investments by the Company or any
Restricted Subsidiary pursuant to an Interest Rate Swap Obligation or a
Currency Agreement permitted by clauses (i), (iv), (vi) or (viii) of Section 5.04(b);

 

(xv)         Investments consisting of debits and
credits between Broadwing Financial LLC and the Company, its Restricted
Subsidiaries and, subject to Section 5.11, its Unrestricted Subsidiaries
pursuant to the Centralized Cash Management System;

 

(xvi)        Investments consisting of loans,
advances and payables due from suppliers or customers made by the Company or
its Restricted Subsidiaries in the Ordinary Course of Business;

 

(xvii)       Investments that may be deemed to arise
out from the cashless exercise by employees of the Company of rights, options
or warrants to purchase Capital Stock of the Company;

 

(xviii)      Investments permitted to be made by Section
5.11;

 

(xix)         Investments the consideration paid for
which consists solely of Capital Stock (other than Disqualified Capital Stock)
of the Company;

 

(xx)          Investments (other than Investments in any member of the BCI Group) in
an aggregate amount of $10,000,000 for any Investments valued as of the date
such Investment is made, including, without limitation, joint ventures;
and

 

(xxi)         Investments the consideration for which
was paid by a Person other than the Company or any of its Restricted
Subsidiaries, without recourse to the Company or its Restricted Subsidiaries.

 

“Permitted
Liens” means:

 

19

 

(i)            Liens to secure the performance of
statutory obligations, surety or appeal bonds, letters of credit or other obligations
of a like nature incurred in the Ordinary Course of Business;

 

(ii)           Liens for Taxes, assessments and
governmental charges, levies or claims that are (x) not yet due and payable or
(y) which are due and payable and are being contested in good faith by
appropriate proceedings so long as such proceedings stay enforcement of such
Liens;

 

(iii)          any Lien arising out of a judgment or
award not constituting an Event of Default under Section 7.01;

 

(iv)          statutory Liens of landlords,
carriers, warehousemen, mechanics, materialmen, workmen, repairmen and other
similar liens imposed by law, which are incurred in the Ordinary Course of
Business for sums not more than thirty (30) days delinquent or which are being
contested in good faith by appropriate proceedings so long as such contest
stays enforcement of such Liens;

 

(v)           survey exceptions, easements,
rights-of-way, zoning restrictions and other similar charges or encumbrances in
respect of real property not interfering in any material adverse respect with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries;

 

(vi)          any interest or title of a lessor
under any Capitalized Lease Obligation; provided that such Liens do not extend to
any property or asset which is not leased property subject to such Capitalized
Lease Obligation;

 

(vii)         Liens securing Capitalized Lease
Obligations and purchase money Indebtedness permitted pursuant to Section
5.04(b)(iii); provided, however, that in the case of purchase money
Indebtedness (a) the Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or any
Restricted Subsidiary of the Company other than the property and assets so
acquired, constructed, repaired, added to or improved and (b) the Lien securing
such Indebtedness shall be created within 180 days after the date of such
acquisition or,
completion of construction, repair, improvement, addition or commencement of
full operation of the property subject to the Lien or, in the case of a
Refinancing of any purchase money Indebtedness, within 180 days of such
Refinancing;

 

(viii)        Liens upon specific items of inventory
or other goods and proceeds of any Person securing such Person’s obligations in
respect of bankers’ acceptances issued or created for the account of such
Person to facilitate the purchase, shipment or storage of such inventory or
other goods;

 

(ix)           Liens securing reimbursement
obligations with respect to commercial letters of credit which encumber
documents and other property relating to such letters of credit and products
and proceeds thereof;

 

20

 

(x)            Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs duties
in connection with the importation of goods;

 

(xi)           Liens arising from filing Uniform
Commercial Code financing statements regarding leases;

 

(xii)          Liens in existence on the date hereof;

 

(xiii)         Liens on property or shares of Capital
Stock of another Person at the time such other Person becomes a Subsidiary of
such Person; provided, however, that such Liens are not created,
Incurred or assumed in connection with, or in contemplation of, such other
Person becoming a Subsidiary;

 

(xiv)        leases, subleases, licenses and
sublicenses of the type referred to in clause (x) in the second sentence
of the definition of “Asset Disposition” granted to third parties in the
Ordinary Course of Business;

 

(xv)         banker’s liens and rights of offset of
the holders of Indebtedness of the Company or any Restricted Subsidiary on
monies deposited by the Company or any Restricted Subsidiary with such holders
of Indebtedness in the Ordinary Course of Business of the Company or any such
Restricted Subsidiary;

 

(xvi)        Liens securing obligations under
Interest Swap Obligations or Currency Agreements so long as such obligations
relate to Indebtedness that is, and is permitted under this Indenture, to be
secured by a Lien on the same property securing such obligations;

 

(xvii)       Liens to secure any Refinancing (or
successive Refinancings) as a whole, or in part, of any Indebtedness secured by
any Lien referred to in the foregoing clauses (vii), (xii), (xiii) and
(xvi); provided, however, that (i) such new Lien shall be
limited to all or part of the same property that secured the original Lien
(plus improvements to or on such property) and (ii) the Indebtedness
secured by such Lien at such time is not increased to any amount greater than
the sum of (1) the outstanding principal amount or, if greater, committed
amount of the Indebtedness secured by Liens described under clauses (vii),
(xii), (xiii) or (xvi) at the time the original Lien became a Permitted Lien
under this Indenture and (2) an amount necessary to pay any fees and
expenses, including premiums related to such Refinancings;

 

(xviii)      pledges or deposits to secure obligations
under workers’ compensation laws or similar legislation or to secure public or
statutory obligations;

 

(xix)         Liens on property at the time such
Person or any of its Subsidiaries acquires the property, including any
acquisition by means of a merger or consolidation with or into such Person or a
Subsidiary or such Person; provided,
however, that such Liens are not
created, Incurred or assumed in connection with, or in contemplation of, such
acquisition; provided, further, however,
that the Liens may not extend to any other property owned by such Person or any
of its Subsidiaries; and

 

21

 

(xx)          other Liens that do not, in the
aggregate, attach to a material portion of the assets of the Company or any of
its Restricted Subsidiaries and do not secure obligations in an aggregate
amount in excess of $5,000,000.

 

“Permitted
Refinancing Indebtedness” means any Indebtedness of the Company or any of
its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to Refinance, other Indebtedness of any such Persons; provided,
however,
that (i) the principal  amount of
such Permitted Refinancing Indebtedness does not exceed the principal amount
(or, if issued at original issue discount, the aggregate accreted value) plus
accrued interest and premium, if any (set forth in the original instrument
representing such Indebtedness), of the Indebtedness so exchanged or Refinanced
(plus the amount of reasonable fees and expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date on or later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, at the time of such Refinancing, the Indebtedness being exchanged
or Refinanced; (iii) if the Indebtedness being exchanged or Refinanced is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is subordinated in right of payment to the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being exchanged or Refinanced; (iv) such Permitted
Refinancing Indebtedness is Incurred by the Person who is the obligor on the
Indebtedness being exchanged or Refinanced; and (v) in the case of Permitted
Refinancing Indebtedness in respect of Convertible Subordinated Notes, such
Permitted Refinancing Indebtedness will have an effective yield thereon not
exceeding 10% per annum.  “Permitted
Refinancing Indebtedness” shall not include Indebtedness under the Credit
Agreement which may be Refinanced in accordance with the definition thereof.

 

“Person”
means any individual, corporation, partnership, joint venture, association,
joint-stock company, limited liability company, trust, unincorporated
organization or government or agency or political subdivision thereof
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).

 

“Positive
Credit Event”  means the Company having a long term (a) senior implied debt
rating of at least BB+ from S&P and Ba1 from Moody’s and (b) senior
subordinated debt rating of at least BB- from S&P and Ba3 from Moody’s; provided that if, after the occurrence of
the Positive Credit Event, the Notes are not Widely Held and the Company’s
senior implied and senior subordinated debt ratings have been downgraded below
the rating levels set forth in this definition of “Positive Credit Event”,
the provisions of this Indenture applicable prior to the Distribution Date
shall govern beginning after such ratings downgrade as if the Distribution Date
has not occurred, until such time as the Notes become Widely Held or another
Positive Credit Event occurs.

 

“Preferred
Stock” of any Person means any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to dividends
or redemptions or upon liquidation, and shall include the 63⁄4% Convertible
Preferred Stock of the Company.

 

22

 

“Purchase
Agreement” means the Purchase Agreement, dated as of December 9, 2002, by
and among the Company and the Purchasers.

 

“Purchase
Date” is defined in Section 4.10(c).

 

“Purchasers”
is defined in the Appendix.

 

“QIB”
is defined in the Appendix.

 

“Redemption
Date,” when used with respect to any Note to be redeemed, means the date
fixed for such redemption by or pursuant to this Indenture and the Notes.

 

“Redemption
Price,” when used with respect to any Note to be redeemed, means the price
at which such Note is to be redeemed pursuant to this Indenture and the Notes.

 

“Refinance”
means, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part.  “Refinanced”
and “Refinancing” shall have correlative meanings.

 

“Registered
Exchange Offer” is defined in the Appendix.

 

“Registrar”
is defined in Section 2.03.

 

“Registration
Default” is defined in Exhibit A.

 

“Regular
Record Date” is defined in Exhibit A.

 

“Regulation S”
is defined in the Appendix.

 

“Representative”
means the trustee, agent, representative (if any), or, in the absence of any of
the foregoing, the holders of the majority in principal amount of, any issue of
Senior Indebtedness.

 

“Required
Holders” means Holders holding more than 50% of the then outstanding
aggregate principal amount at Maturity of the Notes (exclusive of Notes then
owned directly or indirectly by the Company, or any of its Subsidiaries or
Affiliates).

 

“Responsible
Officer” means the chief executive officer, the president, the chief
financial officer, the principal accounting officer or the treasurer (or the
equivalent of any of the foregoing) of the Company or any of its Subsidiaries
or any other officer, partner or member (or person performing similar
functions) of the Company or any of its Subsidiaries responsible for overseeing
the administration of, or reviewing compliance with, all or any portion of this
Indenture.

 

“Restricted
Investment” means an Investment other than a Permitted Investment.

 

“Restricted
Notes Legend” is defined in the Appendix.

 

23

 

“Restricted
Payments” is defined in Section 5.02.

 

“Restricted
Subsidiary” of any Person means any Subsidiary of such Person which at the
time of determination is not an Unrestricted Subsidiary.

 

“Rule 501”
is defined in the Appendix.

 

“Rule
144A” is defined in the Appendix.

 

“Sale
and Leaseback Transaction” means any direct or indirect arrangement with
any Person or to which any such Person is a party, providing for the leasing to
the Company or a Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Closing Date or later acquired,
which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or any other Person from whom funds have
been or are to be advanced by such Person on the security of such property.

 

“Securities
Act” is defined in the Appendix.

 

“Senior
Indebtedness” means (a) principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for post-filing
interest is allowed in such proceedings), fees and all other amounts owing
under or in respect of the Credit Agreement, (b) Indebtedness under the
Senior Notes and (c) the Other Senior Indebtedness.  Notwithstanding the foregoing, “Senior
Indebtedness” shall not include: 
(i) any obligations (other than with respect to any guarantee
Obligations under the Credit Agreement) of the Company to a Subsidiary of the
Company; (ii) obligations to trade creditors and other amounts incurred in
connection with obtaining goods, materials or services; (iii) obligations
represented by Disqualified Capital Stock; (iv) any liability for federal,
state, local or other taxes owed or owing by the Company; (v) that portion
of any Indebtedness Incurred in violation of the provisions set forth in Section 5.04
(but, as to any such obligation, no such violation shall be deemed to exist for
purposes of this clause (v) if the holder(s) of such obligation or their
representative shall have received an officers’ certificate of the Company to
the effect that the Incurrence of such Indebtedness does not (or, in the case
of revolving credit indebtedness, that the Incurrence of the entire committed
amount thereof at the date on which the initial borrowing thereunder is made
would not) violate such provisions of this Agreement; (vi) Indebtedness
which, when Incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to
the Company; and (vii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the Company or
its Subsidiaries.

 

“Senior
Notes” means those certain 71⁄4% Senior Notes due 2023 of the Company issued
pursuant to an indenture dated as of July 1, 1993 in the aggregate principal
amount of $50,000,000, and any such notes issued in exchange or replacement
therefor.

 

“Senior
Subordinated Indebtedness” means the Notes and any other Indebtedness of
the Company permitted hereunder which expressly ranks pari passu to the payment and performance
of the Notes.

 

“series”
means any series of Notes outstanding under this Indenture.

 

24

 

“Shelf
Registration Statement” is defined in the Appendix.

 

“Special
Interest” is defined in Exhibit A.

 

“Spectrum
Assets” means the E-Block spectrum licenses granted by the Federal
Communications Commission or any spectrum license owned by CBW Co. for which
the E-Block may be exchanged.

 

“S&P”
means Standard & Poor’s Ratings Services, a division of McGraw-Hill
Companies, Inc.

 

“Stated
Maturity,” when used with respect to any Note or any installment of
interest thereon, means the date specified in this Indenture or such Note as
the scheduled fixed date on which the Accreted Value of such Note or such
installment of interest is due and payable and shall not include any contingent
obligation to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for payment thereof.

 

“Stated
Maturity Date” is defined in Exhibit A.

 

“Subordinated
Indebtedness” means (i) the Convertible Subordinated Notes, (ii) any
Indebtedness of the Company permitted hereunder Incurred by the Company after
the date hereof or outstanding as of the date hereof which is not Senior
Indebtedness or Senior Subordinated Indebtedness, and (iii) any Indebtedness of
the Company permitted hereunder which is expressly subordinated to and junior
to the payment and performance of the Notes.

 

“Subsidiary”
means, with respect to any Person, (i) any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (A) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (B) the only general
partners of which are such Person or of one or more Subsidiaries of such Person
(or any combination thereof).  Any
Person becoming a Subsidiary of the Company after the date of this Indenture
shall be deemed to have Incurred all of its outstanding Indebtedness on the
date it becomes a Subsidiary.

 

“Successor
Company” is defined in Section 6.01.

 

“Taxes”
means all federal, state, local or foreign income, gross receipts, windfall
profits, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or other taxes, duties or assessments of any
kind whatsoever imposed on any Person, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties and includes any liability for Taxes of another Person by contract,
as a transferee or successor, under Treasury regulation Section 1.1502-6 or
analogous state, local or foreign law provision or otherwise.

 

25

 

“Tax
Returns” means all reports and returns (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be filed
with respect to Taxes.

 

“TIA”
means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as
amended from time to time.

 

“Transaction
Documents” is defined in the Purchase Agreement.

 

“Transfer
Restricted Notes” is defined in the Appendix.

 

“Trigger
Date” is defined in the Exchange and Registration Rights Agreement.

 

“Trustee”
is defined in the preamble.

 

“Trust
Officer” means, when used with respect to the Trustee, the president, any
vice president (whether or not designated by a number or a word or words added
before or after the title “vice president”), the secretary, any assistant
secretary, the treasurer, any assistant treasurer, or any other officer of the
Trustee in its Corporate Trust Administration Department customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.

 

“United
States” shall have the meaning assigned to such term in Regulation S.

 

“U.S.
Government Obligations” means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
that are not callable or redeemable at the issuer’s option.

 

“Unrestricted
Subsidiary” means (i) any member of the BCI Group; provided that after the consummation of
the sale of all or substantially all of the assets of BCI’s Subsidiaries or the
consummation of a confirmed plan of reorganization under Chapter 11 of the
United States Bankruptcy Code with respect to BCI, the Company may designate
Broadwing Telecommunications Inc. as a Restricted Subsidiary by written notice
to the Trustee and the Holders; (ii) any Subsidiary of a Person that at the
time of determination shall be or continue to be designated an Unrestricted
Subsidiary by the Board of Directors of such Person in the manner provided
below; and (iii) any Subsidiary of an Unrestricted Subsidiary.

 

The
Board of Directors of the Company may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided that subject to Section
5.11:  (i) the Company certifies to
the Holders that such designation complies with Section 5.02; and
(ii) each Subsidiary to be so designated and each of its Subsidiaries (other
than any member of the BCI Group, except as provided in

 

26

 

clause (i) of this definition) has not at the time of
designation, and does not thereafter, Incur any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries.

 

The
Board of Directors of the Company may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary only if:  (i)
immediately after giving effect to such designation, the Company can Incur
$1.00 of Indebtedness under Section 5.04(a); and (ii) immediately before
and immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing; provided
that, notwithstanding the foregoing, except as provided in clause (i) of this
definition, the Board of Directors may not designate any member of the BCI
Group to be a Restricted Subsidiary.

 

Any
such designation by the Board of Directors of the Company shall be evidenced to
the Holders by promptly filing with the Holders a copy of the Board Resolution
giving effect to such designation and an officers’ certificate certifying that
such designation complied with the foregoing provisions.

 

“Voting
Stock” of a Person means all classes of Capital Stock or other interests
(including partnership interests) of such Person then outstanding and normally
entitled (without regard to the occurrence of a contingency) to vote in the
election of directors, managers or trustees thereof.

 

“Warrant
Agreement” is defined in the Purchase Agreement.

 

“Warrants”
is defined in the Purchase Agreement.

 

“Weighted
Average Life to Maturity” means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (i) the sum of the products
obtained by multiplying (A) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (B) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness.

 

“Wholly
Owned Restricted Subsidiary” of any Person means any Wholly Owned
Subsidiary of such Person which at the time of determination is a Restricted
Subsidiary of such Person.

 

“Widely
Held” means, with respect to the Notes, that (a) the Purchasers no longer hold
more than 50% of the then outstanding aggregate principal amount at Maturity of
the Notes (exclusive of Notes then owned directly or indirectly by the Company,
or any of its Subsidiaries or Affiliates) and (b) the Company (i) reasonably
believes after due inquiry the number of beneficial owners (as defined in Rule
13d-3 under the Exchange Act) of the Notes (counting for the purpose of this
definition all Holders that are Affiliates of each other as one beneficial
owner) equals or exceeds twenty-five (25) and (ii) if requested by the Required
Holders, delivers to the Required Holders and the Trustee an Officers’
Certificate executed by the Responsible Officer describing in reasonable
details the grounds for such belief and the procedures used by the Company to
count the number of beneficial owners. 
For avoidance of doubt, the Trustee’s

 

27

 

obligations under clause (ii) of this definition shall
be limited solely to keeping such Officers’ Certificate on file with the
Trustee and in no event shall the Trustee be liable for the contents of such
Officers’ Certificate nor shall it be required to deliver such Officers’
Certificate to the Holders.

 

“Wholly
Owned Subsidiary” of any Person means a Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which shall at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.

 

SECTION
1.02.      Incorporation by Reference of Trust
Indenture Act.  This Indenture is
subject to the mandatory provisions of the TIA, which are incorporated by
reference in and made a part of this Indenture.  The following TIA terms have the following meanings:

 

“indenture securities”
means the Initial Notes, the Exchange Notes and the Exchange Guarantees.

 

“indenture security
holder” means a Holder.

 

“indenture to be
qualified” means this Indenture.

 

“indenture trustee” or
“institutional trustee” means the Trustee.

 

“obligor” on the
indenture securities means the Company and any other obligor on the indenture
securities.

 

All other TIA terms used
in this Indenture that are defined by the TIA, defined by TIA reference to
another statute or defined by Commission rule have the meanings assigned to
them by such definitions.

 

SECTION
1.03.      Rules of Construction.  Unless the context otherwise requires:

 

(a)           a term has the meaning assigned to
it;

 

(b)           an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP;

 

(c)           “or” is not exclusive;

 

(d)           “including” means including without
limitation;

 

(e)           “to” and “until” each mean “to but
excluding”;

 

(f)            any definition of or reference to
any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein);

 

28

 

(g)           any reference herein to any Person
shall be construed to include such Person’s successors and assigns;

 

(h)           words in the singular include the
plural and words in the plural include the singular;

 

(i)            unsecured Indebtedness shall not be
deemed to be subordinate or junior to secured Indebtedness merely by virtue of
its nature as unsecured Indebtedness;

 

(j)            the principal amount of any
non-interest bearing or other discount security at any date shall be the
principal amount thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP; and

 

(k)           the principal amount of any Preferred
Stock shall be (i) the maximum liquidation value of such Preferred Stock
or (ii) the maximum mandatory redemption or mandatory repurchase price
with respect to such Preferred Stock, whichever is greater.

 

ARTICLE 2.

 

THE NOTES

 

SECTION 2.01.              Form
and Dating.  Provisions relating to
the Initial Notes and the Exchange Notes to be issued in exchange for the
Initial Notes or otherwise as provided in this Indenture are set forth in the
Appendix, which is hereby incorporated in and expressly made a part of this
Indenture.  The Initial Notes and such
Exchange Notes shall be a separate series of Notes.  The Initial Notes and the Trustee’s certificate of
authentication shall each be substantially in the form of Exhibit A
hereto, which is hereby incorporated in and expressly made a part of this
Indenture.  The Exchange Notes to be
issued in exchange for the Initial Notes or otherwise pursuant to this
Indenture and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit B hereto, which is hereby
incorporated in and expressly made a part of this Indenture.  The Notes may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage (provided that any such notation, legend
or endorsement is in a form acceptable to the Company).  Each Note shall be dated the date of its
authentication.  The Notes shall be
issuable only in registered form without interest coupons and only in
denominations of $1,000 (in principal amount at Maturity) and multiples
thereof.  The Initial Notes and the
Exchange Notes shall be treated as a single class for all purposes under this
Indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase.

 

SECTION 2.02.              Execution
and Authentication.  One officer
shall sign the Notes for the Company by manual or facsimile signature.

 

If an officer whose
signature is on a Note no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid neverthe­less.

 

A Note shall not be valid
until an authorized signatory of the Trustee manually signs the certificate of
authentication on the Note.  The
signature shall be con­clusive evidence that the Note has been authenticated
under this Indenture.

 

29

 

The Trustee shall, upon
written direction of the Company, authenticate and make available for delivery
Notes as set forth in the Appendix.

 

The Trustee may appoint
an authenticating agent reasonably acceptable to the Company to authenticate
the Notes.  Any such appointment shall
be evidenced by an instrument signed by a Trust Officer, a copy of which shall
be furnished to the Company.  Unless
limited by the terms of such appoint­ment, an authenticating agent may authenti­cate
Notes whenever the Trustee may do so. 
Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. 
An authenticating agent has the same rights as any Registrar, Paying
Agent or agent for service of notices and demands.

 

SECTION 2.03.              Registrar
and Paying Agent.  (a) the Company
shall maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (the “Registrar”) and an office
or agency where Notes may be presented for payment (the “Paying Agent”).  The Registrar shall keep a register of the
Notes and of their transfer and exchange. 
The Company may have one or more co-registrars and one or more
additional paying agents.  The term
“Paying Agent” includes any additional paying agent, and the term “Registrar”
includes any co-registrars.  The Company
initially appoints the Trustee as (i) Registrar and Paying Agent in connection
with the Notes and (ii) the Notes Custodian with respect to the Global
Exchange Notes (as defined in the Appendix).

 

(b)           the Company shall enter into an
appropriate agency agreement with any Registrar or Paying Agent not a party to
this Indenture, which shall incorporate the terms of the TIA.  The agreement shall implement the provisions
of this Indenture that relate to such agent. 
The Company shall notify the Trustee in writing of the name and address
of any such agent.  If the Company fails
to maintain a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section
9.07.  The Company or any of its
domestically organized Wholly Owned Restricted Subsidiaries (other than any
member of the BCI Group) may act as Paying Agent or Registrar.

 

(c)           the Company may remove any Registrar
or Paying Agent upon written notice to such Registrar or Paying Agent and to
the Trustee; provided, however, that no such removal shall become
effective until (i) acceptance of an appointment by a successor as evidenced by
an appropriate agreement entered into by the Company and such successor
Registrar or Paying Agent, as the case may be, and delivered to the Trustee or
(ii) notification to the Trustee that the Trustee shall serve as Registrar or
Paying Agent until the appointment of a successor in accordance with clause (i)
above.  The Registrar or Paying Agent
may resign at any time upon written notice to the Company and the Trustee; provided,
however, that the Trustee may resign as Paying Agent or Registrar
only if the Trustee also resigns as Trustee in accordance with Section 9.08.

 

SECTION 2.04.              Paying
Agent to Hold Money in Trust.  On or
prior to each due date of the principal of and interest on any Note, the
Company shall deposit with, or to an account maintained by, the Paying Agent
(or if the Company or a Subsidiary is acting as Paying Agent, segregate and
hold in trust for the benefit of the Persons entitled thereto) a sum sufficient
to pay such principal and interest when so becoming due.  The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the

 

30

 

benefit
of Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or interest on the Notes and shall promptly notify the Trustee in
writing of any default by the Company in making any such payment.  If the Company or a Subsidiary of the
Company acts as Paying Agent, it shall segregate the money held by it as Paying
Agent and hold it as a separate trust fund. 
The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying
Agent.  Upon complying with this Section 2.04,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.

 

SECTION 2.05.              Holder
Lists.  The Trustee  shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders.  If the Trustee is
not the Registrar, the Company shall furnish, or cause the Registrar to furnish,
to the Trustee, in writing at least five Business Days before each Interest
Payment Date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Holders.

 

SECTION 2.06.              Transfer
and Exchange.  The Notes shall be
issued in registered form and shall be transferable only upon the surrender of
a Note for registration of transfer and in compliance with the Appendix.  When a Note is presented to the Registrar
with a request to register a transfer, the Registrar shall register the
transfer as requested if its requirements therefor are met.  When Notes are presented to the Registrar
with a request to exchange them for an equal principal amount of Notes of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met.  To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar’s request.  The Company may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges in
connection with any transfer or exchange pursuant to this Section 2.06.  The Company shall not be required to make
and the Registrar need not register transfers or exchanges of Notes selected
for redemption (except, in the case of Notes to be redeemed in part, the
portion thereof not to be redeemed) or any Notes for a period of 15 days before
a selection of Notes to be redeemed.

 

Prior to the due
presentation for registration of transfer of any Note, the Company, the
Guarantors, the Trustee, the Paying Agent and the Registrar may deem and treat
the Person in whose name a Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and (subject to
paragraph 2 of the Notes) interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and none of the
Company, the Guarantors, the Paying Agent, the Trustee or the Registrar shall
be affected by notice to the contrary.

 

Any Holder of a Global
Exchange Note shall, by acceptance of such Global Exchange Note, agree that
transfers of beneficial interest in such Global Exchange Note may be effected
only through a book-entry system maintained by (a) the Holder of such
Global Exchange Note (or its agent) or (b) any Holder of a beneficial
interest in such Global Exchange Note, and that ownership of a beneficial
interest in such Global Exchange Note shall be required to be reflected in a
book entry.

 

31

 

All Notes issued upon any
transfer or exchange pursuant to the terms of this Indenture shall evidence the
same debt and shall be entitled to the same benefits under this Indenture as
the Notes surrendered upon such transfer or exchange.

 

SECTION 2.07.              Replacement
Notes.  If a mutilated Note is
surrendered to the Registrar or if the Holder of a Note claims that the Note
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note if the requirements of
Section 8-405 of the New York Uniform Commercial Code are met, such that
the Holder (a) satisfies the Company or the Trustee within a reasonable
time after such Holder has notice of such loss, destruction or wrongful taking
and the Registrar does not register a transfer prior to receiving such
notification, (b) makes such request to the Company or the Trustee  prior to the Note being acquired by a
protected purchaser as defined in Section 8-303 of the New York Uniform
Commercial Code (a “protected purchaser”) and (c) satisfies any other
reasonable requirements of the Trustee. 
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Trustee to protect the
Company, the Trustee, the Paying Agent and the Registrar from any loss that any
of them may suffer if a Note is replaced. 
The Company and the Trustee may charge the Holder for their expenses in
replacing a Note.  In the event any such
mutilated, lost, destroyed or wrongfully taken Note has become or is about to
become due and payable, the Company in its discretion may pay such Note instead
of issuing a new Note in replacement thereof.

 

Every replacement Note is
an additional obligation of the Company.

 

The provisions of this Section 2.07
are exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, lost,
destroyed or wrongfully taken Notes.

 

SECTION 2.08.              Outstanding
Notes.  Notes outstanding at any
time are all Notes authenticated by the Trustee except for those canceled by
it, those delivered to it for cancellation and those described in this Section 2.08
as not outstanding.  Subject to Section 14.06,
a Note does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Note.

 

If a Note is replaced
pursuant to Section 2.07, it ceases to be outstanding unless the
Trustee and the Company receive proof satisfactory to them that the replaced
Note is held by a protected purchaser.

 

If the Paying Agent
segregates and holds in trust, in accordance with this Indenture, on a
Redemption Date, the Stated Maturity Date or maturity date money sufficient to
pay all principal and interest and Special Interest, if any, payable on that
date with respect to the Notes (or portions thereof) to be redeemed or
maturing, as the case may be, and the Paying Agent is not prohibited from
paying such money to the Holders on that date pursuant to the terms of this
Indenture, then on and after that date such Notes (or portions thereof) cease
to be outstanding and inter­est on them ceases to accrue.

 

SECTION 2.09.              Temporary
Notes.  Until Definitive Notes are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Notes.  Temporary Notes

 

32

 

shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Notes and deliver them in exchange for
temporary Notes upon surrender of such temporary Notes at the office or agency
of the Company, without charge to the Holder.

 

SECTION 2.10.              Cancellation.  The Company at any time may deliver Notes to
the Trustee for cancellation.  The
Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment or
cancellation and shall dispose of canceled Notes in accordance with its
customary procedures or deliver canceled Notes to the Company pursuant to
written direction by an officer.  The
Company may not issue new Notes to replace Notes it has redeemed, paid or
delivered to the Trustee for cancellation. 
The Trustee shall not authenticate Notes in place of canceled Notes
other than pursuant to the terms of this Indenture.

 

SECTION 2.11.              Defaulted
Interest.  If the Company defaults
in a payment of interest or Special Interest, if any, on the Notes, the Company
shall pay the defaulted interest (plus interest on such defaulted interest to
the extent lawful) in any lawful manner. 
The Company may pay the defaulted interest to the Persons who are
Holders on a subsequent special record date. 
The Company shall fix or cause to be fixed any such special record date
and payment date to the reasonable satisfaction of the Trustee and shall
promptly mail or cause to be mailed to each Holder a notice that states the
special record date, the payment date and the amount of defaulted interest to
be paid.

 

SECTION 2.12.              CUSIP
Numbers.  The Company in issuing the
Notes may use Committee on Uniform Securities Identification Procedures numbers
(the “CUSIP numbers”) (if then generally in use) and, if so, the Trustee
shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers.

 

ARTICLE 3.

 

REDEMPTION

 

SECTION 3.01.              Notices
to Trustee.  If the Company elects
to redeem Notes pursuant paragraph 5 of the Notes or is obligated to purchase
Notes pursuant to Section 4.09 or Section 4.10, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount at Maturity of Notes to be redeemed. 
The redemption provisions of paragraph 5 of the Notes are fully
incorporated herein.  The Trustee may
conclusively rely on an Officers’ Certificate and the calculations given
therein in making any redemption in accordance with paragraph 5 of the Notes.

 

33

 

The Company shall give
each notice to the Trustee provided for in this Section 3.01 at least 45
days before the Redemption Date unless the Trustee consents to a shorter
period.  Such notice shall be
accompanied by an Officers’ Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.  If fewer than all the Notes are
to be redeemed, the record date relating to such redemption shall be selected by
the Company and given to the Trustee, which record date shall be not fewer than
15 days after the date of notice to the Trustee.  Any such notice may be canceled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no
effect.

 

SECTION 3.02.              Selection
of Notes To Be Redeemed.  If fewer
than all the Notes are to be redeemed, the Trustee shall select the Notes to be
redeemed pro rata from all of the Holders. 
The Trustee shall make the selection from outstanding Notes not
previously called for redemption.  The
Trustee may select for redemption portions of the principal amount at Maturity
of Notes that have denominations larger than $1,000.  Notes and portions of them the Trustee selects shall be in
principal amounts at maturity of $1,000 or a multiple thereof.  Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.  The Trustee shall notify
the Company promptly of the Notes or por­tions of Notes to be redeemed.

 

SECTION 3.03.              Notice
of Redemption.  (a) At least
30 days but not more than 60 days before a date for redemp­tion of Notes,
the Company shall mail a notice of redemption by first-class mail, to each
Holder of Notes to be redeemed at such Holder’s registered address.

 

The notice shall identify
the Notes to be redeemed and shall state:

 

(i)            the Redemption Date;

 

(ii)           the Redemption Price and the amount
of accrued interest (including amounts to be accreted to principal of the
Notes) to the Redemption Date;

 

(iii)          the name and address of the Paying
Agent;

 

(iv)          that Notes called for redemption must
be surrendered to the Paying Agent to collect the Redemption Price;

 

(v)           if fewer than all the outstanding
Notes are to be redeemed, the certificate numbers and principal amount at
Maturity of the particular Notes to be redeemed;

 

(vi)          that, unless the Company defaults in
making such redemption payment or the Paying Agent is prohibited from making
such payment pursuant to the terms of this Indenture, interest and any Special
Interest on Notes (or portion thereof) called for redemption ceases to accrue
on and after the Redemption Date;

 

(vii)         the CUSIP number, if any, printed on
the Notes being redeemed; and

 

34

 

(viii)        that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.

 

(b)           At the Company’s written request, the
Trustee shall give the notice of redemption in the Company’s name and at the
Company’s expense.  In such event, the
Company shall provide the Trustee with the information required by this Section 3.03.

 

SECTION 3.04.              Effect
of Notice of Redemption.  Once
notice of redemption is mailed, Notes called for redemption become due and
payable on the Redemption Date and at the Redemption Price stated in the
notice.  Upon surrender to the Paying
Agent, such Notes shall be paid at the Redemption Price stated in the notice,
plus accrued interest and Special Interest, if any, to the Redemption Date; provided,
however, that if the Redemption Date is after a Regular Record Date
and on or prior to the Interest Payment Date, the accrued interest and Special
Interest, if any, shall be payable to the Holder of the redeemed Notes
registered on the relevant Regular Record Date.  Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice to any other Holder.

 

SECTION 3.05.              Deposit
of Redemption Price.  Prior to 10:00
a.m. (New York City time) on the Redemption Date, the Company shall deposit
with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent,
shall segregate and hold in trust) money sufficient to pay the Redemption Price
of, and accrued interest and Special Interest, if any, on all Notes to be
redeemed on that date other than Notes or portions of Notes called for
redemption that have been delivered by the Company to the Trustee for
cancellation.  On or after the
Redemption Date, interest shall cease to accrue on Notes or portions thereof
called for redemption so long as the Company has deposited with the Paying
Agent funds sufficient to pay the principal of, plus accrued and unpaid
interest and Special Interest, if any, on, the Notes to be redeemed, unless the
Paying Agent is prohibited from making such payment pursuant to the terms of
this Indenture.

 

SECTION 3.06.              Notes
Redeemed in Part.  Upon surrender of
a Note that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company’s expense) a new Note equal
in principal amount at Maturity to the unredeemed portion of the principal
amount at Maturity of the Note surrendered.

 

SECTION 3.07.               Tender
of Notes in Exercise of Warrants. 
The Warrant Agreement provides that the holder of a Warrant may exercise
such Warrant by surrendering a Note or a portion thereof then held by such
holder in payment of the exercise price for all Warrant Shares then exercised
equal to 100% of that portion of the Accreted Value of such Notes, which the
Holder thereof directs the Company to accept in payment of such exercise
price.  To the extent the Accreted Value
of such surrendered Note is greater than the aggregate amount of the exercise
price for all Warrant Shares then paid for by surrender thereof (exclusive of
the portion of such exercise price paid for by accrued interest, if any, on
such Surrendered Note), the Company shall deliver a new Note to the tendering
Holder thereof, in accordance with the provisions of this Indenture, dated the
date of the original issuance of the tendered Note, in the principal amount to
maturity which bears the same proportion to the principal amount at maturity of
such surrendered Note immediately prior to acceptance by the Company as the
remaining portion of the Accreted Value of such surrendered Note bears to the
Accreted Value of such surrendered Note immediately prior to acceptance by the
Company.  On the date the Company
accepts such

 

35

 

surrendered
Note in payment of the exercise price for the Warrants, the Company shall pay
all accrued and unpaid interest on the Accreted Value of the Notes cancelled
pursuant to this Section 3.07 up to but excluding such Redemption Date.

 

ARTICLE 4.

 

AFFIRMATIVE
COVENANTS

 

SECTION 4.01.              Payment
of Notes.

 

(a)           The Company shall pay the principal
of and interest on the Notes on or before the dates and in the manner provided
in the Notes and in this Indenture. 
Principal of and interest on the Notes shall be considered paid on the
date due if on such date the Trustee or the Paying Agent holds in accordance
with this Indenture money sufficient to pay all principal of and interest on
the Notes then due and the Trustee or the Paying Agent, as the case may be, is
not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture.

 

(b)           The Company shall pay interest on
overdue principal of the Notes at the rate specified therefor in the Notes and
shall pay interest on overdue installments of interest at the same rate to the
extent lawful.

 

SECTION 4.02.              Commission
Reports.  Whether or not required by
the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long
as the Notes are outstanding, the Company shall file with the Commission, and
provide the Trustee, Holders and prospective Holders (upon request) within 15
days after it files or is required to file them with the Commission, copies of
its annual report and the information, documents and other reports that are
specified in Section 13 and 15(d) of the Exchange Act.  In addition, the Company shall furnish to
the Trustee and the Holders, promptly upon their becoming available, copies of
the annual report to shareholders and any other information provided by the
Company to its public shareholders generally. 
The Company also shall comply with the other provisions of TIA §
314(a).  The receipt by the Trustee of
any such reports and documents pursuant to this Section shall not constitute
notice or constructive notice of any information contained in such documents or
determinable from information contained in such documents, including the
Company’s compliance with any covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers’ Certificates).

 

SECTION 4.03.              Preservation
of Corporate Existence.  The Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (a) its corporate existence, and the corporate, limited
liability company, partnership or other existence of each of its Restricted
Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Company or any such
Restricted Subsidiary (it being understood that legal name change may be made
based upon reasonable discretion of the Company) and (b) the rights
(charter and statutory) and licenses of the Company and its Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve or keep in full force and effect any such right or license, or the corporate,
limited liability company,

 

36

 

partnership
or other existence of any of its Restricted Subsidiaries if the loss thereof
does not and would not reasonably be expected to result in a Material Adverse
Effect.

 

SECTION 4.04.              Maintenance
of Properties.  The Company will
cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in
good condition, repair and working order, ordinary wear and tear excepted, and
will cause to be made all necessary repairs, renewals and replacements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly conducted; provided,
however,  that the foregoing
shall not prevent the Company from discontinuing the operation or maintenance
of any of such properties if such discontinuance does not and would not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 4.05.              Taxes

 

(a)           Payment of Taxes and Other Claims.  The Company shall pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
material Taxes for which the Company or any of its Restricted Subsidiaries
could be liable and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon the property of the
Company or any of its Restricted Subsidiaries; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such Tax or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings, provided that appropriate
reserves therefor are established in the Company’s consolidated financial
statements in accordance with GAAP.

 

(b)           Tax Returns.  The Company and its Restricted Subsidiaries
shall timely file or cause to be filed when due all material Tax Returns that
are required to be filed by or with respect to the Company or any of its
Subsidiaries for taxable years ending after the Closing Date and shall pay any
Taxes due in respect of such Tax Returns except as permitted under Section
4.05(a).

 

(c)           Transfer Taxes.  All transfer, transfer gains, documentary,
sales, use, stamp, registration and other similar Taxes and fees (including
costs and expenses relating to such Taxes) incurred in connection with the
consummation of the transactions contemplated by this Indenture shall be borne
by the Company.  The Holders shall
reasonably cooperate with the Company in the preparation and filing of any such
Tax Returns and other documentation.

 

SECTION 4.06.              Compliance
Certificate.  The Company shall
deliver to the Trustee within (a) 50 days after the end of each of the
first three fiscal quarters of the Company’s fiscal year, and (b) within 95
days of the end of the fiscal year of the Company, an Officers’ Certificate
made on behalf of the Company stating that in the course of the performance by
the signers of their duties as officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default
that occurred during such period.  If
they do, the certificate shall describe the Default, its status and what action
the Company is taking or proposes to take with respect thereto.  The Company also shall comply with
Section 314(a)(4) of the TIA.

 

37

 

SECTION 4.07.              Compliance
with Law.  The Company will, and
will cause each of its Restricted Subsidiaries to, comply with all Applicable
Laws and all Environmental Laws and will obtain and maintain, and will cause
each of its Restricted Subsidiaries to obtain and maintain, all Permits
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, except where and to the extent the failure to so
comply with Applicable Laws and all Environmental Laws or to obtain and
maintain in effect any such Permits could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.08.              Insurance.  The Company shall cause its Restricted
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and business against such
casualties and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as is customary in the case of entities
engaged in a similar businesses and owning similar properties in the same
general areas in which the Company and its Restricted Subsidiaries operate.

 

SECTION 4.09.              Offer
to Repurchase Upon Change of Control.

 

(a)           Upon the occurrence of a Change of
Control, the Company shall make an offer (a “Change of Control Offer”)
to each Holder to repurchase all or any part (equal to $1,000 of principal
amount at Maturity or a multiple thereof) of each Holder’s Notes at an offer
price in cash equal to 101% of the Accreted Value thereof, plus accrued and
unpaid interest thereon, if any, as of the Change of Control Payment Date (the
“Change of Control Payment”) in accordance with the terms set forth
below; provided, however, that, notwithstanding the
occurrence of a Change of Control, the Company shall not be obligated to
purchase the Notes pursuant to this Section 4.09 in the event that it has
exercised its right to redeem all the Notes under paragraph 5 of the
Notes.  The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control, and the Company shall not be in violation of
this Indenture by reason of any act required by such rule or other Applicable
Law.

 

(b)           Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder stating:

 

(i)            that the Change of Control Offer is
being made pursuant to this Section 4.09 and that all Notes
tendered will be accepted for payment;

 

(ii)           the purchase price and the purchase
date, which shall be at least 10 Business Days but no more than
60 days from the date on which the Company mails notice of the Change of Control
(the “Change of Control Payment Date”);

 

(iii)          that Holders electing to have any
Notes purchased pursuant to a Change of Control Offer shall be required to
surrender the Notes, with the form entitled “Option of Holder to Elect
Purchase” on the reverse of the Notes completed, to the

 

38

 

Paying Agent for such purpose, at the address
specified in the notice prior to the close of business on the third Business
Day preceding the Change of Control Payment Date;

 

(iv)          that Holders will be entitled to
withdraw their election if the Company or its designated agent for such
purpose, receives, not later than the close of business on the second Business
Day preceding the Change of Control Payment Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and

 

(v)           other information required to be
included pursuant to Section 3.03.

 

(c)           On the Change of Control Payment
Date, the Company shall, to the extent lawful, (i) accept for payment all Notes
or portions thereof properly tendered pursuant to the Change of Control Offer
and (ii) pay to the Holders of Notes or portions thereof so tendered an amount
equal to the Change of Control Payment in respect of all Notes or portions
thereof so tendered.  The Company shall
promptly mail or deliver by wire transfer to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Company shall promptly
execute and mail (or cause to be transferred by book-entry) to each Holder a
new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, however, that each such new Note
shall be in a principal amount at Maturity of $1,000 or a multiple thereof.

 

(d)           In the event that at the time of such
Change of Control the terms of any Senior Indebtedness restrict or prohibit the
repurchase of Notes pursuant to this Section 4.09, then prior to
the mailing of the notice to Holders provided for in Section 4.09(b)
but in any event within 30 days following any Change of Control, the
Company shall (i) repay in full all such Senior Indebtedness or offer to repay
in full all such Senior Indebtedness and repay such Senior Indebtedness of each
lender or holder who has accepted such offer or (ii) obtain the requisite
consent under such Senior Indebtedness to permit the repurchase of the Notes as
provided for in Section 4.09(c).

 

(e)           The Company shall not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in a manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.09 and
such third party purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.

 

SECTION 4.10.               Offer
to Purchase by Application of Excess Proceeds.

 

(a)           In the event that, pursuant to Section
5.05, the Company shall be required to commence an offer to all Holders to
purchase Notes (an “Asset Sale Offer”), it shall follow the procedures
specified in this Section 4.10. 
Each Asset Sale Offer shall remain open for not less than ten (10)
Business Days nor more than sixty (60) days immediately following its
commencement, except to the extent that a longer period is required by
Applicable Law (the “Offer Period”).

 

39

 

(b)           Upon the commencement of an Asset
Sale Offer, the Company shall send, by first class mail, a notice to each of
the Holders which shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer.  The Asset Sale Offer shall be made to all
Holders.  The notice, which shall govern
the terms of the Asset Sale Offer, shall state:

 

(i)            that
the Asset Sale Offer is being made pursuant to this Section 4.10 and Section
5.05 and the length of time the Asset Sale Offer shall remain open;

 

(ii)           the
Offer Amount and the Purchase Date;

 

(iii)          that
Holders electing to have a Note purchased pursuant to any Asset Sale Offer
shall be required to surrender the Note, with the form entitled “Option of
Holder to Elect Purchase” on the reverse of the Note completed to the Company
at the address specified in the notice at least three Business Days before the
Purchase Date;

 

(iv)          that
Holders shall be entitled to withdraw their election if the Company receives,
not later than the second Business Day prior to the expiration of the Offer
Period, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such Note
purchased; and

 

(v)           other
information required to be included pursuant to Section 3.03.

 

(c)           On or before the Business Day
immediately after the termination of the Offer Period (the “Purchase Date”),
the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary,
Notes or portions thereof tendered pursuant to the Asset Sale Offer with an
Accreted Value equal to the Accreted Value required to be purchased pursuant to
Section 5.05 plus accrued and unpaid interest, if any, thereon to the
Purchase Date (the “Offer Amount”) or, if the Accreted Value of Notes
tendered is less than the Offer Amount, the Company shall purchase all Notes
tendered in response to the Asset Sale Offer. 
Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.  The Company
shall promptly (but in any case not later than five (5) Business Days after the
Purchase Date) mail or deliver by wire transfer to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a
new Note and deliver it to such Holder, in a principal amount at Maturity equal
to any unpurchased portion of the Note surrendered.  Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof.

 

SECTION 4.11.              Other
Covenants.  The Company hereby
agrees, to the extent reasonably practicable but subject to the limitations set
forth in Section 5.11:

 

(a)           To maintain the books and records of
the Cincinnati Bell Group separate from the BCI Group;

 

(b)           Not to commingle assets of the
Cincinnati Bell Group with those of the BCI Group, except as permitted to be
invested to effect the Centralized Cash Management

 

40

 

System
pursuant to Section 5.02(f)(ix) of the Credit Agreement, as in effect on
the date of this Indenture;

 

(c)           To maintain separate financial
statements of the Cincinnati Bell Group from those of the BCI Group, which financial
statements need not (except as provided in Section 9 of the Purchase
Agreement) be separately audited or reviewed by an independent accounting firm;

 

(d)           To observe all material corporate,
partnership or limited liability company (as applicable) formalities;

 

(e)           Not to pay the salaries of the
Cincinnati Bell Group employees with funds of the BCI Group and vice versa,
except, in the case of payments of salaries of management employees of the BCI
Group with the funds of the Cincinnati Bell Group, for any such payments made
in the Ordinary Course of Business;

 

(f)            Other than as required under the
Credit Documents or pursuant to the terms of any documents governing Existing
Indebtedness, not to guarantee or become obligated for the debts of the BCI
Group or hold out its credit as being available to satisfy the obligations of
the BCI Group;

 

(g)           Other than as required under the
Credit Documents or pursuant to the terms of any documents governing Existing
Indebtedness, not to pledge the assets of the Cincinnati Bell Group for the
benefit of the BCI Group; and

 

(h)           To hold itself out as a separate
entity from the BCI Group.

 

SECTION 4.12.              Further
Assurances.  The Company shall, upon
the request of Holders, execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the provisions of this Indenture.

 

SECTION 4.13.              Future
Guarantors.  Subject to Section
11.02(b), the Company shall cause each Restricted Subsidiary that is (a)
acquired or formed after the Closing Date and is a Restricted Subsidiary that
is also a guarantor under the Credit Agreement or (b) an existing Restricted
Subsidiary that becomes a guarantor under the Credit Agreement to become a
Guarantor, and, if applicable, to execute and deliver to the Trustee a
supplemental guarantee in the form of Exhibit C pursuant to which such
Restricted Subsidiary will guarantee payment of the Notes.

 

SECTION 4.14.              Approvals.  The Company agrees to exercise commercially
reasonable efforts, and shall cause its Restricted Subsidiaries to exercise
commercially reasonable efforts, to obtain any approval of the Federal
Communications Commission, any public utility or service commission or any
other Governmental Authority for any action or transaction contemplated by this
Indenture that is then required by Applicable Law, except where the failure to
obtain any such approval could not, individually and in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

41

 

ARTICLE 5.

 

NEGATIVE
COVENANTS APPLICABLE TO COMPANY AND ITS SUBSIDIARIES

 

SECTION 5.01.              Stay,
Extension and Usury Laws.  The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of its obligations under the Notes or this Indenture, and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants (to the extent that it may
lawfully do so) that it shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holders, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.

 

SECTION 5.02.              Restricted
Payments.  (a) The Company shall
not, and shall not permit any of its Restricted Subsidiaries to, (i) declare or
make any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any class of
Capital Stock (including any payment in connection with a merger or
consolidation involving the Company or any of its Restricted Subsidiaries),
except (x) dividends or distributions payable solely in its Capital Stock
(other than Disqualified Capital Stock or Capital Stock convertible into or exchangeable
for Disqualified Capital Stock) and (y) dividends or distributions payable to
the Company or to a Restricted Subsidiary (and, if the Restricted Subsidiary
making such dividend or distribution has equityholders other than the Company
or another Restricted Subsidiary, to such equityholders on a pro rata basis),
(ii) purchase, redeem or otherwise acquire for value any shares of Capital
Stock of the Company or any of its Restricted Subsidiaries now or hereafter
outstanding held by a Person other than the Company or another Restricted
Subsidiary, (iii) make any payment or prepayment of principal of, premium, if
any, interest, redemption, exchange, purchase, retirement, defeasance, sinking
fund or other payment with respect to, any Subordinated Indebtedness prior to
scheduled maturity, scheduled payment, scheduled repayment or scheduled sinking
fund payment thereof (except redemption, exchange, purchase, retirement,
defeasance, sinking fund or other payment within six months of the final
maturity thereof; provided that
no such redemption, exchange, purchase, retirement, defeasance, sinking fund or
other payment may be made prior to the final maturity may be made with respect
to the Convertible Subordinated Notes) or (iv) make any Restricted Investments
(the items described in clauses (i), (ii), (iii), and (iv)
are referred to as “Restricted Payments”); except that the Company or
any Restricted Subsidiary of the Company may make a Restricted Payment if at
the time of and after giving effect to such Restricted Payment;

 

(A)          no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof; and

 

(B)           the Company could, at the time such
Restricted Payment was made and after giving pro forma effect thereto as if
such Restricted Payment had been made at the beginning of the applicable
four-fiscal quarter period, have been permitted to Incur at least $1.00 of
additional Indebtedness pursuant to Section 5.04(a) hereof; and

 

42

 

(C)           such Restricted Payment, together
with the aggregate of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by Section 5.02(b)(i) through (v), inclusive, (viii)
and (ix)), is less than the sum, without duplication, of (1) the
Applicable Percentage of the Consolidated Net Income for the period (taken as
one accounting period) from the beginning of (x) if the Closing Date occurs in
the first half of a fiscal quarter, such fiscal quarter or (y) if the Closing
Date occurs in the second half of a fiscal quarter, the fiscal quarter
commencing after the Closing Date, in each case, to the end of the Company’s
most recently ended fiscal quarter for which internal financial statements of
the Company and its Restricted Subsidiaries are, or should have been, available
in accordance with the Transaction Documents at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (2) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (x) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (y) the initial amount of such Restricted Investment, plus
(3) the amount equal to the net reduction in Investments in Unrestricted
Subsidiaries resulting from the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued as provided in the definition of the
“Investment”), plus (4) net cash dividends or other net cash
distributions paid to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries (for the avoidance of doubt, only to the extent not
included in clause (1) above) but only for the purpose of making (x) prior to
the Distribution Date, Restricted Investments and (y) after the Distribution
Date any Restricted Payments (whether or not constituting Restricted
Investments), plus (5) the aggregate Net Proceeds received by the
Company from the issue or sale of its Capital Stock (other than Disqualified
Capital Stock) or other capital contributions subsequent to the date of this
Indenture (other than Net Proceeds received from an issuance or sale of such
Capital Stock to a Subsidiary of the Company or an employee stock ownership
plan, option plan or similar trust to the extent such sale to an employee stock
ownership plan, option plan or similar trust is financed by loans from or
guaranteed by the Company or any Restricted Subsidiary), but only for the
purpose of making (x) prior to the Distribution Date, Restricted Investments
and (y) after the Distribution Date any Restricted Payments (whether or not constituting
Restricted Investments), plus (6) aggregate net cash proceeds received
by the Company from the issue or sale since the Closing Date of debt securities
that have been converted into Capital Stock (other than Disqualified Capital
Stock) of the Company, but only for the purpose of making (x) prior to the
Distribution Date, Restricted Investments and (y) after the Distribution Date
any Restricted Payments (whether or not constituting Restricted Investments).

 

(b)           The foregoing provisions shall not
prohibit any of the following if no Default or Event of Default shall have
occurred and be continuing immediately after any such transaction:

 

43

 

(i)            the
defeasance, redemption or repurchase of (x) Subordinated Indebtedness with the
net cash proceeds from an Incurrence of Permitted Refinancing Indebtedness or
the substantially concurrent sale (other than to a Subsidiary of the Company)
of Capital Stock of the Company or (y) Convertible Preferred Stock or other Capital
Stock of the Company with the net cash proceeds from the substantially
concurrent sale (other than to a Subsidiary of the Company) of Capital Stock of
the Company (other than the Disqualified Capital Stock);

 

(ii)           the
pro rata redemption or repurchase by any Restricted Subsidiary of the Company
of its Common Stock;

 

(iii)          the
making by the Company of regularly scheduled payments in respect of any
Subordinated Indebtedness permitted hereby in accordance with the terms of, and
only to the extent required by, and subject to the subordination provisions
contained in, any agreement pursuant to which such Subordinated Indebtedness
was issued; provided that the
regularly scheduled payments in respect of Convertible Subordinated Notes
permitted by this clause (iii) may not exceed an effective rate of 10% per
annum;

 

(iv)          the
making by the Company and its Restricted Subsidiaries of Permitted
Acquisitions;

 

(v)           the
making by the Company of (x) regularly scheduled dividend payments in respect
of 6 3⁄4% Cumulative Convertible Preferred Stock of the Company in accordance
with the terms thereof and (y) regularly scheduled interest payments (excluding
any common and non-redeemable preferred equity component thereof) in respect of
Alternative Mezzanine Debt in accordance with the terms thereof;

 

(vi)          dividends
paid within 60 days after the date of declaration thereof if at such date
of declaration such dividend would have complied with Section 5.02(a);

 

(vii)         the
repurchase or other acquisition of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees, former
employees, directors or former directors of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto) approved by
the Board of Directors of the Company under which such individuals purchase or
sell or are granted the option to purchase or sell, shares of such common
stock; provided, however, that the aggregate amount of such repurchases shall
not exceed $2,000,000 in any calendar year;

 

(viii)        the issuance of common stock of the Company to officers,
directors and employees as part of compensation arrangements;

 

(ix)           the
making by the Company and its Restricted Subsidiaries of other Restricted
Payments not to exceed $5,000,000 in the aggregate since the date of this
Indenture; and

 

44

 

(x)            the
making by the Company and its Restricted Subsidiaries of Restricted Payments
permitted to be made by Section 5.11.

 

(c)           The amount of all Restricted Payments
(other than cash) shall be the fair market value (evidenced by a resolution of
the Board of Directors set forth in an Officers’ Certificate delivered to the
Trustee) on the date of the Restricted Payment of the asset(s) proposed to be
transferred by the Company or such Subsidiary, as the case may be, pursuant to
the Restricted Payment.

 

SECTION 5.03.              Dividend
and Other Payment Restrictions Affecting Subsidiaries.  The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to
(a)(i) pay dividends or make any other distributions to the Company with
respect to any Capital Stock of such Restricted Subsidiary or any other
interest or participation in, or measured by, such Restricted Subsidiary’s
profits, or (ii) pay any Indebtedness owed by such Restricted Subsidiary
to the Company or any of the Company’s other Restricted Subsidiaries,
(b) make loans or advances to the Company or any of the Company’s Restricted
Subsidiaries or (c) transfer any of such Restricted Subsidiary’s
properties or assets to the Company or any of the Company’s Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) existing Indebtedness and agreements listed on Schedule
5.03, in each case, as in effect on the date of this Indenture,
(ii) the Credit Documents as in effect as of the date of this Indenture,
and any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or Refinancings thereof permitted hereunder, provided,
however, that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or Refinancings are
not materially more restrictive with respect to such provisions than those
contained in the Credit Documents on the date hereof, (iii) this Indenture
and the Notes, (iv) Applicable Law, (v) any encumbrance or
restriction (1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract or (2) contained in security agreements
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such encumbrance or restriction restricts the transfer of the property subject
to such security agreements, (vi) capital leases or purchase money
obligations for property acquired in the Ordinary Course of Business that
impose restrictions of the nature described in clause (v) above on the
property so acquired, (vii) Permitted Refinancing Indebtedness; provided,
however, that such restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not materially more
restrictive than those contained in the agreements governing the Indebtedness
being Refinanced, (viii) any instrument governing Indebtedness, Capital
Stock or assets of a Person acquired by the Company or any of the Company’s
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such instrument was created or such Indebtedness was Incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided
that, in the case of Indebtedness, such Indebtedness was permitted
by the terms of this Indenture to be Incurred, (ix) secured Indebtedness
otherwise permitted to be Incurred pursuant to this Indenture that limits the
right of the debtor thereunder to dispose of the assets securing such
Indebtedness, (x) contracts for the sale of assets, including without
limitation customary restrictions with respect to a Subsidiary

 

45

 

pursuant
to an agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary,
(xi) restrictions on deposits or minimum net worth requirements imposed by
customers under contracts entered into in the Ordinary Course of Business,
(xii) customary provisions in joint venture agreements, licenses and leases and
other similar agreements entered into in the Ordinary Course of Business,
(xiii) any encumbrance or restriction contained in an agreement evidencing
Indebtedness of a Restricted Subsidiary permitted to be Incurred subsequent to
the Closing Date pursuant to Section 5.04; provided, however,
that such encumbrance or restriction applies only in the event of and during
the continuance of a default contained in such agreement and (xiv) any
encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (i) through (xiii) above; provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith
judgment of the Board of Directors of the Company, no more restrictive with
respect to such dividend and other payment restrictions than those contained in
the dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.

 

SECTION 5.04.              Incurrence
of Indebtedness and Issuance of Preferred Stock

 

(a)           The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, Guarantee or otherwise become directly or indirectly
liable, contingently or otherwise (including by operation of law), with respect
to (collectively, “Incur”) any Indebtedness (including Acquired
Indebtedness) and shall not permit any of its Restricted Subsidiaries to issue
any Preferred Stock; provided, however, that the Company and the
Guarantors may Incur Indebtedness (including Acquired Indebtedness), and the
Company and the Guarantors may guarantee such Indebtedness, if immediately
after the Incurrence of such Indebtedness, both (i) prior to the Distribution
Date, the Consolidated EBITDA to Consolidated Interest Ratio for the most
recent four full fiscal quarter period for which consolidated financial
statements of the Company and its Restricted Subsidiaries are, or should have
been, available in accordance with the Transaction Documents is 3.0 to 1.00 or
greater (this test is referred to herein as the “Interest Coverage Test”),
and (ii) the Consolidated Adjusted Debt to Adjusted EBITDA Ratio is less than
(A) 4.75 to 1.00 if such Incurrence occurs on or prior to December 31, 2002,
(B) 4.5 to 1.00 if such Incurrence occurs on or after January 1, 2003 and on or
prior December 31, 2003, (C) 4.25 to 1.00 if such Incurrence occurs on or after
January 1, 2004 and on or prior December 31, 2004 or (D) 4.00 to 1.00 if such
Incurrence occurs on or after January 1, 2005 (the test set forth in
sub-paragraph (ii) hereof is referred to herein as “Leverage Test”).  For the purpose of the calculation of the
Leverage Test (both before and after the Distribution Date) and, prior to the
Distribution Date, the Interest Coverage Test, with respect to any period
included in such calculation, Consolidated EBITDA, the components of
Consolidated Interest Expense, and Consolidated Adjusted Debt and Capital
Expenditures shall be calculated with respect to such period by the Company in
good faith on a pro forma basis (including and consistent with Permitted Adjustments),
giving effect to any Permitted Acquisition, Asset Disposition or Incurrence or
redemption or repayment of Indebtedness that has given rise to the need for
such calculation, has occurred during such period or has occurred after such
period and on or prior to the date of such calculation (each a “Subject

 

46

 

Transaction”), including, with regards to
Permitted Acquisitions and Asset Dispositions, by using the historical
financial statements of any business so acquired or to be acquired or sold or
to be sold and the consolidated financial statements of the Company and its
Restricted Subsidiaries which shall be reformulated as if such Subject
Transaction, and any Indebtedness Incurred or redeemed or repaid in connection
therewith, had been consummated or Incurred or redeemed or repaid at the
beginning of such period (and assuming that such Indebtedness bears interest
during any portion of the applicable measurement period prior to the relevant
acquisition at the weighted average of the interest rates applicable to
outstanding revolving loans under the Credit Agreement Incurred during such
period).

 

(b)           The foregoing provisions shall not
apply to:

 

(i)            the
Incurrence by the Company and its Restricted Subsidiaries of the Existing
Indebtedness (including, without limitation, all pay-in-kind interest under the
Convertible Subordinated Indenture; provided
that the Company will not permit the rate of interest on the Convertible
Subordinated Notes to exceed of 10% per annum);

 

(ii)           the
Incurrence by the Company and its Restricted Subsidiaries of the Indebtedness
represented by the Notes and the Guarantees (including the Exchange Guarantees)
thereof, as the case may be;

 

(iii)          the
Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by (A) Capitalized Lease Obligations, mortgage financings or
purchase money Indebtedness, in each case, Incurred for the purpose of
financing all or any part of the purchase price or cost of construction,
repair, addition to or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal amount,
together with the principal amount of all Indebtedness incurred pursuant to
clause (xx) below, not to exceed (without duplication) the Applicable Capital
Lease Amount at any one time outstanding and (B) other short-term purchase
money Indebtedness the term of which does not exceed six (6) months, in an
aggregate principal amount not to exceed (without duplication) $10,000,000 at
any one time outstanding;

 

(iv)          the
Incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to extend, Refinance, renew, replace, defease or refund, Indebtedness that was
permitted by this Indenture to be Incurred by the Company or such Restricted
Subsidiary;

 

(v)           the
Incurrence by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness (A) between or among the Company and any Wholly Owned Restricted
Subsidiaries of the Company and CBW (provided
that, in the case of Indebtedness incurred by CBW, such intercompany
Indebtedness shall not exceed $300,000,000 at any time outstanding) and (B)
consisting of debits and credits among the Company and its Restricted
Subsidiaries pursuant to the Centralized Cash Management System; provided, however,
that (1) any intercompany Indebtedness which is borrowed by the Company or a
Restricted Subsidiary from a Restricted Subsidiary that is not a

 

47

 

Guarantor shall be expressly subordinated to the Notes and
(2) (x) any subsequent issuance or transfer of Capital Stock that results in
any such Indebtedness being held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary of the Company or CBW, or (y) any sale or other
transfer of any such Indebtedness to a Person other than the Company, a Wholly
Owned Restricted Subsidiary of the Company or CBW, or a lender or agent upon
exercise of remedies under a pledge of such Indebtedness under the Credit
Documents, shall be deemed, in each case of the foregoing clauses (2)(x) and
(y), to constitute an Incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;

 

(vi)          the
Incurrence by the Company or any of its Restricted Subsidiaries of Interest
Swap Obligations that are Incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding;

 

(vii)         the
Incurrence by the Company and its Restricted Subsidiaries of Indebtedness
evidenced by the Credit Documents (and the Guarantees thereof by the Company
and the Company’s Subsidiaries) in a principal amount not exceeding
$1,705,041,000 less the amount of all term loan repayments and permanent
reductions of term and revolving loan commitments actually made under the
Credit Agreement; provided that,
to the extent that the loans under the Credit Agreement are repaid (and
corresponding commitments are permanently reduced) with the proceeds of the New
Notes (as defined in the Credit Agreement) other than the Notes and such New
Notes were Incurred pursuant to this clause (vii), such repayment shall not
reduce the aggregate amount of Indebtedness permitted to be Incurred pursuant
to this clause (vii); and, provided,
further, that, notwithstanding
the limitations set forth in this clause (vii), in the event of any permanent
reduction or repayment of the Credit Agreement’s revolving facility, the
Company and its Restricted Subsidiaries shall have the right to obtain
additional commitments under, and extend the maturity of, such revolving
facility (and Incur additional revolving Indebtedness pursuant to such
additional commitments) in an amount not exceeding the amount of such permanent
reduction; provided that the
aggregate amount of all such additional commitments obtained by the Company and
its Restricted Subsidiaries since the date of this Indenture does not exceed
$100,000,000;

 

(viii)        the Incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness under Currency Agreements;

 

(ix)           the
Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the Ordinary Course of
Business;

 

(x)            the
Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
of the Company or any of its Restricted Subsidiaries represented by letters of
credit for the account of the Company or such Restricted Subsidiary, as the
case may be, in order to provide security for workers’ compensation

 

48

 

claims, payment obligations in connection with self-insurance
or similar requirements in the Ordinary Course of Business;

 

(xi)           the
Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
in respect of performance bonds, bankers’ acceptances, workers’ compensation
claims, completion guarantees, letters of credit surety or appeal bonds,
payment obligations in connection with self-insurance or similar obligations Incurred
in the Ordinary Course of Business;

 

(xii)          the
Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness
of the Company or a Restricted Subsidiary of the Company that was permitted to
be Incurred by another provision of this Section 5.04;

 

(xiii)         Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification, adjustment
of purchase price or similar obligations, in each case, Incurred in connection
with an Asset Disposition permitted by this Indenture or a Permitted
Acquisition or other sale or disposition of assets permitted under this
Indenture;

 

(xiv)        Indebtedness
arising from agreements of the Company or a Restricted Subsidiary of the
Company (including the Exchange and Registration Rights Agreement, and similar
contractual undertakings) providing for indemnification and payment of expenses
relating to the registration under the Securities Act of the sale of Capital
Stock of the Company or the Notes;

 

(xv)         Indebtedness
permitted to be Incurred by Section 5.11;

 

(xvi)        the
Incurrence of Indebtedness by the Company as a result of its indemnification
obligations permitted pursuant to Section 5.06(c) and Section 5.06(d);

 

(xvii)       endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;

 

(xviii)      Indebtedness of a Restricted Subsidiary that is not a Guarantor
Incurred and outstanding on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred in
contemplation of, in connection with, as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Subsidiary of or was otherwise acquired by the Company); provided, however,
that on the date that such Restricted Subsidiary is acquired by the Company,
the Company would have been able to Incur $1.00 of additional Indebtedness (x)
prior to the Distribution Date, pursuant to the definition of the “Other Senior
Indebtedness” (without regard to the dollar limit set forth therein) and
pursuant to Section 5.04(a) and (y) after the Distribution Date,
pursuant to Section 5.04(a), in each case, after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (xviii);

 

49

 

(xix)         the
Incurrence by the Company of unsecured short-term Indebtedness in the Ordinary
Course of Business in the form of swing lines of credit and overdraft
protection lines of credit in an aggregate principal amount not to exceed
$20,000,000; provided that the
amount of Indebtedness permitted to be incurred pursuant to clause (vii) above shall
be reduced by the amount of Indebtedness outstanding pursuant to this clause
(xix);

 

(xx)          in
the case of CBT, the Incurrence by CBT of Indebtedness to finance Capital
Expenditures mandated by the Ohio, Indiana or Kentucky Public Utilities
Commission; provided that (x) at
the time such Capital Expenditures must be made, CBT is not permitted to Incur
Indebtedness under any other provision of this Section 5.04 and does not
have sufficient internally-generated funds to make such Capital Expenditures
and (y) the aggregate amount of such Indebtedness at any one time outstanding,
together with all Indebtedness outstanding pursuant to Section
5.04(b)(iii)(A) does not exceed the Applicable Capital Lease Amount;

 

(xxi)         the
Incurrence of Attributable Debt with respect to Sale and Leaseback Transactions
by CBW and CBT of towers and associated equipment, cabling, antennae and other
appurtenances thereto, in each case, used in the operation of CBW’s wireless
business; provided that the proceeds of such Indebtedness shall be used
to prepay Indebtedness under the Credit Agreement in accordance with Section
5.05;

 

(xxii)        in the case of CBW Co., the incurrence of Indebtedness
secured by, and recourse only to, the Spectrum Assets not to exceed $60,000,000
in aggregate principal amount at any time outstanding; provided that the
proceeds of such Indebtedness shall be used to prepay Indebtedness under the
Credit Agreement; and

 

(xxiii)       the Incurrence on the Closing Date of the Alternative
Mezzanine Debt.

 

(c)           For purposes of determining
compliance with this Section 5.04, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of
Indebtedness described in clauses (i) through (xxi) of the immediately
preceding paragraph or is entitled to be Incurred pursuant to Section
5.04(a), the Company shall, in its sole discretion, classify (or later
reclassify) such item of Indebtedness in any manner that complies with Section 5.04
and will only be required to include the amount and type of such Indebtedness
in one of such clauses of Section 5.04(b) or pursuant to Section
5.04(a).  Accrual of interest,
accretion of accreted value, amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness with
the same terms as the Indebtedness on which such interest is being paid and any
other issuance of securities paid-in-kind shall not be deemed to be an
Incurrence of Indebtedness for purposes of Section 5.04.  In addition, the Company may, at any time,
change the classification of an item of Indebtedness (or any portion thereof)
to any other clause of Section 5.04(b) or to Indebtedness properly
Incurred under Section 5.04(a)  provided that the Company would be
permitted to Incur such item of Indebtedness (or portion thereof) pursuant to
such other clause of this Section 5.04(b) or Section 5.04(a), as
the case may be, at such time of reclassification.

 

50

 

(d)           Notwithstanding anything herein to
the contrary, the Company shall not, and shall not permit any of its Restricted
Subsidiaries to, Incur or permit to exist any Indebtedness entered into after
the date of this Indenture unless, subject to the proviso of clause (i) to the
definition of the “Unrestricted Subsidiary,” the documents governing
such Indebtedness designate each member of the BCI Group as an “unrestricted
subsidiary” (or provide for equivalent treatment of the BCI Group if
designation of unrestricted subsidiaries is not customary for such type of
Indebtedness) and restricts the dealings among the Company and its Restricted
Subsidiaries, on the one hand, and the BCI Group, on the other hand, at least
to the same extent and with the same effect as under this Indenture and
consistent with Sections 5.01(t) and 5.02 (insofar as it relates to the
Permitted Obligations and Permitted BCI Transactions (each as defined in the
Credit Agreement)) of the Credit Agreement as in effect on the date of this
Indenture.

 

SECTION 5.05.              Asset
Dispositions.

 

(a)           The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, consummate any Asset Disposition
(provided
that the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole shall be governed by the provisions of Article 6 and not by the
provisions of this Section 5.05) unless all of the following
conditions are met:  (i)  the
aggregate fair market value of assets sold or otherwise disposed of in Asset Dispositions
in any fiscal year of the Company does not exceed $20,000,000; provided that the limitation of this
clause (i) shall not apply to: (1) prior to the Distribution Date, Asset
Dispositions that do not involve CBT Assets or CBW Assets, the Net Proceeds of
which are applied substantially concurrently with the receipt thereof, in
accordance with clause (c) below; (2) after the Distribution Date, Asset
Dispositions that do not involve CBT Assets, the Net Proceeds of which are
applied substantially concurrently with the receipt thereof, in accordance with
clause (c) below; (3) Asset Dispositions by CBW Co. of Spectrum Assets, so long
as Net Proceeds of such Asset Dispositions are applied substantially
concurrently with the receipt thereof, in accordance with clause (c) below; (4)
Asset Dispositions by CBW and CBT of towers and associated equipment, cabling,
antennae and other appurtenances thereto, in each case, used in the operations
of CBW’s wireless business, so long as such Asset Dispositions are made as Sale
and Leaseback Transactions and the Net Proceeds of such Asset Dispositions are
applied substantially concurrently with the receipt thereof, in accordance with
clause (c) below; and (5) Permitted Asset Swaps;  (ii) the consideration received is at least equal to the
fair market value of such assets (except as the result of (x) any foreclosure
or sale by the lenders under the Credit Documents or (y) Net Proceeds received
from an insurer or a Governmental Authority, as the case may be, in the event of
loss, damage, destruction or condemnation); (iii) in the case of Asset
Dispositions that are not Permitted Asset Swaps, at least 80% of the
consideration received is cash or Cash Equivalents; and (iv) prior to the
Distribution Date, no Default or Event of Default then exists or shall result
from such Asset Disposition; provided, however, that the amount of
(x) any liabilities (as shown on the Company’s or such Restricted
Subsidiary’s most recent balance sheet) of the Company or any Restricted
Subsidiary that are assumed by the transferee of any such assets pursuant to
any arrangement releasing the Company or such Restricted Subsidiary from
further liability and (y) any securities, notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are converted by the Company or such Restricted Subsidiary into cash or
Cash

 

51

 

Equivalents
within 90 days after the Asset Disposition (to the extent of the cash received),
shall be deemed to be cash for purposes of this provision.

 

(b)           Subject to clause (a)(i) above,
within 365 days after the receipt of any Net Proceeds from an Asset
Disposition, the Company or the Restricted Subsidiary making such Asset
Disposition, as the case may be, may, at its option, apply such Net Proceeds
(i) to permanently reduce Senior Indebtedness or any Indebtedness of the
Restricted Subsidiaries of the Company which are not Guarantors, or to purchase
the Notes (with the consent of the Holders thereof to the extent required) or
Indebtedness ranking pari passu with the Notes (and to
correspondingly reduce commitments with respect thereto, to the extent
applicable) or (ii) to the acquisition of a controlling interest in
another business, the making of Capital Expenditures or the investment in or
acquisition of other long-term assets, in each case, in the same or a similar
line of business as the Company and its Subsidiaries engaged in at the time
such assets were sold or in a business reasonably related, complementing or
ancillary thereto or a reasonable expansion thereof.  Pending the final application of any such Net Proceeds, the
Company may temporarily reduce revolving credit Indebtedness under the Credit
Agreement or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture.  Any Net
Proceeds from Asset Dispositions that are not applied or invested as provided
in the first sentence of this paragraph shall be deemed to constitute “Excess
Proceeds.”  When the aggregate
amount of Excess Proceeds exceeds in any fiscal year $5,000,000, the Company
shall make an Asset Sale Offer pursuant to Section 4.10 to purchase
the maximum Accreted Value of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the
outstanding Accreted Value thereof, plus accrued and unpaid interest, thereon
to the date of purchase, in accordance with the procedures set forth in Section 4.10;
provided, however, that if the Company elects (or is
required by the terms of any other Senior Subordinated Indebtedness), such
Asset Sale Offer may be made ratably to purchase the Notes and other Senior
Subordinated Indebtedness of the Company. 
Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.

 

(c)           Subject to clause (a)(i) above, Net
Proceeds from Asset Dispositions in excess of the $20,000,000 per fiscal year
limitation set forth in Section 5.05(a)(i) shall be applied,
substantially concurrently with the receipt thereof, to permanently reduce
Senior Indebtedness.  Any such Net
Proceeds remaining after all Senior Indebtedness has been permanently repaid
shall constitute the Excess Proceeds with respect to which an Asset Sale Offer
pursuant to Section 4.10 shall be made as provided in the foregoing
clause (b).

 

(d)           Notwithstanding anything herein to
the contrary, the Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate any Asset Disposition involving any Capital Stock
of CBT or any of CBT’s Restricted Subsidiaries, other than pursuant to a
transaction governed by the provisions of Article 6.

 

52

 

SECTION 5.06.               Transactions
with Affiliates.  The Company will
not and will not permit any of its Restricted Subsidiaries directly or
indirectly to enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
management, consulting, investment banking, advisory or other similar services)
with any Affiliate of the Company or with any director, officer or employee of
the Company or any Restricted Subsidiary (each of the foregoing, an “Affiliate
Transaction”), except:

 

(a)           the performance of any of the
Transaction Documents as in effect as of the date of this Indenture or the
consummation of any transaction contemplated thereby (including pursuant to any
amendment thereto so long as any such amendment is not disadvantageous to the
Holders of the Notes in any material respect);

 

(b)           transactions (i) in the ordinary
course of the business of the Company or any of its Restricted Subsidiaries and
upon terms which are not materially less favorable to the Company or such
Restricted Subsidiary than would be obtained in a comparable arm’s length
transaction with a Person that is not an Affiliate of the Company and
(ii) with respect to which the Company delivers to the Trustee
(A) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $3,000,000, a resolution of the Board of Directors
of the Company set forth in an Officers’ Certificate certifying that such
Affiliate transaction complies with clause (i) above and that such
Affiliate Transaction has been approved by a majority of the disinterested members
of the Board of Directors of the Company, and (B) with respect to any
Affiliate Transaction or series of Affiliate Transactions involving in excess
of $30,000,000, an opinion as to the fairness of such Affiliate Transaction to
the Company from a financial point of view issued by an Independent Qualified
Party;

 

(c)           payment of customary compensation to
officers, employees, consultants and investment bankers for services actually
rendered to the Company or such Restricted Subsidiary, including indemnity;

 

(d)           payment of director’s fees plus
expenses and customary indemnification of directors;

 

(e)           the payment of the fees, expenses and
other amounts payable by the Company and its Restricted Subsidiaries in
connection with the transactions contemplated by the Transaction Documents that
were disclosed to the Purchasers on or prior to the Closing Date;

 

(f)            transactions undertaken pursuant to
the agreements set forth on Schedule 5.06, copies of which shall have
been provided to the Purchasers prior to the Closing Date;

 

(g)           Restricted Payments permitted by Section 5.02
and Permitted Investments;

 

(h)           transactions (x) between or among the
Company and its Restricted Subsidiaries, (y) between and among the Restricted
Subsidiaries and (z) between or among the Company and/or its Subsidiaries
pursuant to the Centralized Cash Management System;

 

(i)            any licensing agreement or similar
agreement entered into in the Ordinary Course of Business relating to the use
of technology or intellectual property between any of the Company and its
Subsidiaries, on the one hand, and any company or other Person which is an

 

53

 

Affiliate
of the Company or its subsidiaries by virtue of the fact that Person has made
an Investment in or owns any Capital Stock of such company or other Person
which are fair to the Company or its Restricted Subsidiaries, in the reasonable
determination of the Board of Directors, or are on terms at least as favorable
as might reasonably have been obtained at such time from an unaffiliated party;

 

(j)            the issuance of payments, awards or
grants, in cash or otherwise, pursuant to, or the funding of, employment
arrangements approved by the Board of Directors of the Company in good faith
and customary loans and advances to employees of the Company, or any Restricted
Subsidiary of the Company to the extent otherwise permitted in this Indenture;

 

(k)           transactions with the BCI Group
(other than those set forth in clause (l) below) (A) set forth on Schedule
5.06 or (B) permitted by Section 5.11, in each case, so long as such
transactions are conducted in the Ordinary Course of Business and upon terms
which are not less favorable to the Company or such Restricted Subsidiary than
would be obtained in a comparable arm’s length transaction with a Person that
is not an Affiliate of the Company; and

 

(l)            sale of services by the BCI Group to
the Company and its Restricted Subsidiaries, so long as the prices for such
services are consistent with past practices, are upon terms which are not less
favorable to the Company or such Restricted Subsidiary than would be obtained
in a comparable arm’s length transaction with a Person that is not an Affiliate
of the Company and are based on rate cards and wholesale prices approved
semiannually by the Board of Directors.

 

SECTION 5.07.               Limitation
on Liens.  The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, create, incur, assume or suffer to exist any Lien (other than
(a) Liens securing the Guarantee by the Company and the Restricted Subsidiaries
of Indebtedness Incurred and other Obligations under the Credit
Documents, (b) Liens securing any Senior Indebtedness (including Attributable
Debt, if applicable) and (c) Permitted Liens) on any asset now owned or
hereafter acquired to secure any Indebtedness of the Company or such Restricted
Subsidiary; provided that the
Company or any Restricted Subsidiary may create, incur or assume Lien to secure
any Indebtedness or a Guarantee thereof, so long as concurrently with the
incurrence or assumption of such Lien the Company or such Restricted Subsidiary
effectively provides that the Notes shall be secured equally and ratably with
(or prior and senior to, in the case of Liens with respect to Subordinated
Indebtedness) such Indebtedness, so long as such Indebtedness shall be so
secured.

 

SECTION 5.08.              Limitation
on Issuances and Sales of Capital Stock of Subsidiaries.  The Company shall not, and shall not permit
any Restricted Subsidiary to, transfer, convey, sell, issue, lease or otherwise
dispose of any Capital Stock of any Restricted Subsidiary to any Person (other
than to the Company or another Restricted Subsidiary of the Company), unless
(a) prior to the Distribution Date, such transfer, conveyance, sale, lease or
other disposition is of (x) all the Capital Stock of such Restricted Subsidiary
or (y) Capital Stock of a Restricted Subsidiary that is a Guarantor and (b)
such transfer, conveyance, sale, lease or other disposition shall be made in
accordance with the provisions of Section 5.05, including the provisions
of Section 5.05 governing the application of Net Proceeds from such
transfer, conveyance, sale, lease or other disposition; provided, however,
that (i) this Section 5.08 shall not restrict any pledge of Capital

 

54

 

Stock of
the Company and its Restricted Subsidiaries securing Indebtedness under the
Credit Documents or other Indebtedness permitted to be secured by Section
5.07 and (ii) clause (a) above does not apply to (x) to the issuances of
Capital Stock of CBW pursuant to capital calls in accordance with the
provisions of CBW’s organizational documents in existence on the date of this
Indenture and (y) any other sales and issuances of Capital Stock of CBW so long
as CBW remains a Restricted Subsidiary of the Company.

 

SECTION 5.09.               Prohibition
on Incurrence of Senior Subordinated Debt. 
The Company shall not, and shall not permit any Restricted Subsidiary
that is a Guarantor to, Incur or suffer to exist Indebtedness that is senior in
right of payment to the Notes or said Guarantor’s Guarantee, as the case may
be, and subordinate in right of payment to any other Indebtedness of the
Company or such Guarantor, as the case may be.

 

SECTION 5.10.               Conduct
of Business.  The Company shall not
and shall not permit any of its Subsidiaries directly or indirectly to engage
in any business other than business of the type engaged in at the date hereof
and any business reasonably related, complementing or ancillary thereto or a
reasonable expansion thereof.

 

SECTION 5.11.               Restrictions
on Dealings with BCI Group.  (a) The
Company hereby acknowledges and agrees that each member of the BCI Group is
hereby designated as an Unrestricted Subsidiary.  Notwithstanding any provision contained in this Indenture, the
Company shall not, without the consent of the Required Holders, redesignate any
member of the BCI Group as a Restricted Subsidiary.  Furthermore, no member of the Cincinnati Bell Group may (1) make
any Restricted Payment to, (2) issue Capital Stock of any member of the
Cincinnati Bell Group to, (3) make any Investment in (including, without
limitation, by (x) becoming an obligor, whether directly or by way of Guarantee
on any Indebtedness to or for the benefit of any member of the BCI Group, (y)
purchasing an asset for the BCI Group without charge or allocation to the BCI
Group or (z) making any payments in respect of operating expenses or net
operating losses of the BCI Group (including payments for direct expenses of the
BCI Group that are made by the Cincinnati Bell Group and not charged or
allocated to the BCI Group or payments made by the Cincinnati Bell Group for
shared expenses that are not charged or allocated to the BCI Group)) or (4)
allow any tax reimbursement for the benefit of, any member of the BCI Group
unless, immediately following such payment, Incurrence, allowance or payment:

 

(i)            no
Default or Event of Default shall then have occurred or be continuing; and

 

(ii)           the
aggregate amount of all such Restricted Payments, Indebtedness, Investments,
issuances, allowances and payments made after October 1, 2002 shall not exceed
in the aggregate the sum of (A) $118,000,000, plus (B) net cash
dividends or net cash distributions (including, without limitation, net cash
payments under any intercompany notes issued by the BCI Group to the Company
and its Restricted Subsidiaries) made by any member of the BCI Group to the
Company or any other member of the Cincinnati Bell Group after October 1, 2002,
plus (C) the aggregate amount of Revolving Credit Borrowings (as defined under
the Credit Agreement) made under Section 5.02(e)(ix)(E) of the Credit
Agreement (as in effect on the date hereof).

 

55

 

(b)           The foregoing restrictions shall not
apply to, without duplication, (q) Permitted Obligations (as defined in the
Credit Agreement on the date hereof) and any transactions set forth on Schedule
5.11(b), (r) any customary non-cash transition arrangements or other
related services provided for the benefit of a buyer in connection with a
disposition of any properties or assets of the BCI Group, (s) the accrual and
capitalization of interest on intercompany notes issued by the BCI Group to the
Company or its Restricted Subsidiaries, (t) the issuance of Capital Stock of
the Company (other than Disqualified Capital Stock) and the related payment of
up to $1,000,000 in cash in exchange for shares of BCI’s 12 1⁄2% Series B Junior
Exchangeable Preferred Stock Due 2009 or BCI’s 9% Senior Subordinated Notes due
2008 (the “9% BCI Notes”) or, in the case of the 9% BCI Notes, the
issuance of Capital Stock of the Company (other than Disqualified Stock) or
Indebtedness Incurred in compliance with Section 5.04 the net proceeds
of which are used, substantially contemporaneously with such issuance, to
redeem such 9% BCI Notes, (u) guarantees by the Company and its Restricted
Subsidiaries of the Existing BCSI Loan, (v) Liens on assets of the Company and
its Restricted Subsidiaries to secure the Existing BCSI Loan, (w) (1) scheduled
principal and interest payments made or guaranteed by the Company or any of its
Restricted Subsidiaries in respect of the Existing BCSI Loan (or capital
contributions made solely for the purpose of funding such payments), (2) scheduled
interest payments with respect to the 9% BCI Notes and BCI’s 12 1⁄2% Senior
Series B Notes due 2005 and (3) the redemption of BCI’s 12 1⁄2% Senior
Series B Notes due 2005 outstanding on the date hereof at the applicable
redemption premium pursuant to the documentation governing such notes as in
effect on the date hereof, (x) payments made by the Company or any of its
Restricted Subsidiaries under the guarantee of the Existing BCSI Loan, (y)
non-cash payments made in the form of reductions in the principal amount of any
intercompany notes issued by the BCI Group to the Company or its Restricted
Subsidiaries in respect of net operating losses of the BCI Group used by the
Company and its Restricted Subsidiaries or other Investments in the form of
reduction of such intercompany notes and (z) the payment by the BCI Group of
non-cash management fees to the Cincinnati Bell Group in an amount not to
exceed $2,000,000 per quarter.

 

SECTION 5.12.              Sale
of Assets of the BCI Group. 
Notwithstanding any provision contained in this Indenture, the execution
and delivery of the Agreement for the Purchase and Sale of Assets dated as of
February 22, 2003 (the “BCSI Purchase Agreement”) by and between BCSI,
Broadwing Communications Services of Virginia, Inc., Broadwing Communications
Real Estate Services LLC, Broadwing Services LLC, IXC Business Services LLC,
Broadwing Logistics LLC, Broadwing Telecommunications Inc., IXC Internet
Services, Inc., and MSM Associates, Limited Partnership, on the one side, and C
III Communications, LLC, and C III Communications Operations, LLC, on the other
side, and the performance by the Company and its Subsidiaries of all
transactions contemplated thereby shall be permitted by, and shall not
constitute a Default or Event of Default under, this Indenture.

 

ARTICLE 6.

 

SUCCESSOR
COMPANY

 

Notwithstanding
anything in this Indenture to the contrary:

 

56

 

SECTION 6.01.               Merger,
Consolidation, or Sales of Assets of the Company.  The Company shall not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or directly and/or indirectly
through its Subsidiaries sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the properties and assets of the Company
and its Restricted Subsidiaries taken as a whole in one or more related
transactions, to any other Person, unless:

 

(a)           the resulting, surviving or
transferee Person (the “Successor Company”) shall be a corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor Company (if not the
Company) shall expressly assume, by a supplemental indenture hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the
Obligations of the Company under the Notes and this Indenture;

 

(b)           immediately after giving effect to
such transaction (and treating any Indebtedness which becomes an obligation of
the Successor Company or any Restricted Subsidiary as a result of such
transaction as having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have occurred and
be continuing under this Indenture;

 

(c)           immediately after giving effect to
such transaction, the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 5.04(a) if it were deemed to
be the Company thereunder; and

 

(d)           the Company shall have delivered to
the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) are permitted by and comply with this Indenture.

 

(e)           The restrictions contained in this Section
6.01 shall not apply to any disposition of properties or assets of the BCI
Group.

 

SECTION 6.02.              Successor
Company Substituted.  The Successor
Company shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture, but the Company in the case of
a conveyance, transfer or lease of all or substantially all its assets shall
not be released from the obligation to pay the principal of and interest on the
Notes.

 

ARTICLE 7.

 

EVENTS
OF DEFAULT; REMEDIES

 

SECTION 7.01.              Events
of Default.  An Event of Default
shall exist upon the occurrence of any of the following specified events (each
an “Event of Default”):

 

(a)           the Company defaults in the payment
when due of interest, if any, on the Notes and such default continues for a
period of (x) ten (10) days, prior to the Distribution Date or (y) thirty (30)
days after the Distribution Date;

 

57

 

(b)           the Company defaults in the payment
when due of the principal amount of or premium, if any, on the Notes when the
same becomes due and payable at its Maturity, upon required redemption or
otherwise;

 

(c)           the Company fails to observe or
perform (i) any provision of Section 4.11, Article 5 or Article
6 of this Indenture and either (x) prior to the Distribution Date, such
failure continues for a period of twenty (20) days after the Holders of at
least 25% in principal amount at Maturity of the outstanding Notes notify the
Company and the Trustee in writing of such Default (which notice must specify
the Default, demand that it be remedied and state that such notice is a “Notice
of Default”) or (y) after the Distribution Date, such failure continues for
a period of thirty (30) days after a Notice of Default, or (ii) any other
covenant or other agreement in this Indenture, the Notes or, prior to the
Distribution Date, the Purchase Agreement and such failure continues for a
period of (x) thirty (30) days prior to the Distribution Date or (y) sixty (60)
days after the Distribution Date, in each case, after a Notice of Default;

 

(d)           prior to the Distribution Date, any
representation, warranty, certification or statement made by the Company in the
Purchase Agreement and the related documents or in any statement or certificate
at any time given by or on behalf of the Company in writing pursuant to the
Purchase Agreement or any other related documents shall be false in any
material respect (provided that
the representations and warranties qualified by materiality or Material Adverse
Effect shall not be false in any respect) on the date as of which made;

 

(e)           (i) prior to the Distribution Date, a
default occurs under any mortgage, indenture, agreement or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or payment of which is Guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or
is created after the date of this Indenture, which default in the case (but
only in the case) of Senior Indebtedness (A) constitutes a failure to pay
at final maturity (after giving effect to any applicable grace periods and any
extensions thereof) the principal amount of such Senior Indebtedness or (B) shall
have resulted in such Senior Indebtedness being accelerated or otherwise become
or being declared due and payable prior to its stated maturity and, in each
case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness (other than Senior
Indebtedness) under which there has been a default, and together with the
principal amount of any such other Senior Indebtedness under which there has
been a default in payment at final maturity or the maturity of which has been
accelerated or otherwise become or being declared due prior to its stated
maturity, aggregates $20,000,000 (or such lower amount as may be set forth in Section
7.01(e) of the Credit Agreement, as such provision may be amended in the
future, or in a similar provision) or more; or

 

(ii)           after
the Distribution Date, a default occurs under any mortgage, indenture,
agreement or instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Restricted Subsidiaries (or payment of which is Guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
Guarantee now exists, or is created after the date of this Indenture, which
default (A) constitutes a failure to pay at final maturity (after giving
effect to any applicable grace periods and any extensions thereof) the
principal amount of

 

58

 

such Indebtedness or (B) shall have resulted in
such Indebtedness being accelerated or otherwise become or being declared due
and payable prior to its stated maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a default in payment at
final maturity or the maturity of which has been accelerated or otherwise
become or being declared due prior to its stated maturity, aggregates
$20,000,000 (or such lower amount as may be set forth in Section 7.01(e)
of the Credit Agreement, as such provision may be amended in the future, or in
a similar provision) or more;

 

(f)            a final judgment or final judgments
for the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any of its Restricted Subsidiaries and such
judgment or judgments remain unpaid and undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, and is not
adequately covered by insurance or indemnities which have been cash
collateralized, provided, however, that the aggregate amount of all such
undischarged or uninsured judgments exceeds $30,000,000 (or such lower amount
as may be set forth in Section 7.01(g) of the Credit Agreement, as such
provision may be amended in the future, or in a similar provision);

 

(g)           the Company or any of its Material
Restricted Subsidiaries, within the meaning of Bankruptcy Law:

 

(i)            commences a voluntary case or
proceeding,

 

(ii)           consents to the entry of a decree or
order for relief against it in an involuntary case or proceeding or to the
commencement of any case or proceeding against it,

 

(iii)          consents to the filing of a petition
or to the appointment of or taking possession by a Custodian (as defined below)
of it or for all or any substantial part of its property,

 

(iv)          makes or consents to the making of a
general assignment for the benefit of its creditors, or

 

(v)           generally is not paying, or admits in
writing that it is not able to pay its debts as they become due, or

 

(h)           a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that:

 

(i)            is for relief against the Company or
any of its Material Restricted Subsidiaries in an involuntary case or
proceeding;

 

(ii)           appoints a Custodian of the Company
or any of its Material Restricted Subsidiaries or for all or any substantial
part of the property of the Company or any of its Subsidiaries or approves as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of any of the foregoing; or

 

59

 

(iii)          orders the winding up or liquidation
of the Company or any of its Material Restricted Subsidiaries or adjudges any
of them as bankrupt or insolvent.

 

The
term “Custodian” means any custodian, receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.

 

SECTION 7.02.              Acceleration.  If an Event of Default (other than an Event
of Default specified in Section 7.01(g) or (h) with respect
to the Company) occurs and is continuing, the Trustee or the Holders of 25% or
more in principal amount at Maturity of the then outstanding Notes, may, by
notice to the Company, declare the principal of and accrued but unpaid interest
and any Special Interest on all the Notes to be due and payable.  Upon such a declaration, such principal and
interest will be due and payable immediately. 
If an Event of Default specified in Section 7.01(g) or (h)
with respect to the Company occurs, the principal of and interest on all the
Notes shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holders.  The Holders of a majority in principal
amount at Maturity of the outstanding Notes by written notice to the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal of or interest on Notes
that has become due solely because of acceleration.  No such rescission shall affect any subsequent Default or impair
any right consequent thereto.

 

If an Event of Default
has occurred and is continuing, the Notes will accrue an additional interest at
3% per annum, until such time as no Event of Default shall be continuing (to
the extent that the payment of such interest shall be legally enforceable); provided that 2.25% of such additional
interest shall be payable in cash and 0.75% of such additional interest shall
be added to the principal amount of the Notes as set forth in the definition of
Accreted Value.

 

The Company shall give
prompt notice (which in any event shall be within five (5) Business Days of the
event) to the Trustee and the Holders of the occurrence of any Event of Default
and the rescission, cure or waiver of any Event of Default.

 

SECTION 7.03.              Other
Remedies.  Notwithstanding any other
provision of this Indenture, if an Event of Default occurs and is continuing,
the Trustee may pursue any available remedy to collect the payment of principal
of or interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.

 

The Trustee may maintain
a proceeding in its own name and as trustee of an express trust even if it does
not possess any of the Notes or does not produce any of them in the
proceeding.  A delay or omission by the
Trustee or any Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquies­cence in the Event of Default. 
No remedy is exclusive of any other remedy.  All available remedies are cumulative.

 

SECTION 7.04.              Waiver
of Past Defaults.  The Holders of a
majority in principal amount at Maturity of the Notes by written notice to the
Trustee may waive an existing Default and its consequences except (a) a
Default in the payment of principal of or interest on a Note, (b) a
Default arising from the failure to redeem or purchase any Note when required pursuant
to

 

60

 

the
terms of this Indenture or (c) a Default in respect of a provision that
under Section 13.02 cannot be amended without the consent of each Holder
affected.  When a Default is waived, it
is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.

 

SECTION 7.05.              Control
by Majority.  The Holders of a
majority in principal amount at Maturity of the outstanding Notes may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee.  However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 9.01, that the Trustee determines is unduly
prejudicial to the rights of other Holders or would involve the Trustee in per­sonal
liability; provided,
however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.  Prior to taking any action hereunder, the
Trustee shall be entitled to indemni­fication satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.

 

SECTION 7.06.              Limitation
on Suits.  (a)
Except to enforce the right to receive payment of principal of or interest on
the Notes when due, no Holder may pursue any remedy with respect to this Inden­ture
or the Notes unless:

 

(i)            the Holder has previously given to
the Trustee written notice stating that an Event of Default has occurred and is
continuing;

 

(ii)           the Holders of at least 25% in
principal amount at Maturity of the outstanding Notes make a written request to
the Trustee to pursue the remedy;

 

(iii)          such Holder or Holders offer to the
Trustee reasonable security or indemnity against any loss, liability or
expense;

 

(iv)          the Trustee does not comply with the
request within 60 days after receipt of the request and the offer of security
or indemnity; and

 

(v)           the Holders of a majority in
principal amount at Maturity of the outstanding Notes do not give the Trustee a
direction inconsistent with the request during such 60 day period.

 

(b)           A Holder may not use this Indenture
to prejudice the rights of another Holder or to obtain a preference or priority
over another Holder.

 

61

 

SECTION 7.07.              Rights
of Holders to Receive Payment. 
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and any Special Interest and interest
on the Notes held by such Holder, on or after the respective due dates
expressed or provided for in the Notes, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder, it being understood that each
Holder has consented to the subordination provisions set forth in Article 8.

 

SECTION 7.08.              Collection
Suit by Trustee.  If an Event of
Default speci­fied in Section 7.01(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Notes for the
whole amount then due and owing (together with interest on overdue portion of
the principal amount and (to the extent lawful) on any unpaid interest at the
rate provided for in the Notes) and the amounts provided for in Section 9.07.

 

SECTION 7.09.              Trustee
May File Proofs of Claim.  The
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and the
Holders allowed in any judicial proceedings relative to the Company or any
Subsidiary, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall
consent to the making of such pay­ments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses, disburse­ments
and advances of the Trustee, its agents and its counsel, and any other amounts
due the Trustee under Section 9.07.

 

SECTION 7.10.              Priorities.  If the Trustee collects any money or
property pursuant to this Article 7, it shall pay out the money or
property in the following order:

 

FIRST:  to the Trustee for its fees (excluding
expenses and indemnities) due under Section 9.07;

 

SECOND:  to the holders of the Senior Indebtedness
if, when and to the extent required by Articles 8 and 12; 

 

THIRD:  to the Trustee for amounts (other than those
set forth in clause FIRST) due under Section 9.07;

 

FOURTH:  to Holders for amounts due and unpaid on the
Notes for principal and interest, ratably, and any Special Interest without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal, any Special Interest and interest, respectively; and

 

FIFTH:  to the Company.

 

The
Trustee may fix a record date and payment date for any payment to Holders
pursuant to this Section 7.10. 
At least 15 days before such record date, the Trustee shall mail to

 

62

 

each Holder and the Company a notice that states the
record date, the payment date and amount to be paid.

 

SECTION 7.11.              Undertaking
for Costs.  In any suit for the enforcement
of any right or remedy under this Inden­ture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys’ fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant.  This Section 7.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
7.06 or a suit by Holders of more than 10% in principal amount at Maturity
of the Notes.

 

ARTICLE 8.

 

SUBORDINATION

 

SECTION 8.01.              Agreement
to Subordinate.  The Company agrees,
and each Holder by accepting a Note agrees, that the Note Amounts are
subordinated in right of payment, to the extent and in the manner provided in
this Article 8, to the prior Payment in Full of all Senior Indebtedness
of the Company and that the subordination is for the benefit of and enforceable
by the holders of such Senior Indebtedness. 
The Notes shall in all respects rank pari
passu with all other Senior Subordinated Indebtedness of the Company
and only Indebtedness of the Company that is Senior Indebtedness of the Company
shall rank senior to the Notes in accordance with the provisions set forth
herein.  All provisions of this Article
8 shall be subject to Section 8.12.

 

SECTION 8.02.              Liquidation,
Dissolution, Bankruptcy.  Upon any payment or distribution of the assets of the
Company to creditors upon a liquidation or dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its properties:

 

(a)           holders of Senior Indebtedness of the
Company shall be entitled to receive Payment in Full of such Senior
Indebtedness (including interest accruing after, or that would accrue but for,
the commencement of such proceeding at the rate specified in the applicable Senior
Indebtedness, whether or not such claim for such interest would be allowed)
before the Holders shall be entitled to receive any payment of the Note
Amounts; and

 

(b)           until the Senior Indebtedness of the
Company is Paid in Full, any payment or distribution to which Holders would be
entitled but for this Article 8 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Holders may receive and
retain payments made from the defeasance trust described under Section 10.01
so long as, on the date or dates the respective amounts were paid into the
defeasance trust, such payments were made with respect to the Notes without
violating the subordination provisions described herein.

 

(c)           Nothing in this Section 8.02
shall prohibit (i) the accretion of the Accreted Value of the Notes or (ii)
payment or distribution of stock or securities of the Company provided for by a
plan of reorganization or readjustment authorized by an order or decree of a
court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy law or of

 

63

 

any
other corporation provided for by such plan of reorganization or readjustment
which stock or securities are subordinated in right of payment to all then
outstanding Senior Indebtedness to substantially the same extent as, or to a
greater extent than, the Notes are so subordinated as provided in this Article 8.

 

SECTION 8.03.              Default
on Designated Senior Indebtedness. 
The Company may not pay the Note Amounts or make any deposit pursuant to
Section 10.01, and may not otherwise purchase, repurchase, redeem,
retire, defease or otherwise acquire for value any Notes if:

 

(a)           a default in the payment of the
principal of, premium, if any, or interest on any Designated Senior
Indebtedness of the Company occurs and is continuing or any other amount owing
in respect of any Designated Senior Indebtedness of the Company is not paid
when due, whether at the due date of any such payment or by declaration of
acceleration, prepayment, call for redemption or otherwise; or

 

(b)           any other default (beyond any
applicable period of grace) on Designated Senior Indebtedness of the Company
occurs and the maturity of such Designated Senior Indebtedness is accelerated
in accordance with its terms;

 

until, in either case,
the earliest to occur,

 

(i)            the
default has been cured or waived and any such acceleration has been rescinded;
or

 

(ii)           such
Designated Senior Indebtedness has been Paid in Full;

 

provided,
however, that the Company may pay
the Notes without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of the
Designated Senior Indebtedness with respect to which either of the events set
forth in clause (a) or (b) above has occurred and is continuing.

 

(c)           During the continuance of any default
(other than a default described in clause (a) or (b) of the preceding sentence)
with respect to any Designated Senior Indebtedness of the Company either (x)
which is a default under Section 7.01(f) or 7.01(p)(i)(y) of the
Credit Agreement or (y) pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay any of the Note Amounts or make any deposit
pursuant to Section 10.1 for a period (a “Blockage Period”)
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a “Blockage Notice”) of such default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Blockage Period and ending 179 days thereafter (or earlier if such
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) by
Payment in Full of such Designated Senior Indebtedness or (iii) because the
default giving rise to such Blockage Notice is no longer continuing).  Notwithstanding the provisions described in
the immediately preceding sentence (but subject to the provisions contained in
the first sentence of this Section 8.03), unless the holders of such Designated
Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company
may resume

 

64

 

payments
on the Notes after the end of such Blockage Period, including any missed
payments.  Not more than one Blockage
Notice may be given in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period; provided, however, that if any Blockage Notice
within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness other than the holders of Senior Indebtedness
under the Credit Agreement, the Representative under the Credit Agreement may
give another Blockage Notice within such period; and, provided, further,
that in no event may the total number of days during which any Blockage Period
or Periods is in effect exceed 179 days in the aggregate during any consecutive
360 day period.  For purposes of this Section
8.03, no default or event of default that existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Indebtedness initiating such Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Blockage Period by the Representative
of such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days.  Notwithstanding the
foregoing, the Company may pay the Notes without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative of the Designated Senior Indebtedness with respect to which
either of the events set forth in this clause (c) has occurred and is
continuing.

 

SECTION 8.04.              Acceleration
of Payment of Notes.  If payment of
the Notes is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
of the Company (or their Representative) of the acceleration.  If any Designated Senior Indebtedness of the
Company is outstanding, the Company may not pay the Notes until five Business
Days after such holders or the Representative of such Designated Senior
Indebtedness receive notice of such acceleration (which notice, for the
avoidance of doubt, shall not be effective prior to the earlier to occur of (x)
the expiration of such five-day period and (y) the acceleration of such
Designated Senior Indebtedness) and, thereafter, may pay the Notes only if this
Article 8 otherwise permits payment at that time.

 

SECTION 8.05.              When
Distribution Must Be Paid Over.  If
a payment or distribution is made to Holders that because of this Article 8
should not have been made to them, the Holders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and
pay it over to them as their interests may appear.

 

SECTION 8.06.              Subrogation.  After all Senior Indebtedness of the Company
is Paid in Full and until the Notes are paid in full in cash, Holders shall be
subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to Senior Indebtedness.  A distribution made under this Article 8 to holders of
such Senior Indebtedness which otherwise would have been made to Holders is
not, as between the Company and Holders, a payment by the Company on such
Senior Indebtedness.

 

SECTION 8.07.              Relative
Rights.  This Article 8
defines the relative rights of Holders and holders of Senior Indebtedness of
the Company.  Nothing in this Indenture
shall:

 

65

 

(a)           impair, as between the Company and
Holders, the obligation of the Company, which is absolute and unconditional, to
pay principal of and interest on the Notes in accordance with their terms; or

 

(b)           prevent the Trustee or any Holder
from exercising its available remedies upon a Default, subject to the rights of
holders of Senior Indebtedness of the Company to receive distributions
otherwise payable to Holders.

 

SECTION 8.08.              Subordination
May Not Be Impaired by the Company. 
No right of any holder of Senior Indebtedness of the Company to enforce
the subordination of the Indebtedness evidenced by the Notes shall be impaired
by any act or failure to act by the Company or by its failure to comply with this
Indenture.

 

SECTION 8.09.              Rights
of Trustee and Paying Agent. 
Notwithstanding Section 8.03, the Trustee or Paying Agent may
continue to make payments on the Notes and shall not be charged with knowledge
of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Trust Officer of the Trustee receives written notice from a Responsible Officer
that payments may not be made under this Article 8.  The Company, the Registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of the Company may
give the written notice; provided,
however, that, if an issue of
Senior Indebtedness of the Company has a Representative, only the
Representative may give the written notice.

 

The Trustee in its
individual or any other capacity may hold Senior Indebtedness of the Company
with the same rights it would have if it were not Trustee.  The Registrar and the Paying Agent may do
the same with like rights.  The Trustee
shall be entitled to all the rights set forth in this Article 8 with
respect to any Senior Indebtedness of the Company that may at any time be held
by it, to the same extent as any other holder of such Senior Indebtedness; and
nothing in Article 9 shall deprive the Trustee of any of its rights as
such holder.  Nothing in this Article
8 shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 9.07 or any other Section of this Indenture.

 

SECTION 8.10.              Distribution
or Notice to Representative. 
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness of the Company, the distribution may be made and the notice
given to their Representative (if any).

 

SECTION 8.11.              Article
8 Not To Prevent Events Of Default Or Limit Right To Accelerate.  The failure to make a payment pursuant to
the Notes by reason of any provision in this Article 8 shall not be
construed as preventing the occurrence of a Default.  Nothing in this Article 8 shall have any effect on the right
of the Holders or the Trustee to accelerate the maturity of the Notes.

 

SECTION 8.12.              Trust
Monies Not Subordinated. 
Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in trust under Article
10 by the Trustee for the payment of principal of and interest on the Notes
and Additional Amounts, if any, in respect thereof shall not be subordinated to
the prior payment of any Senior Indebtedness of the Company or subject to the restrictions
set forth in this

 

66

 

Article 8, and none of the Holders
shall be obligated to pay over any such amount to the Company or any holder of
Senior Indebtedness of the Company or any other creditor of the Company.

 

SECTION 8.13.              Trustee
Entitled To Rely.  Upon any payment
or distribution pursuant to this Article 8, the Trustee and the Holders
shall be entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
8.02 are pending, (b) upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or to
the Holders or (c) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other Indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 8.  In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of the Company to participate in any payment
or distribution pursuant to this Article 8, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and
other facts pertinent to the rights of such Person under this Article 8,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pendent judicial determination as to the right of such Person to
receive such payment.  The provisions of
Sections 9.01 and 9.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 8.

 

SECTION 8.14.              Trustee
To Effectuate Subordination.  Each
Holder by accepting a Note authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of the Company as provided in this Article 8 and appoints
the Trustee as attorney-in-fact for any and all such purposes.

 

SECTION 8.15.              Trustee
Not Fiduciary for Holders of Senior Indebtedness.  Neither the Trustee nor any Holder shall be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company or shall be
liable to any such holders if it shall mistakenly pay over or distribute to
Holders or the Company or any other Person, money or assets to which any
holders of Senior Indebtedness of the Company shall be entitled by virtue of
this Article 8 or otherwise.

 

SECTION 8.16.              Reliance
by Holders of Senior Indebtedness on Subordination Provisions.  Each Holder by accepting a Note acknowledges
and agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of any Senior Indebtedness
of the Company, whether such Senior Indebtedness was created or acquired before
or after the issuance of the Notes, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.

 

67

 

SECTION 8.17.              Trustee’s
Compensation Not Prejudiced. 
Nothing in this Article shall apply to amounts due to the Trustee
pursuant to other sections of this Indenture, including, but not limited to, Section
9.07 hereof.

 

ARTICLE 9.

 

TRUSTEE

 

SECTION 9.01.              Duties
of Trustee.  (a)  If an
Event of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person’s own affairs.

 

(b)           Except during the continuance of an
Event of Default:

 

(i)            the Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

 

(ii)           in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the require­ments of this
Indenture.  However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.

 

 (c)          The
Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:

 

(i)            this paragraph does not limit the
effect of Section 9.01(b);

 

(ii)           the Trustee shall not be liable for
any error of judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and

 

(iii)          the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 7.05.

 

(iv)          No provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers.

 

 (d)          Every
provision of this Indenture that in any way relates to the Trustee is subject
to Sections 9.01(a), 9.01(b) and 9.01(c).

 

 (e)          The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.

 

68

 

 (f)           Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

 

(g)           Every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall extend to the Registrar, Notes Custodian, Paying Agent and
an authenticating agent and be subject to the provisions of this Section 9.01
and to the provisions of the TIA.

 

SECTION 9.02.              Rights
of Trustee.  (a) The Trustee may
rely on any document believed by it to be genu­ine and to have been signed or
presented by the proper per­son.  The
Trustee need not investigate any fact or matter stated in the document.

 

(b)           Before the Trustee acts or refrains
from acting, it may require an Officers’ Certificate or an Opinion of Counsel.  The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officers’
Certificate or Opinion of Counsel.

 

(c)           The Trustee may act through agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.

 

(d)           The Trustee shall not be liable for
any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided, however, that the Trustee’s
conduct does not constitute willful misconduct or negligence.

 

(e)           The Trustee may consult with counsel,
and the advice or opinion of counsel with respect to legal matters relating to
this Indenture and the Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it here­under in good faith and in accordance with the advice or opinion of
such counsel.

 

(f)            The Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, debenture, note or other paper or document or as to
whether or not an Event of Default shall have occurred unless requested in
writing to do so by the Holders of not less than a majority in principal amount
at Maturity of the Notes at the time outstanding, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney.

 

(g)           The permissive rights of the Trustee
to do things enumerated in this Indenture shall not be construed as a duty
unless so specified herein.

 

(h)           The Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the Holders, pursuant to
the provisions of this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby.

 

69

 

SECTION 9.03.              Individual
Rights of Trustee.  The Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. 
Any Paying Agent, Registrar or co-paying agent may do the same with like
rights.  However, the Trustee must
comply with Sections 9.10 and 9.11.

 

SECTION 9.04.              Trustee’s
Disclaimer.  The Trustee shall not
be responsible for and makes no representation as to the validity, priority or
adequacy of this Indenture, or the Notes, it shall not be account­able for the
Company’s use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee’s
certificate of authentication.  The
Trustee shall not be responsible for any conduct or omission by the Company or
the occurrence of any Event of Default.

 

SECTION 9.05.              Notice
of Defaults.  If a Default occurs
and is continuing and if it is actually known to the Trustee, the Trustee shall
mail to each Holder notice of the Default (“Notice of Default”) within
30 days after it is known to a Trust Officer or written notice of it is
received by the Trustee.  Except in the
case of a Default in payment of principal of or interest on any Note (including
payments pursuant to the mandatory redemption provisions of such Note, if any),
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Holders.  If a Notice of
Default has been given to the Company by the Holders, a copy of such Notice of
Default shall be delivered by the Company to the Trustee.  Except as expressly provided herein, the
Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein, in
any other Transaction Document or in any of the documents executed in
connection with the Notes, or as to the existence of a Default or Event of
Default hereunder or thereunder, and may assume that no such Default or Event
of Default has occurred unless it has actual knowledge or received written
notice thereof.

 

SECTION 9.06.              Reports
by Trustee to Holders.  As promptly
as practicable after each year beginning with the year 2002 following the date
of this Indenture, and in any event prior to February 1 in each year,
the Trustee shall mail (if required by Section 313(a) of the TIA) to each
Holder a brief report dated as of the preceding year that complies with
Section 313(a) of the TIA.  The
Trustee shall also comply with Section 313(b) of the TIA.

 

Following
a Note Registration, a copy of each report at the time of its mailing to
Holders shall be filed with the Commission and each stock exchange (if any) on
which the Notes are listed.  The Company
agrees to notify promptly the Trustee whenever the Notes become listed on any
stock exchange and of any delisting thereof.

 

SECTION 9.07.              Compensation
and Indemnity.  The Company shall
pay to the Trustee from time to time compensation for its services as may be
agreed to between the Trustee and the Company in writing.  The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services.  Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee’s agents,

 

70

 

counsel,
accountants and experts.  The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including reasonable and documented attorneys’ fees) incurred by or in
connection with the administration of this trust and the performance of its
duties hereunder.  The Trustee shall
notify the Company of any claim for which it may seek indemnity promptly upon
obtaining actual knowledge thereof; provided, however, that any failure so to
notify the Company shall not relieve the Company of its indemnity obligations
hereunder.  The Company shall defend the
claim and the indemnified party shall provide reasonable cooperation at the
Company’s expense in the defense.  Such
indemnified parties may have separate counsel and the Company shall pay the
fees and expenses of such counsel; provided, however, that the Company shall
not be required to pay such fees and expenses if it assumes such indemnified
parties’ defense and, in such indemnified parties’ reasonable judgment, there
is no conflict of interest between the Company and such parties in connection
with such defense; provided, further, however,
that the selection of the Company’s counsel shall be reasonably acceptable to
the Trustee.  The Company need not
reimburse any expense or indemnify against any loss, liability or expense incurred
by an indemnified party through such party’s own willful misconduct or
negligence.

 

To
secure the Company’s payment obligations in this Section 9.07, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest and Special Interest, if any, on particular Notes.

 

The
Company’s obligations pursuant to this Section 9.07 shall survive
the satisfaction or discharge of this Indenture, any rejection or termination
of this Indenture under any bankruptcy law or the resignation or removal of the
Trustee.  Without prejudice to any other
rights available to the Trustee under applicable law, when the Trustee incurs
expenses after the occurrence of a Default specified in Section 7.01(g)
or (h) with respect to the Company or the Company, the expenses are
intended to constitute expenses of administration under the Bankruptcy Law.

 

All
indemnifications and releases from liability granted hereunder to the Trustee
shall extend to its officers, directors, employees, agents, successors and
assigns.

 

SECTION 9.08.              Replacement
of Trustee.  (a) The Trustee
may resign at any time by so notifying the Company in writing in accordance
with the provisions of Section 12.02.  Any resignation of the Trustee shall be effective immediately
upon receipt by the Company of such notice (unless such notice shall specify a
later time as the effective time of such resignation, in which case such later
time shall be the effective time), and the resignation of the Trustee shall not
prejudice any rights of the Trustee to receive any compensation, any
reimbursement of any expenses or any indemnity or right to being defended and
held harmless under this Indenture.  The
Holders of a majority in principal amount at Maturity of the Notes may remove
the Trustee by so notifying the Trustee and may appoint a successor
Trustee.  The Company shall remove the
Trustee if:

 

(i)            the
Trustee fails to comply with Section 9.10;

 

(ii)           the
Trustee is adjudged bankrupt or insolvent;

 

71

 

(iii)          a
receiver or other public officer takes charge of the Trustee or its property;
or

 

(iv)          the
Trustee otherwise becomes incapable of acting.

 

(b)           If the Trustee resigns, is removed by
the Company or by the Holders of a majority in principal amount at Maturity of
the Notes and such Holders do not reasonably promptly appoint a successor
Trustee, or if a vacancy exists in the office of Trustee for any reason (the
Trustee in such event being referred to herein as the retiring Trustee), the
Company shall promptly appoint a successor Trustee.

 

(c)           A successor Trustee shall deliver a
written acceptance of its appointment to the retiring Trustee and to the
Company.  Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the succes­sor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  The successor Trustee shall
mail a notice of its succession to Holders. 
The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section
9.07.

 

(d)           If a successor Trustee does not take
office within 60 days after the retiring Trustee resigns or is removed, the
retiring Trustee or the Holders of 10% in principal amount at Maturity of the
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

 

(e)           If the Trustee fails to comply with Section
9.10, unless the Trustee’s duty to resign is stayed as provided in TIA §
310(b), any Holder who has been a bona fide Holder of a Note for at least six
months may petition any court of competent jurisdiction for the removal of the
Trustee and the appoint­ment of a successor Trustee.

 

(f)            Notwithstanding the replacement of
the Trustee pursuant to this Section 9.08, the Company’s
obligations under Section 9.07 shall continue for the benefit of
the retiring Trustee.

 

SECTION 9.09.              Successor
Trustee by Merger.  If the Trustee
consolidates with, merges or converts into, or transfers or sells all or
substantially all its corporate trust business or assets to, another
corporation or banking associa­tion, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.

 

In
case at the time such successor or successors by merger, conversion, sale or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Notes so authenticated; and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Notes or in this Indenture provided that the certificate of the Trustee
shall have.

 

72

 

SECTION 9.10.              Eligibility;
Disqualification.  The Trustee shall
at all times satisfy the require­ments of TIA § 310(a).  The Trustee shall have, or in the case of a
corporation included in a bank holding company system, the related bank holding
company shall have, a combined capital and surplus of at least $100.0 million
as set forth in its most recent published annual report of condition.  The Trustee shall comply with TIA
§ 310(b), subject to its right to apply for a stay of its duty to resign
under the penultimate paragraph of TIA § 310(b); provided, however, that
there shall be excluded from the operation of TIA § 310(b)(1) any
indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are out­standing
if the requirements for such exclusion set forth in TIA § 310(b)(1)
are met.

 

SECTION 9.11.              Preferential
Collection of Claims Against the Company.  The Trustee shall comply with TIA § 311(a), excluding any
creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed shall be subject to
TIA § 311(a) to the extent indicated.

 

SECTION 9.12.              Appointment
of Co-Trustee.  It is the purpose of
this Indenture that there shall be no violation of any law of any jurisdiction
(including the law of the State of New York) denying or restricting the right
of banking corporations or associations to transact business as trustee in such
jurisdiction.  It is recognized that, in
case of litigation under this Indenture, and in particular in the case of the
enforcement thereof on default, or in the case the Trustee deems that by reason
of any present or future law of any jurisdiction it may not exercise any of the
powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any action which may be
desirable or necessary in connection therewith, it may be necessary that an
additional individual or institution act as a separate or Co-Trustee.

 

In the
event that the Trustee shall appoint an additional individual or institution as
a separate or Co-Trustee, each and every remedy, power, right, claim, demand,
cause of action, immunity, estate, title, interest and lien expressed or
intended by this Indenture to be exercised by or vested in or conveyed to the
Trustee with respect thereto shall be exercisable by and vest in such separate
or Co-Trustee, but only to the extent necessary to enable any separate or such
separate or Co-Trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by any separate or
such separate or Co-Trustee shall run to and be enforceable by either of them.

 

Should
any instrument in writing from the Company be required by the separate or
Co-Trustee so appointed by the Trustee for more fully and certainly vesting in
and confirming to it such estates, property, rights, powers, trusts, duties,
and obligations, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Company.  In case the Co-Trustee or a successor to either shall die or
become incapable of acting, resign, or be removed, all the estates, properties,
rights, powers, trusts, duties and obligations of any separate or such separate
or Co-Trustee, so far as permitted by law, shall vest in and be exercised by
the Trustee until the appointment by the Trustee of a successor to any separate
or such separate or Co-Trustee or a new separate or Co-Trustee.  Any separate or Co-Trustee appointed by the
Trustee pursuant to this section  may be
removed by the Trustee , in

 

73

 

which case all powers, rights and remedies vested in
the separate or Co-Trustee shall again vest in the Trustee as if no such
appointment as a separate or Co-Trustee had been made.

 

ARTICLE 10.

 

DISCHARGE
OF INDENTURE; DEFEASANCE

 

SECTION 10.01.            Discharge
of Liability on Notes; Defeasance. 
(a)  When (i) all outstanding Notes (other than Notes
replaced or paid pursuant to Section 2.07) have been canceled or
delivered to the Trustee for cancellation or (ii) all outstanding Notes
have become due and payable, whether at maturity or as a result of the mailing
of a notice of redemption pursuant to Article 3 hereof, and the
Company irrevocably deposits with the Trustee funds in an amount sufficient, or
U.S. Government Obligations, the principal of and interest on which will be
sufficient, or a combination thereof sufficient, in the written opinion of a
nationally recognized firm of independent public accountants delivered to the
Trustee (which delivery shall only be required if U.S. Government Obligations
have been so deposited), to pay the principal amount of and interest on the
outstanding Notes when due at maturity or upon redemption of all outstanding
Notes, including interest thereon to maturity or such Redemption Date (other
than Notes replaced or paid pursuant to Section 2.07), and Special
Interest, if any, and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 10.01(c),
cease to be of further effect.  The
Trustee shall acknowledge satisfaction and dis­charge of this Indenture on
demand of the Company accompanied by an Officers’ Certificate and an Opinion of
Counsel and at the cost and expense of the Company.

 

(b)           Subject to Sections 10.01(c)
and 10.02, the Company at any time may terminate (i) all of its
obliga­tions under the Notes and this Indenture (“legal defeasance option”)
or (ii) its obligations under Article 4, Sections 5.02,
5.03, 5.04, 5.05, 5.06, 5.07, 5.08, 5.09,
5.10, 5.11 and 6.01, and the operation of 7.01(c), 7.01(d),
7.01(e), 7.01(f) , 7.01(g) and 7.01(h) (“covenant
defeasance option”).  The Company
may exercise its legal defeasance option not­with­standing its prior exercise
of its covenant defeasance option.

 

In the
event that the Company terminates all of its obligations under the Notes and
this Indenture by exercising its legal defeasance option, the obligations under
the Guarantees shall each be terminated simultaneously with the termination of
such obligations.

 

If the
Company exercises its legal defeasance option, payment of the Notes may not be
accelerated because of an Event of Default. 
If the Company exer­cises its covenant defeasance option, payment of the
Notes may not be accelerated because of an Event of Default specified in Section 7.01(c),
7.01(d), 7.01(e), 7.01(f), 7.01(g) or 7.01(h).

 

Upon
satisfaction of the conditions set forth herein and upon request of the
Company, the Trustee shall acknowledge in writing the discharge of those obliga­tions
that the Company terminates.

 

(c)           Notwithstanding clauses (a) and
(b) above, the Company’s obligations in Sections 2.03, 2.04, 2.05,
2.06, 2.07, 2.08, 9.07, 9.08 and in this Article 10
shall survive until the

 

74

 

Notes have been paid in full.  Thereafter, the Company’s obligations in Sections
9.07, 10.05 and 10.06 shall survive.

 

SECTION 10.02.            Conditions
to Defeasance.

 

(a)           the Company may exercise its legal
defeasance option or its covenant defeasance option only if:

 

(i)            the Company irrevocably deposits in
trust with the Trustee money in an amount sufficient, or U.S. Government
Obligations the principal of and interest on which will be sufficient, or a
combination thereof sufficient, to pay the principal of and interest on the
Notes when due at maturity or redemption, as the case may be, including
interest thereon to maturity or such Redemption Date and Special Interest, if
any;

 

(ii)           the Company delivers to the Trustee a
cer­tificate from a nationally recognized firm of indepen­dent accountants
expressing their opinion that the payments of principal and interest when due
and without reinvestment on the deposited U.S. Government Obliga­tions
plus any deposited money without investment will provide cash at such times and
in such amounts as will be sufficient to pay principal and interest when due on
all the Notes to maturity or redemption, as the case may be;

 

(iii)          123 days pass after the deposit is
made and during the 123-day period no Default specified in Section 6.01(g) and
(h) with respect to the Company occurs which is continuing at the end of the
period;

 

(iv)          the Company delivers to the Trustee an
Opinion of Counsel to the effect that the trust resulting from the deposit does
not constitute, or is quali­fied as, a regulated investment company under the
Investment the Company Act of 1940;

 

(v)           in the case of the legal defeasance
option, the Company shall have delivered to the Trustee an Opinion of Counsel
stating that (1) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (2) since the date
of this Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not occurred;

 

(vi)          in the case of the covenant defeasance
option, the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such cove­nant defeasance and will
be subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred; and

 

75

 

(vii)         the Company delivers to the Trustee an
Offi­cers’ Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Notes as
contemplated by this Article 10 have been complied with.

 

(b)           Before or after a deposit, the
Company may make arrangements satisfactory to the Trustee for the redemption of
Notes at a future date in accordance with Article 3.

 

SECTION 10.03.            Application
of Trust Money.  The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it
pursuant to this Article 10. 
It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Notes.  The Trustee shall be under no liability for
interest on any money and U.S. Government Obligations received by it in respect
of the outstanding Notes except as the Trustee may, at its sole option,
otherwise agree with the Company.

 

SECTION 10.04.            Repayment
to the Company.  The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any money or
U.S. Government Obligations held by it as provided in this Article 10
which, in the written opinion of a nationally recognized firm of independent
public accountants delivered to the Trustee (which delivery shall only be
required if U.S. Government Obligations have been so deposited), are in excess
of the amount thereof which would then be required to be deposited to effect an
equivalent discharge or defeasance in accordance with this Article 10.

 

If
money for the payment of principal of or interest on the Notes has been
deposited with the Trustee or Paying Agent and remains unclaimed for two years
after such amount is due and payable, the Trustee or Paying Agent shall pay the
money back to the Company at its written request unless an abandoned property
law designates another Person.  After
any such payment, the Trustee and the Paying Agent shall have no further
liability for such funds and Holders entitled to the money must look only to
the recipient and not to the Trustee for payment.

 

SECTION 10.05.            Indemnity
for Government Obligations.  The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government
Obligations or the princi­pal and interest received on such U.S.
Government Obliga­tions.

 

SECTION 10.06.            Reinstatement.  If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article
10 by reason of any legal proceeding or by reason of any order or judgment
of any court or Governmental Authority enjoining, restraining or otherwise
prohibiting such application, the Company’s obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 10 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations
in accordance with this Article 10; provided, however, that, if
the Company has made any payment of interest on principal of any Notes because
of the reinstatement of its Obligations, the Company shall be subrogated to the

 

76

 

rights
of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.

 

ARTICLE 11.

 

Guarantees

 

SECTION 11.01.            Guarantees.  (a) Each Guarantor hereby jointly and
severally, irrevocably and unconditionally guarantees, as a primary obligor and
not merely as a surety, to each Holder and to the Trustee and its successors
and assigns (i) the full and punctual payment when due, whether at Stated
Maturity, by acceleration, by redemption or otherwise, of all obligations of
the Company under this Indenture (including obligations to the Trustee) and the
Notes, whether for payment of principal of, or interest on the Notes and all
other monetary obligations of the Company under this Indenture and the Notes
and (ii) the full and punctual performance within applicable grace periods of
all other obligations of the Company whether for fees, expenses,
indemnification or otherwise under this Indenture and the Notes (all the
foregoing being hereinafter collectively called the “Guaranteed Obligations”).  Each Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice or further assent from each such Guarantor, and that each such Guarantor
shall remain bound under this Article 11 notwithstanding any extension
or renewal of any Guaranteed Obligation.

 

(b)           Each Guarantor waives presentation
to, demand of, payment from and protest to the Company of any of the Guaranteed
Obligations and also waives notice of protest for nonpayment.  Each Guarantor waives notice of any default
under the Notes or the Guaranteed Obligations. 
The obligations of each Guarantor hereunder shall not be affected by (i)
the failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under this
Indenture, the Notes or any other agreement or otherwise; (ii) any extension or
renewal of any thereof; (iii) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Notes or any other
agreement; (iv) the release of any security held by any Holder or the Trustee
for the Guaranteed Obligations or any of them; (v) the failure of any Holder or
Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (vi) any change in the ownership of such Guarantor,
except as provided in Section 11.02(b).

 

(c)           Each Guarantor hereby waives any
right to which it may be entitled to have its obligations hereunder divided
among the Guarantors, such that such Guarantor’s obligations would be less than
the full amount claimed.  Each Guarantor
hereby waives any right to which it may be entitled to have the assets of the
Company first be used and depleted as payment of the Company’s or such Guarantor’s
obligations hereunder prior to any amounts being claimed from or paid by such
Guarantor hereunder.  Each Guarantor
hereby waives any right to which it may be entitled to require that the Company
be sued prior to an action being initiated against such Guarantor.

 

(d)           Each Guarantor further agrees that
its Guarantee herein constitutes a guarantee of payment, performance and
compliance when due (and not a guarantee of collection)

 

77

 

and
waives any right to require that any resort be had by any Holder or the Trustee
to any security held for payment of the Guaranteed Obligations.

 

(e)           The Guarantee of each Guarantor and
all amounts payable thereunder is, to the extent and in the manner set forth in
Article 12, subordinated and subject in right of payment to the prior
Payment in Full of all Senior Indebtedness of the relevant Guarantor and is
made subject to such provisions of this Indenture.

 

(f)            Except as expressly set forth in Sections
10.01 and 11.02, the obligations of each Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Guaranteed Obligations or otherwise.  Without limiting the generality of the foregoing,
the obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Notes or any
other agreement, by any waiver or modification of any thereof, by any default,
failure or delay, wilful or otherwise, in the performance of the obligations,
or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of any Guarantor
or would otherwise operate as a discharge of any Guarantor as a matter of law
or equity.

 

(g)           Except as expressly set forth in Sections
10.01 and 11.02, each Guarantor agrees that its Guarantee shall
remain in full force and effect until payment in full of all the Guaranteed
Obligations.  Each Guarantor further
agrees that its Guarantee herein shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
principal of or interest on any Guaranteed Obligation is rescinded or must
otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.

 

(h)           In furtherance of the foregoing and
not in limitation of any other right which any Holder or the Trustee has at law
or in equity against any Guarantor by virtue hereof, upon the failure of the
Company to pay the principal of or interest on any Guaranteed Obligation when
and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Guaranteed
Obligation, each Guarantor hereby promises to and shall, upon receipt of
written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to
the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Guaranteed Obligations, (ii) accrued and unpaid
interest on such Guaranteed Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary obligations of the Company to the Holders
and the Trustee.

 

(i)            Each Guarantor agrees that it shall
not be entitled to any right of subrogation in relation to the Holders in
respect of any Guaranteed Obligations guaranteed hereby until payment in full
of all Guaranteed Obligations and all obligations to which the Guaranteed
Obligations are subordinated as provided in Article 12.  Each Guarantor further agrees that, as
between it, on the one hand, and the Holders and the Trustee, on the other
hand, (i) the maturity of the Guaranteed Obligations guaranteed hereby may be
accelerated as provided

 

78

 

in Article
7 for the purposes of any Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Guaranteed Obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of such Guaranteed Obligations as provided in Article
7, such Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purposes of this Section
11.01.

 

(j)            Each Guarantor also agrees to pay
any and all costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by the Trustee or any Holder in enforcing any rights under
this Section 11.01.

 

(k)           Upon request of the Trustee, each
Guarantor shall execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

 

SECTION 11.02.            Limitation
on Liability.  (a) Any term or
provision of this Indenture to the contrary notwithstanding, the maximum
aggregate amount of the Guaranteed Obligations guaranteed hereunder by any
Guarantor shall not exceed the maximum amount that can be hereby guaranteed
without rendering the Guarantee, as it relates to such Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer
or similar laws affecting the rights of creditors generally.

 

(b)           Any Guarantee of any Subsidiary
Guarantor shall terminate and be of no further force or effect and such
Subsidiary Guarantor shall be deemed to be released from all obligations under
this Article 11 upon (i) the sale or other disposition (including
through merger or consolidation) of the Capital Stock, or all or substantially
all the assets, of the applicable Guarantor if such sale or other disposition
is made in compliance with Section 5.08; (ii) the designation by the
Company of any Restricted Subsidiary as an Unrestricted Subsidiary in
accordance with the provisions of this Indenture; or (iii) the applicable
Guarantor ceasing to be a Subsidiary of the Company as a result of any
foreclosure of any pledge or security interest securing Senior Indebtedness or
other exercise of remedies in respect thereof if such Guarantor is released
from its guarantees of, and all pledges and security interests granted in
connection with, such Senior Indebtedness.

 

In the event that the
conditions specified in this Section 11.02(b) are satisfied and the
Company delivers to the Trustee an Opinion of Counsel and an Officers’
Certificate to that effect, the Trustee shall execute and deliver an
appropriate instrument evidencing such release.

 

SECTION 11.03.             Successors
and Assigns.  This Article 11
shall be binding upon each Guarantor and its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Notes shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Indenture.

 

SECTION 11.04.             Execution
of Supplemental Indenture for Future Guarantors.  Each Subsidiary which is required to become a Guarantor pursuant
to Section 4.13 shall promptly

 

79

 

execute
and deliver to the Trustee a supplemental indenture in the form of Exhibit C
hereto pursuant to which such Subsidiary shall become a Guarantor under this Article
11 and shall guarantee the Guaranteed Obligations.  Concurrently with the execution and delivery
of such supplemental indenture to this Indenture, the Company shall deliver to
the Trustee an Opinion of Counsel and an Officers’ Certificate to the effect
that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and that, subject to the application of
bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other
similar laws relating to creditors’ rights generally and to the principles of
equity, whether considered in a proceeding at law or in equity, the Guarantee
of such Guarantor is a legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms and or to such
other matters as the Trustee may reasonably request.

 

SECTION 11.05.            Non-Impairment.  The failure to endorse a Guarantee on any
Note shall not affect or impair the validity thereof.

 

SECTION 11.06.            Endorsement
of Guarantees.  To evidence its
Guarantee set forth in this Article 11, each Guarantor hereby
agrees that a notation of such Guarantee substantially in the form of Exhibit
D to this Indenture shall be endorsed by an officer of such Guarantor on
each Definitive Note and each Global Exchange Note authenticated and delivered
by the Company; provided that the
Guarantee set forth in this Article 11 shall remain in full force
and effect notwithstanding any failure of a Guarantor to endorse on each Note a
notation of Guarantee.

 

ARTICLE 12.

SUBORDINATION OF THE GUARANTEES

 

SECTION 12.01.            Agreement
To Subordinate.  Each Guarantor
agrees, and each Holder by accepting a Note agrees, that the obligations of a
Guarantor hereunder are subordinated in right of payment, to the extent and in
the manner provided in this Article 12, to the prior Payment in Full of
all Senior Indebtedness of such Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness of such
Guarantor.  The obligations hereunder
with respect to a Guarantor shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Guarantor and shall rank senior to all
existing and future Subordinated Obligations of such Guarantor; and only
Indebtedness of such Guarantor that is Senior Indebtedness of such Guarantor
shall rank senior to the obligations of such Guarantor in accordance with the
provisions set forth herein.

 

SECTION 12.02.            Liquidation,
Dissolution, Bankruptcy.  Upon any payment or distribution of the assets of a
Guarantor to creditors upon a liquidation or dissolution of such Guarantor or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such Guarantor or its properties:

 

(a)           holders of Senior Indebtedness of
such Guarantor shall be entitled to receive Payment in Full of such Senior
Indebtedness (including interest accruing after, or that would accrue but for,
the commencement of such proceeding at the rate specified in the applicable
Senior Indebtedness, whether or not such claim for such interest would be
allowed)

 

80

 

before
the Holders shall be entitled to receive any payment pursuant to any Guaranteed
Obligations from such Subsidiary Guarantor; and

 

(b)           until the Senior Indebtedness of such
Guarantor is Paid in Full, any payment or distribution to which Holders would
be entitled but for this Article 12 shall be made to holders of such
Senior Indebtedness as their respective interests may appear, except that
Holders may receive and retain payments made from the defeasance trust
described under Section 10.01 so long as, on the date or dates the
respective amounts were paid into the defeasance trust, such payments were made
with respect to the Notes without violating the subordination provisions
described herein.

 

(c)           Nothing in this Section 12.02
shall prohibit (i) the accretion of the Accreted Value of the Notes or (ii)
payment or distribution of stock or securities of the Company provided for by a
plan of reorganization or readjustment authorized by an order or decree of a
court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy law or of any other corporation provided for by such plan
of reorganization or readjustment which stock or securities are subordinated in
right of payment to all then outstanding Senior Indebtedness to substantially
the same extent as, or to a greater extent than, the Notes are so subordinated
as provided in this Article 8.

 

SECTION 12.03.            Default
on Designated Senior Indebtedness of a Guarantor.  A Guarantor may not make any payment pursuant to any of the
Guaranteed Obligations or repurchase, redeem or otherwise acquire for value any
Notes if:

 

(a)           a default in the payment of the
principal of, premium, if any, or interest on any Designated Senior
Indebtedness of such Guarantor occurs and is continuing or any other amount
owing in respect of any Designated Senior Indebtedness of such Guarantor is not
paid when due, whether at the due date of any such payment or by declaration of
acceleration, prepayment, call for redemption or otherwise; or

 

(b)           any other default (beyond any
applicable period of grace) on Designated Senior Indebtedness of such Guarantor
occurs and the maturity of such Designated Senior Indebtedness is accelerated
in accordance with its terms;

 

until, in either case,
the earlier to occur

 

(i)            the
default has been cured or waived and any such acceleration has been rescinded;
or

 

(ii)           such
Designated Senior Indebtedness has been Paid in Full;

 

provided,
however, that such Guarantor may
pay its Guarantee without regard to the foregoing if such Guarantor and the
Trustee receive written notice approving such payment from the Representative
of the holders of the Designated Senior Indebtedness of such Guarantor with
respect to which either of the events in clause (a) or (b) above has occurred
and is continuing.

 

(c)           During the continuance of any default
(other than a default described in clause (a) or (b) of the preceding
sentence) with respect to any Designated Senior Indebtedness

 

81

 

of a
Guarantor either (x) which is a default under Section 7.01(f) or 7.01(p)(i)(y)
of the Credit Agreement or (y) pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, such Guarantor may not pay its Guarantee for a period (a “Guarantee
Payment Blockage Period”) commencing upon the receipt by the Trustee (with
a copy to such Guarantor and the Company) of written notice (a “Guarantee
Blockage Notice”) of such default from the Representative of the holders of
the Designated Senior Indebtedness of such Guarantor specifying an election to
effect a Guarantee Payment Blockage Period and ending 179 days thereafter
(or earlier if such Guarantee Payment Blockage Period is terminated (i) by
written notice to the Trustee (with a copy to such Guarantor and the Company)
from the Person or Persons who gave such Guarantee Blockage Notice,
(ii) because such Designated Senior Indebtedness has been Paid in Full or
(iii) because the default giving rise to such Guarantee Blockage Notice is
no longer continuing).  Notwithstanding
the provisions described in the immediately preceding sentence (but subject to
the provisions contained in the first sentence of this Section 12.03),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, such Guarantor may resume to paying its Guarantee after such
Guarantee Payment Blockage Period, including any missed payments.  Not more than one Guarantee Blockage Notice
may be given with respect to a Guarantor in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness of such Guarantor during such period; provided, however,
that if any Blockage Notice within such 360-day period is given by or on behalf
of any holders of Designated Senior Indebtedness other than the holders of
Senior Indebtedness under the Credit Agreement, the Representative under the
Credit Agreement may give another Blockage Notice within such period; and, provided, further,
that in no event may the total number of days during which any Guarantee
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any consecutive 360 day period. 
For purposes of this Section 12.03, no default or event of
default that existed or was continuing on the date of the commencement of any
Guarantee Payment Blockage Period with respect to the Designated Senior
Indebtedness initiating such Guarantee Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Guarantee Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days. 
Notwithstanding the foregoing, such Guarantor may pay its Guarantee
without regard to the foregoing if such Guarantor and the Trustee receive
written notice approving such payment from the Representative of the holders of
the Designated Senior Indebtedness of such Guarantor with respect to which
either of the events in this clause (c) has occurred and is continuing.

 

SECTION 12.04.            Demand
for Payment.  If payment of the
Notes is accelerated because of an Event of Default and a demand for payment is
made on a Guarantor pursuant to Article 11, the Trustee shall promptly
notify the holders of the Designated Senior Indebtedness of such Guarantor (or
the Representative of such holders) of such demand.  If any Designated Senior Indebtedness of such Guarantor is
outstanding, such Guarantor may not pay its Guarantee until five Business Days
after such holders or the Representative of the holders of the Designated
Senior Indebtedness of such Guarantor receive notice of such demand (which notice,
for the avoidance of doubt, shall not be effective prior to the earlier to
occur of (x) the expiration of such five-day period and (y) the acceleration of
such Designated Senior Indebtedness) and, thereafter, may pay its Guarantee
only if this Article 12 otherwise permits payment at that time.

 

82

 

SECTION 12.05.            When
Distribution Must Be Paid Over.  If
a payment or distribution is made to Holders that because of this Article 12
should not have been made to them, the Holders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of
the Senior Indebtedness of the relevant Guarantor and pay it over to them as
their respective interests may appear.

 

SECTION 12.06.            Subrogation.  After all Senior Indebtedness of a Guarantor
is Paid in Full and until the Notes are paid in full in cash, Holders shall be
subrogated to the rights of holders of Senior Indebtedness of such Guarantor to
receive distributions applicable to Designated Senior Indebtedness of such
Guarantor.  A distribution made under
this Article 12 to holders of Senior Indebtedness of such Guarantor
which otherwise would have been made to Holders is not, as between such
Guarantor and Holders, a payment by such Guarantor on Senior Indebtedness of
such Guarantor.

 

SECTION 12.07.            Relative
Rights.  This Article 12
defines the relative rights of Holders and holders of Senior Indebtedness of a
Guarantor.  Nothing in this Indenture
shall:

 

(a)           impair, as between a Guarantor and
Holders, the obligation of a Guarantor which is absolute and unconditional, to
make payments with respect to the Guaranteed Obligations to the extent set
forth in Article 11; or

 

(b)           prevent the Trustee or any Holder
from exercising its available remedies upon a default by a Guarantor under its
obligations with respect to the Guaranteed Obligations, subject to the rights
of holders of Senior Indebtedness of such Guarantor to receive distributions
otherwise payable to Holders.

 

SECTION 12.08.            Subordination
May Not Be Impaired by a Guarantor. 
No right of any holder of Senior Indebtedness of a Guarantor to enforce
the subordination of the obligations of such Guarantor hereunder shall be
impaired by any act or failure to act by such Guarantor or by its failure to
comply with this Indenture.

 

SECTION 12.09.            Rights
of Trustee and Paying Agent. 
Notwithstanding Section 12.03, the Trustee or the Paying Agent
may continue to make payments on the Notes and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives written notice from a
Responsible Officer that payments may not be made under this Article 12.  A Guarantor, the Registrar or co-registrar,
the Paying Agent, a Representative or a holder of Senior Indebtedness of a
Guarantor may give the written notice; provided, however, that if
an issue of Senior Indebtedness of a Guarantor has a Representative, only the
Representative may give the written notice.

 

The Trustee in its
individual or any other capacity may hold Senior Indebtedness of a Guarantor
with the same rights it would have if it were not Trustee.  The Registrar and co-registrar and the
Paying Agent may do the same with like rights. 
The Trustee shall be entitled to all the rights set forth in this Article
12 with respect to any Senior Indebtedness of a Guarantor which may at any
time be held by it, to the same extent as any other holder of Senior
Indebtedness of such Guarantor; and nothing in Article 9 shall deprive
the Trustee of any of its

 

83

 

rights as such
holder.  Nothing in this Article 12
shall apply to claims of, or payments to, the Trustee under or pursuant to Section
9.07 or any other Section of this Indenture.

 

SECTION 12.10.            Distribution
or Notice to Representative. 
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness of a Guarantor, the distribution may be made and the notice
given to their Representative (if any).

 

SECTION 12.11.            Article
12 Not To Prevent Events of Default or Limit Right To Demand Payment.  The failure of a Guarantor to make a payment
on any of its obligations by reason of any provision in this Article 12
shall not be construed as preventing the occurrence of a default by such
Guarantor under such obligations. 
Nothing in this Article 12 shall have any effect on the right of
the Holders or the Trustee to make a demand for payment on a Guarantor pursuant
to Article 11.

 

SECTION 12.12.            Trustee
Entitled To Rely.  Upon any payment
or distribution pursuant to this Article 12, the Trustee and the Holders
shall be entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
12.02 are pending, (b) upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or to
the Holders or (c) upon the Representatives for the holders of Senior
Indebtedness of a Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness of a Guarantor and other Indebtedness of a Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 12.  In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness of a Guarantor to participate in any payment
or distribution pursuant to this Article 12, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness of such Guarantor held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this Article
12, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.  The
provisions of Sections 9.01 and 9.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 12.

 

SECTION 12.13.            Trustee
To Effectuate Subordination.  Each
Holder by accepting a Note authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of each of the Guarantors as provided in this Article 12
and appoints the Trustee as attorney-in-fact for any and all such purposes.

 

SECTION 12.14.            Trustee
Not Fiduciary for Holders of Senior Indebtedness of a Guarantor.  Neither the Trustee nor the Holder shall be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness of a
Guarantor or shall be liable to any such holders if it shall mistakenly pay
over or distribute to Holders or the relevant Guarantor or any other Person,
money or assets to which any holders of Senior Indebtedness of such Guarantor
shall be entitled by virtue of this Article 12 or otherwise.

 

84

 

SECTION 12.15.            Reliance
by Holders of Senior Indebtedness of a Guarantor on Subordination Provisions.  Each Holder by accepting a Note acknowledges
and agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of any Senior Indebtedness
of a Guarantor, whether such Senior Indebtedness was created or acquired before
or after the issuance of the Notes, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.

 

SECTION 12.16.            Defeasance.  Notwithstanding anything contained in this Article
12, payments from money or the proceeds of U.S. Government Obligations held
in trust under Article 10 by the Trustee for the payment of principal of
and interest on the Notes shall not be subordinated to the prior payment of any
Senior Indebtedness of any Guarantor or subject to the restrictions set forth
in this Article 12, and none of the Holders shall be obligated to
pay over any such amount to a Guarantor or any holder of Senior Indebtedness of
the Guarantor or any other creditor of a Guarantor.

 

ARTICLE 13.

AMENDMENTS

 

SECTION 13.01.            Without
Consent of Holders.

 

(a)           The Company, the Guarantors and the
Trustee may amend this Indenture or the Notes without notice to or consent of
any Holder:

 

(i)            to cure any ambiguity, omission,
defect or inconsistency;

 

(ii)           to comply with Article 6;

 

(iii)          to provide for uncertificated Notes in
addition to or in place of certificated Notes; provided, however, that the
uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Notes are described in Section 163(f)(2)(B) of the Code;

 

(iv)          to add Guarantees of the Notes;

 

(v)           to secure the Notes;

 

(vi)          to add to the covenants of the Company
for the benefit of the Holders or to surrender any right or power herein
conferred upon the Company;

 

(vii)         to make any change in Article 8
or Article 12 that would limit or terminate the benefits available
to any holder of Senior Indebtedness of the Company or a Guarantor (or
Representative thereof) under Article 8 or Article 12,
respectively;

 

85

 

(viii)        subject to the final sentence of Section
13.02(a),to comply with any requirement of the Commission in connection
with qualifying, or maintaining the qualification of, this Indenture under the
TIA;

 

(ix)           to make any change that does not
adversely affect the rights of any Holder;

 

(x)            to provide for the issuance of the
Exchange Notes, which shall have terms substantially identical in all material
respects to the Initial Notes (except that the transfer restrictions contained
in the Initial Notes shall be modified or eliminated, as appropriate), and
which shall be treated, together with any Initial Notes or the Exchange Notes
that remain outstanding, as a single issue of securities; or

 

(xi)           to change the name or title of the
Notes, and any conforming changes related thereto.

 

(b)           An amendment under this Section 13.01
may not make any change that adversely affects the rights under Article 8
or Article 12 of any holder of Senior Indebtedness of the Company
of a Guarantor then outstanding unless the holders of such Senior Indebtedness
(or any group of Representatives thereof authorized to give a consent) consent
to such change.

 

(c)           After an amendment under this Section 13.01
becomes effective, the Company shall mail to Holders a notice briefly
describing such amendment.  The failure
to give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section 13.01.

 

SECTION 13.02.            With
Consent of Holders.  (a) The
Company, the Guarantors and the Trustee may amend this Indenture or the Notes
without notice to any Holder but with the written consent of the Required
Holders (including consents obtained in connection with a tender offer or
exchange for the Notes).  However,
without the consent of each Holder affected, an amendment may not:

 

(i)            reduce the principal amount or
percentage of Notes whose Holders must consent to an amendment, supplement,
waiver or modification;

 

(ii)           reduce the rate of or extend the time
for payment of interest or any Special Interest on any Note;

 

(iii)          reduce the principal amount of or
extend the Stated Maturity of any Note;

 

(iv)          reduce the premium payable upon the
redemption of any Note or change the time at which any Note may be redeemed in
accordance with Article 3;

 

(v)           make any Note payable in money other
than that stated in the Note;

 

86

 

(vi)          impair the right of any holder to
receive payment of principal of and interest or any Special Interest on such
Holder’s Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder’s Notes; or

 

(vii)         make any change in Section 7.04
or 7.07 or the second sentence of this Section 13.02.

 

It
shall not be necessary for the consent of the Holders under this Section 13.02
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.

 

An
amendment under this Section 13.02 may not make any change that
adversely affects the rights under Article 8 or Article 12
of any holder of Senior Indebtedness then outstanding unless the holders of
such Senior Indebtedness (or any group or Representative thereof authorized to
give a consent) consent to such change.

 

(b)           After an amendment under this Section 13.02
becomes effective, the Company shall mail to Holders a notice briefly
describing such amendment.  The failure
to give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section 13.02.

 

SECTION 13.03.            Compliance
with Trust Indenture Act.  Every
amendment to this Indenture or the Notes shall comply with the TIA as then in
effect.

 

SECTION 13.04.            Revocation
and Effect of Consents and Waivers. 
(a) A consent to an amendment or a waiver by a Holder of a Note shall
bind the Holder and every subsequent Holder of that Note or portion of the Note
that evidences the same debt as the consenting Holder’s Note, even if notation
of the consent or waiver is not made on the Note.  However, any such Holder or subse­quent Holder may revoke the
consent or waiver as to such Holder’s Note or portion of the Note if the
Trustee receives the notice of revocation before the date on which the Trustee
receives an Officers’ Certificate from the Company certifying that the
requisite number of consents have been received.  After an amendment or waiver becomes effective, it shall bind
every Holder.  An amendment or waiver
becomes effective upon the (i) receipt by the Company or the Trustee of
the requisite number of consents, (ii) satisfaction of conditions to
effectiveness as set forth in this Indenture and any indenture supplemental
hereto containing such amendment or waiver and (iii) execution of such
amendment or waiver (or supplemental indenture) by the Company and the Trustee.

 

(b)           the Company may, but shall not be
obligated to, fix a record date for the purpose of determining the Holders
entitled to give their consent or take any other action described above or
required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. 
No such consent shall be valid or effective for more than 120 days after
such record date.

 

87

 

SECTION 13.05.            Notation
on or Exchange of Notes.  If an
amendment changes the terms of a Note, the Trustee may require the Holder of
the Note to deliver it to the Trustee. 
The Trustee may place an appropriate notation on the Note regarding the
changed terms and return it to the Holder. 
Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Note shall issue and the Trustee shall authenticate a new
Note that reflects the changed terms. 
Failure to make the appropriate notation or to issue a new Note shall
not affect the validity of such amendment.

 

SECTION 13.06.            Trustee
to Sign Amendments.  The Trustee
shall sign any amendment authorized pursuant to this Article 13 if the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee.  If it does,
the Trustee may but need not sign it. 
In sign­ing such amendment the Trustee shall be entitled to receive
indemnity reasonably satisfactory to it and to receive, and (subject to Section 9.01)
shall be fully protected in relying upon, an Officers’ Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture and that such amendment is the legal, valid and binding
obligation of the Company and the Guarantors enforceable against them in
accordance with its terms, subject to customary exceptions, and complies with
the provisions hereof (including Section 13.03).

 

ARTICLE 14.

MISCELLANEOUS

 

SECTION 14.01.            Trust
Indenture Act Controls.  If and to
the extent that any provision of this Indenture limits, qualifies or con­flicts
with the duties imposed by, or with another provision (an “incorporated
provision”) included in this Indenture by operation of TIA §§ 310 to 318,
inclusive, such imposed duties or incorporated provi­sion shall control.

 

SECTION 14.02.            Notices.  Any notice or communication shall be in
writing and delivered in person, mailed by first-class mail addressed as
follows or transmitted via telecopy (or other facsimile device) with receipt
confirmed as set forth below:

 

if to the Company:

 

Broadwing Inc.

201 West Fourth Street

Cincinnati, Ohio

Attention:  Mark Peterson

(facsimile no.:  (513) 397-4177)

 

with copies to:

 

Cravath, Swaine &
Moore

825 Eighth Avenue

New York, NY  10019

Attention:  William V. Fogg, Esq.

(facsimile no.:  (212) 474-3700)

 

88

 

if to the Trustee:

 

The Bank of New York

101 Barclay Street – 8W

New York, New York  10286

Attention:  Corporate Trust Administration

(facsimile no.:  (212) 815-5704/5707)

 

The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.

 

Any
notice or communication mailed to a Holder shall be mailed first class mail, to
the Holder at the Holder’s address as it appears on the registration books of
the Registrar and shall be sufficiently given if so mailed within the time
prescribed.

 

Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

 

SECTION 14.03.            Communication
by Holders with Other Holders. 
Holders may communicate pursuant to TIA § 312(b) with other Holders with
respect to their rights under this Indenture or the Notes.  The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA § 312(c).

 

SECTION 14.04.            Certificate
and Opinion as to Conditions Precedent. 
Upon any request or application by the Company to the Trustee to take or
refrain from taking any action under this Indenture, the Company shall furnish
to the Trustee:

 

(a)           an Officers’ Certificate in form
reasonably satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with; and

 

(b)           an Opinion of Counsel in form
reasonably satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.

 

SECTION 14.05.            Statements
Required in Certificate or Opinion. 
Each certificate or opinion with respect to compliance with a covenant
or condition provided for in this Indenture (other than pursuant to Section 4.06)
shall include:

 

(a)           a statement that the individual
making such certificate or opinion has read such covenant or condi­tion;

 

(b)           a brief statement as to the nature
and scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;

 

89

 

(c)           a statement that, in the opinion of
such individual, he has made such examination or investigation as is necessary
to enable him to express an informed opin­ion as to whether or not such
covenant or condition has been complied with; and

 

(d)           a statement as to whether or not, in
the opin­ion of such individual, such covenant or condition has been complied
with.

 

SECTION 14.06.             When
Notes Disregarded.  In determining
whether the Holders of the required principal amount at Maturity of Notes have
concurred in any direction, waiver or consent hereunder, under the Notes, the
Purchase Agreement or the Exchange and Registration Rights Agreement, Notes owned
by (x) the Company, any Subsidiary or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any Subsidiary or (y) except in the case of any determination
pursuant to Section  13.02(a)(i) through (vii), the holder
of any Subordinated Indebtedness or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such holder of Subordinated Indebtedness shall in each case be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes which the officer of the Trustee actually knows are so
owned shall be so disregarded.  Subject
to the foregoing, only Notes outstanding at the time shall be considered in any
such determination.

 

SECTION 14.07.            Rules
by Trustee, Paying Agent and Registrar. 
The Trustee may make reasonable rules for action by or a meeting of Holders.  The Registrar and the Paying Agent may make
reasonable rules for their functions.

 

SECTION 14.08.            Legal
Holidays.  If a payment date is a
Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.  If a Regular Record Date is a Legal Holiday,
the record date shall not be affected.

 

SECTION 14.09.            GOVERNING
LAW.  THIS INDENTURE AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

 

SECTION 14.10.            No
Recourse Against Others.  A
director, officer, employee, stockholder or member, as such, of the Company or
any of the Subsidiaries shall not have any liability for any obligations of the
Company or any of the Subsidiaries under the Notes or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation.  By accepting a Note, each
Holder shall waive and release all such lia­bility.  The waiver and release shall be part of the consi­deration for
the issue of the Notes.

 

SECTION 14.11.            Successors.  All agreements of the Company and each
Subsidiary in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this
Indenture shall bind its successors.

 

90

 

SECTION 14.12.            Multiple
Originals; Counterparts.  The
parties may sign any number of counterparts of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.

 

SECTION 14.13.            Table
of Contents; Headings.  The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

 

SECTION 14.14.            Incorporation.  All Exhibits and Schedules attached hereto
are incorporated as part of this Indenture as if fully set forth herein.

 

SECTION 14.15.            Intent
to Limit Interest to Maximum.  In no
event shall the interest rate payable on the Notes under this Indenture, plus
any other amounts paid by the Company to the Holders in connection therewith,
exceed the highest rate permissible under law that a court of competent
jurisdiction shall, in the final determination, deem applicable.  The Company and the Trustee, in executing
and delivering this Indenture, intend legally to agree upon the rate or rates
of interest and the manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or
rates of interest or manner of payment exceed the maximum allowable under
applicable law, then, ipso  facto as of the date of this
Indenture, the Company is and shall be liable only for the payment of such
maximum as allowed by law, and payment received from the Company in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of any Notes then outstanding to the extent of such excess, or, if such
excess exceeds the then outstanding principal, such excess shall be first
set-off against any other amounts then due and owing by the Company and
refunded to the Company.

 

91

 

IN
WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as
of the date first written above.

 

 

	
  COMPANY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BROADWING INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  	
  Mark W. Peterson

  
	
   

  	
   

  	
  Title:

  	
  Vice President &
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CINCINNATI BELL PUBLIC

  COMMUNICATIONS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  ZOOMTOWN.COM INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CINCINNATI BELL ANY
  DISTANCE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CINCINNATI BELL TELECOMMUNICATIONS
  SERVICES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

92

 

	
   

  	
  BROADWING FINANCIAL LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CINCINNATI BELL
  WIRELESS COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CINCINNATI BELL
  WIRELESS

  
	
   

  	
  HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  BROADWING HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

93

 

	
  TRUSTEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Schmalzel

  
	
   

  	
   

  	
  Name:  Paul Schmalzel

  
	
   

  	
   

  	
  Title:  Vice President

  

 

94

 

APPENDIX A

 

PROVISIONS
RELATING TO 

INITIAL NOTES 

AND EXCHANGE NOTES

 

1.             Definitions

 

1.1           Definitions

 

For the purposes of this
Appendix A, except where the context otherwise requires, the following terms
shall have the meanings indicated below:

 

“Exchange and
Registration Rights Agreement” means the Exchange and Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company and
the Purchasers.

 

“Definitive Note”
means a certificated Initial Note or Exchange Note (bearing the Restricted
Notes Legend if the transfer of such Note is restricted by applicable law) that
does not include the Global Notes Legend.

 

“Depositary” means
The Depository Trust the Company, its nominees and their respective successors.

 

“Global Notes Legend”
means the legend set forth under that caption in Exhibit B to this
Indenture.

 

“Institutional
Accredited Investor” means an institutional “accredited investor” as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

 

“Notes” under the Indenture include the Initial Notes
and any Exchange Notes issued in exchange for Initial Notes.

 

“Notes Custodian,”
who shall initially be the Trustee, means the custodian with respect to a
Global Exchange Note (as appointed by the Depositary) or any successor person
thereto.

 

“Purchase Agreement”
means the Purchase Agreement, dated as of December 9, 2002, by and among the
Company and the Purchasers.

 

“Purchasers” means
GS Mezzanine Partners II, L.P., a Delaware limited partnership (“GS
Mezzanine”), GS Mezzanine Partners II Offshore, L.P. (“GS Offshore”),
an exempted limited partnership organized under the laws of the Cayman Islands,
and any other affiliate of GS Mezzanine who purchases the Offered Securities
(as defined in the Purchase Agreement) being issued under the Purchase
Agreement at the Closing (as defined in the Purchase Agreement) (together with
GS Mezzanine, GS Offshore and one or more partnerships, corporations, trusts or
other organizations specified as a Purchaser in Schedule 1 to the Purchase

 

95

 

Agreement (as defined in
the Purchase Agreement) which controls, is controlled by, or is under common
control with, GS Mezzanine or GS Offshore), and any other person specified as a
Purchaser in Schedule 1 to the Purchase Agreement.

 

“QIB” means a
“qualified institutional buyer” as defined in Rule 144A.

 

“Registered Exchange
Offer” means the offer by the Company, pursuant to the Exchange and
Registration Rights Agreement, to certain Holders of Initial Notes, to issue
and deliver to such Holders, in exchange for their Initial Notes, a like
aggregate principal amount at Maturity of Exchange Notes registered under the
Securities Act.

 

“Regulation S”
means Regulation S under the Securities Act.

 

“Restricted Notes
Legend” means the legend set forth in Paragraph 2.3(d)(i) herein.

 

“Rule 501”
means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

 

“Rule 144A” means
Rule 144A under the Securities Act.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Shelf Registration
Statement” means a registration statement filed by the Company in
connection with the offer and sale of Initial Notes pursuant to the Exchange
and Registration Rights Agreement.

 

“Transfer Restricted
Notes” means Definitive Notes and any other Notes that bear or are required
to bear the Restricted Notes Legend.

 

1.2           Other Definitions

 

	
  Term:

  	
   

  	
  Defined in
  Section:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Agent
  Members”

  	
   

  	
  2.1(c)

  	
   

  
	
  “Initial
  Definitive Notes”

  	
   

  	
  2.1(b)

  	
   

  
	
  “Global
  Exchange Note”

  	
   

  	
  2.1(b)

  	
   

  

 

2.                                       The
Notes

 

2.1           Form and Dating

 

(a)   The Initial Notes issued on the date hereof
will be sold by the Company pursuant to the Purchase Agreement to the
Purchasers.  All such Initial Notes may
thereafter be transferred to, among others, QIBs, purchasers in reliance on
Regulation S and, except as set forth below, Accredited Investors in accordance
with Rule 501.  A pledge by any
Holder of an Initial Note shall not constitute a transfer unless and until such
pledge shall be realized upon.

 

96

 

(b)           The Initial Notes shall be issued in
the form of Definitive Notes, in fully registered form (the “Initial
Definitive Notes”) bearing the Restricted Notes Legend and shall be issued
to and registered in the name of the applicable Purchaser and duly executed by
the Company and authenticated by the Trustee as provided in this Indenture.

 

Initial Notes will be
exchanged for Exchange Notes in the Registered Exchange Offer pursuant to the
Exchange and Registration Rights Agreement. 
Exchange Notes will also be issued upon the sale of Initial Notes (i) under
a Shelf Registration Statement or (ii) at any time that the Initial Notes
being sold are not Transfer Restricted Notes. 
Exchange Notes shall, except as provided in Sections 2.3 and
2.4, be issued in global form bearing the Global Notes Legend (the “Global
Exchange Notes”).  The aggregate
principal amount at Maturity of the Global Exchange Notes may from time to time
be increased or decreased by adjustments made on the records of the Trustee and
the Depositary or its nominee and on the schedules thereto as hereinafter
provided.

 

(c)           Book-Entry Provisions.  This Paragraph 2.1(c) shall apply
only to a Global Exchange Note deposited with or on behalf of the Depositary.

 

The Company shall execute
and the Trustee shall, in accordance with this Paragraph 2.1(c) and Paragraph
2.2 and pursuant to an order of the Company signed by one officer,
authenticate and deliver one Global Exchange Note that (i) shall be
registered in the name of the Depositary for such Global Exchange Note or the
nominee of such Depositary and (ii) shall be delivered by the Trustee to
such Depositary or pursuant to such Depositary’s instruc­tions or held by the
Trustee as Notes Custodian.

 

Members of, or
participants in, the Depositary (“Agent Members”) shall have no rights
under this Indenture with respect to any Global Exchange Note held on their
behalf by the Depositary or by the Trustee as Notes Custodian or under such
Global Exchange Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Exchange Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in
any Global Exchange Note.

 

(d)           Definitive Notes.  Except as provided in Paragraph 2.3
or 2.4, owners of beneficial interests in Global Exchange Notes will not
be entitled to receive physical delivery of certificated Notes.

 

2.2           Authentication.  The Trustee shall authenticate and make
available for delivery upon a written order of the Company signed by one
officer (a) Initial Definitive Notes that are Initial Notes for original
issue on the date hereof in an aggregate principal amount at Maturity of $441,628,051.27,
(b) subject to the terms of this Indenture, Exchange Notes in the form of
Global Exchange Notes for issue in a Registered Exchange Offer pursuant to the
Exchange and Registration Rights Agreement in a like principal amount at
Maturity of the Initial Definitive Notes exchanged pursuant thereto,
(c) subject to the terms of this Indenture, Exchange Notes in 

 

97

 

the form of Global
Exchange Notes in lieu of Initial Definitive Notes upon the sale of such
Initial Definitive Notes (i) under a Shelf Registration Statement or
(ii) at any time that such Initial Notes being sold are not Transfer
Restricted Notes and (d) subject to the terms of this Indenture,
Definitive Notes upon presentation to the Trustee of Initial Notes that are not
required to bear the Restricted Notes Legend. 
Such order shall specify the amount of the Notes to be authenticated,
the date on which the original issue of Notes is to be authenticated and
whether the Notes are to be Initial Notes or Exchange Notes.  The aggregate principal amount at Maturity
of the Initial Notes and the Exchange Notes outstanding at any time may not
exceed $441,628,051.27, except as provided in Sections 2.07 and 2.08
of the Indenture.

 

2.3           Transfer and Exchange.

 

(a)           Transfer and Exchange of
Definitive Notes.  When Definitive
Notes are presented to the Registrar with a request:

 

(i)            to register the transfer of such
Definitive Notes; or

 

(ii)           to exchange such Definitive Notes for
an equal principal amount at Maturity of Definitive Notes of other authorized
denominations,

 

the Registrar shall
register the transfer or make the exchange as requested if its reasonable
require­ments for such transaction are met; provided, however, that the Definitive
Notes surrendered for transfer or exchange:

 

(1)           shall be duly endorsed or accompanied
by a written instrument of transfer in form reason­ably satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing; and

 

(2)           in the case of Transfer Restricted
Notes are accompanied by the following additional information and documents, as
applicable:

 

(A)          if such Definitive Notes are being
delivered to the Registrar by a Holder for registration in the name of such Holder,
with­out transfer, a certification from such Holder to that effect (in the form
set forth on the reverse side of the Initial Note); or

 

(B)           if such Definitive Notes are being
transferred to the Company, a certification to that effect (in the form set forth
on the reverse side of the Initial Note); or

 

(C)           if such Definitive Notes are being
transferred pursuant to an exemption from registration in accordance with
Rule 144 under the Securities Act or in reliance upon another exemption
from the registration requirements of the Securities Act, (x) a
certification to that effect (in the form set forth on the reverse side of the
Initial Note) and (y) if the Company, the Registrar or the Trustee so
requests, an opinion of

 

98

 

counsel or other evidence
reasonably satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Paragraph 2.3(d)(i).

 

(b)           Restrictions on Transfer of a
Definitive Note for a Beneficial Interest in a Global Exchange Note.  A Definitive Note may not be exchanged for a
beneficial interest in a Global Exchange Note except (i) as part of a
Registered Exchange Offer, (ii) upon sale of the Definitive Note under the
Shelf Registration Statement, (iii) upon sale of the Definitive Note at
the time such Definitive Note is not a Transfer Restricted Note or
(iv) upon presentation to the Trustee of Definitive Notes that are not
Transfer Restricted Notes.  Upon receipt
by the Trustee of a Definitive Note, duly endorsed or accom­panied by a written
instrument of transfer in form reasonably satisfactory to the Company and the
Registrar, together with written instructions directing the Trustee to make, or
to direct the Notes Custodian to make, an adjustment on its books and records
with respect to such Global Exchange Note to reflect an increase in the
aggregate principal amount at Maturity of the Notes represented by the Global
Exchange Note, such instructions to contain information regarding the
Depositary account to be credited with such increase, then the Trustee shall
cancel such Definitive Note and cause, or direct the Notes Custodian to cause,
in accordance with the standing instructions and procedures existing between
the Depositary and the Notes Cus­todian, the aggregate principal amount at
Maturity of Notes represented by the Global Exchange Note to be increased by
the aggregate principal amount at Maturity of the Definitive Note to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Exchange
Note equal to the principal amount at Maturity of the Definitive Note so
canceled.  If no Global Exchange Notes
are then outstanding and the Global Exchange Note has not been previously
exchanged for certificated Notes pursuant to Paragraph 2.4, the Company
shall issue and the Trustee shall authenticate, upon written order of the
Company in the form of an Officers’ Certificate, a new Global Exchange Note in
the appropriate principal amount at Maturity.

 

(c)           Transfer and Exchange of Global
Exchange Notes.  (i)  The
transfer of the Global Exchange Note or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor. 
A transferor of a beneficial interest in a Global Exchange Note shall
deliver a written order given in accordance with the Depositary’s procedures
containing information regarding the participant account of the Depositary to
be credited with a beneficial interest in such Global Exchange Note and such
account shall be credited in accordance with such order with a beneficial
interest in the applicable Global Exchange Note and the account of the Person
making the transfer shall be debited by an amount equal to the beneficial
interest in the Global Exchange Note being transferred.

 

(ii)           Notwithstanding any other provisions
of this Appendix (other than the provisions set forth in Paragraph 2.4),
a Global Exchange Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.

 

99

 

(d)           Legend.

 

(i)            Except as permitted by the following
clauses (ii), (iii) or (iv), each Definitive Note (and all Notes issued in
exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form (each defined term in the legend being defined
as such for purposes of the legend only):

 

“THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  NEITHER THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

 

THE
HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION
DATE”) WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH COMPANY OR ANY AFFILIATE OF COMPANY WAS THE OWNER OF
THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED
INVESTOR ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR OR TO AN “ACCREDITED INVESTOR” WITHIN
THE MEANING OF RULE 501(a)(5) OR (6) ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT AT MATURITY OF THE NOTES OF $250,000,
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO COMPANY’S

 

100

 

AND THE TRUSTEE’S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. 
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.”

 

Each Definitive Note
shall bear the following additional legend:

 

“IN CONNECTION WITH ANY
TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”

 

(ii)           Upon any sale or transfer of a
Transfer Restricted Note that is a Definitive Note, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted Note for a Definitive
Note that does not bear the legends set forth above and rescind any restriction
on the transfer of such Transfer Restricted Note if the Holder certifies in
writing to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth on
the reverse of the Initial Note).

 

(iii)          After a transfer of any Initial Notes
during the period of the effectiveness and pursuant to a Shelf Registration
Statement with respect to such Initial Notes, all requirements pertaining to
the Restricted Notes Legend on such Initial Notes shall cease to apply and the
requirements that any such Initial Notes be issued in global form shall become
applicable.

 

(iv)          Upon the consummation of a Registered
Exchange Offer with respect to the Initial Notes pursuant to which Holders of
such Initial Notes are offered Exchange Notes in exchange for their Initial
Notes, Exchange Notes in global form without the Restricted Notes Legend shall
be available to Holders that exchange such Initial Notes in such Registered
Exchange Offer.

 

(e)           Cancellation or Adjustment of Global
Exchange Note.  At such time as all
beneficial interests in a Global Exchange Note have either been exchanged for
Definitive Notes, transferred, redeemed, repurchased or canceled, such Global
Exchange Note shall be returned by the Depositary to the Trustee for
cancellation or retained and canceled by the Trustee.  At any time prior to such cancellation, if any beneficial
interest in a Global Exchange Note is exchanged for Definitive Notes,
transferred in exchange for an interest in another Global Exchange Note,
redeemed, repurchased or canceled, the principal amount at Maturity of Notes
represented by such Global Exchange Note shall be reduced and an adjustment
shall be made on the books and records of the Trustee (if it is then the Notes
Custodian for such Global Exchange Note) with respect to such Global Exchange
Note, by the Trustee or the Notes Custodian, to reflect such reduction.

 

101

 

(f)            Obligations with Respect to
Transfers and Exchanges of Notes.

 

(i)            To permit registrations of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate,
Definitive Notes and Global Exchange Notes at the Registrar’s request.

 

(ii)           No service charge shall be made for
any registration of transfer or exchange, but the Company or the Trustee may
require payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable upon
exchanges pursuant to Sections 2.06, 3.06, 4.09,
4.10 and 10.05 of the Indenture).

 

(iii)          Prior to the due presentation for
registration of transfer of any Note, the Company, the Trustee, the Paying
Agent or the Registrar may deem and treat the person in whose name a Note is
registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and interest on and Special Interest, if any, with
respect to such Note and for all other purposes whatsoever, whether or not such
Note is overdue, and none of the Company, the Trustee, the Paying Agent or the
Registrar shall be affected by notice to the con­trary.

 

(iv)          All Notes issued upon any transfer or
exchange pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the Notes
surrendered upon such transfer or exchange.

 

(g)           No Obligation of the Trustee.

 

(i)            The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Exchange Note,
a member of, or a participant in the Depositary or any other Person with
respect to the accuracy of the records of the Depositary or its nominee or of
any participant or member thereof, with respect to any ownership interest in
the Notes or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption or repurchase) or the payment of any
amount, under or with respect to such Notes. 
All notices and communica­tions to be given to the Holders and all
payments to be made to Holders under the Notes shall be given or made only to
the registered Holders (which shall be the Depositary or its nominee in the
case of a Global Exchange Note).  The
rights of beneficial owners in any Global Exchange Note shall be exercised only
through the Depositary subject to the applicable rules and pro­cedures of the
Depositary.  The Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depositary with respect to its mem­bers, participants and any beneficial
owners.

 

(ii)           The Trustee shall have no obligation
or duty to monitor, determine or inquire as to compliance with any restrictions
on transfer imposed under this Inden­ture or under applicable law with respect
to any trans­fer of any interest in any Note (including any trans­fers between
or among Depositary participants, members or beneficial owners in any Global
Exchange Note) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when

 

102

 

expressly required by, the terms of this Indenture,
and to examine the same to determine substantial compliance as to form with the
express requirements hereof.

 

2.4  Definitive
Notes

 

(a)           A Global Exchange Note deposited with
the Depositary or with the Trustee as Notes Custodian pursuant to Paragraph 2.1
or issued in connection with a Registered Exchange Offer shall be transferred
to the beneficial owners thereof in the form of Definitive Notes in an
aggregate principal amount at Maturity equal to the principal amount at
Maturity of such Global Exchange Note, in exchange for such Global Exchange
Note, only if such transfer complies with Paragraph 2.3 and
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as a Depositary for such Global Exchange Note or if at any time the
Depositary ceases to be a “clearing agency” registered under the Exchange Act,
and a successor depositary is not appointed by the Company within 90 days
of such notice or after the Company becomes aware of such cessation, or
(ii) an Event of Default has occurred and is continuing or (iii) the Company,
in its sole discretion, notifies the Trustee in writing that it elects to cause
the issuance of certificated Notes under this Indenture.

 

(b)           Any Global Exchange Note that is
transferable to the beneficial owners thereof pursuant to this Paragraph 2.4
shall be surrendered by the Depositary to the Trustee, to be so transferred, in
whole or from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Exchange Note, an equal aggregate principal amount at Maturity of Definitive
Notes of authorized denominations.  Any
portion of a Global Exchange Note transferred pursuant to this paragraph shall
be executed, authenticated and delivered only in denominations of $1,000 (in
principal amount at Maturity) and any multiple thereof and registered in such
names as the Depositary shall direct. 
Any certificated Initial Note in the form of a Definitive Note delivered
in exchange for an interest in the Global Exchange Note shall, except as
otherwise provided by Paragraph 2.3(d), bear the Restricted Notes
Legend.

 

(c)           Subject to the provisions of Paragraph 2.4(b),
the registered Holder of a Global Exchange Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.

 

(d)           In the event of the occurrence of any
of the events specified in Paragraph 2.4(a)(i), (ii) or
(iii), the Company will promptly make available to the Trustee a
reasonable supply of Definitive Notes in fully registered form without interest
coupons.

 

103

 

EXHIBIT A

 

FORM OF FACE OF INITIAL NOTE

 

THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  NEITHER THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

 

THE HOLDER OF THIS NOTE
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE,
PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE
ON WHICH COMPANY OR ANY AFFILIATE OF COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE), ONLY (A) TO COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN “ACCREDITED INVESTOR”
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE NOTE FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR OR TO
AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(5) OR (6)
ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT AT MATURITY OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO COMPANY’S
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.  THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

IN CONNECTION WITH ANY
TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES
AND OTHER

 

 

1

 

 

INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS.

 

The following information is provided pursuant to Treas. Reg. Section
1.1275-3:

 

This debt instrument is issued with original issue discount.

 

Treasurer (513-397-9900),
as a representative of the issuer, will make available on request to holder(s)
of this debt instrument the following information:  issue price, amount of original issue discount, issue date and
yield to maturity.

 

2

 

	
  No.
  [                 ]

  	
   

  	
  $

  

 

Senior Subordinated Discount Note due 2009

 

BROADWING INC., an Ohio
corporation, promises to pay
to                  
or registered assigns, the principal amount at Maturity of
[                 ]
Dollars on January 20, 2009 (the “Stated Maturity Date”).

 

	
  Interest Payment Date

  	
   

  	
  Record Date

  	
   

  
	
  June 30, 2003

  	
   

  	
  June 15, 2003

  	
   

  
	
  December 31, 2003

  	
   

  	
  December 15, 2003

  	
   

  
	
  June 30, 2004

  	
   

  	
  June 15, 2004

  	
   

  
	
  December 31, 2004

  	
   

  	
  December 15, 2004

  	
   

  
	
  June 30, 2005

  	
   

  	
  June 15, 2005

  	
   

  
	
  December 31, 2005

  	
   

  	
  December 15, 2005

  	
   

  
	
  June 30, 2006

  	
   

  	
  June 15, 2006

  	
   

  
	
  December 31, 2006

  	
   

  	
  December 15, 2006

  	
   

  
	
  June 30, 2007

  	
   

  	
  June 15, 2007

  	
   

  
	
  January 20, 2008

  	
   

  	
  January 5, 2008

  	
   

  
	
  January 20, 2009

  	
   

  	
  January 5, 2009

  	
   

  

 

3

 

Additional provisions of
this Note are set forth on the other side of this Note.

 

 

IN WITNESS WHEREOF, the
parties have caused this instrument to be duly executed.

 

	
   

  	
  BROADWING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

The Bank of New York,
Trustee, certifies that this is one of the Notes referred to in the Indenture.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
  Dated:

  	
   

  

 

4

 

FORM OF REVERSE
SIDE OF INITIAL NOTE

Senior
Subordinated Discount Note due 2009

 

1.                                       Interest

 

(a)           BROADWING INC., an Ohio corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the “Company”), promises to
pay cash interest on the Accreted Value at such date, in arrears, on each of
June 30 and December 31 of 2003 through 2006, commencing on June 30, 2003, and then
on each of June 30, 2007, January 20, 2008 and on the Stated Maturity Date
(each, an “Interest Payment Date”), at the rate of 12% per annum,
compounded semi-annually, until the principal hereof is paid.  Such interest on the Notes shall accrue from
the most recent date to which interest has been paid or duly provided for or,
if no such interest has been paid or duly provided for, from March 26, 2003
until the principal hereof is due. 
Principal of the Notes will accrete as set forth in the Indenture.  Interest shall be paid in cash.  Any principal of, or premium or installment
of interest or Special Interest (as hereinafter defined) on this Note which is
overdue shall bear interest at the rate equal to 2.25% per annum above the cash
interest rate from the date such amounts are due until they are paid (to the
extent that the payment of such interest shall be legally enforceable), and
such excess interest shall be payable in cash on demand.  In addition, the accretion of principal on
the Notes will increase as set forth in the Indenture.  Interest shall be computed on the basis of a
360-day year of twelve 30-day months.

 

(b)           Special Interest.  The holder of this Note is entitled to the
benefits of the Exchange and Registration Rights Agreement, dated as of the
date hereof, by and among the Company and the Purchasers named therein.  Capitalized terms used in this
paragraph (b) but not defined herein have the meanings assigned to them in
the Exchange and Registration Rights Agreement.  If (i) the Exchange Offer Registration Statement is not filed
with the Commission within 90 days following the Trigger Date, (ii) the Shelf
Registration Statement is not filed within 30 days after, or is not declared
effective within 150 days after, filing is required or requested pursuant to
the Exchange and Registration Rights Agreement, (iii) the Exchange Offer
Registration Statement is not declared effective on or prior to 150 days after
the Trigger Date, (iv) the Registered Exchange Offer is not consummated on or
prior to 180 days after the Trigger Date, or (v) the Shelf Registration
Statement is filed and declared effective but shall thereafter cease to be
effective prior to the end of the Shelf Registration Period (other than during
a Suspension Period permitted under the Exchange and Registration Rights
Agreement) (at any time that the Company and the Guarantors are obligated to
maintain the effectiveness thereof) (each such event referred to in clauses (i)
through (v), a “Registration Default”), the Company and the Guarantors
will be jointly and severally obligated to pay Special Interest to each holder
of Transfer Restricted Notes, during the period of one or more such
Registration Defaults, at the rate equal to $0.05 per week per $1,000 of
principal amount at Maturity for the first 90 days during the period of one or
more such Registration Defaults, which amount shall increase by $0.05 per week
per $1,000 of principal amount at Maturity for each subsequent 90-day period
during the continuance of one or more Registration Default, until such time as
no Registration Default is in effect (such amount equal to the “Special
Interest”), up to a maximum amount of Special Interest for all Registration
Defaults of $0.192 per week per $1,000 of principal amount at Maturity.  All accrued Special Interest shall be paid
to Holders in the same manner as interest

 

5

 

payments on the Notes on semi-annual payment dates
which correspond to interest payments for the Notes.  Following the cure of all Registration Defaults, the accrual of
Special Interest shall cease.  The
Trustee shall have no responsibility with respect to the determination of the
amount of any such Special Interest.

 

(c)           Record
Dates, etc.  Upon the
issuance of an Exchange Note in exchange for this Note, any accrued and unpaid
interest (including Special Interest) on this Note shall cease to be payable to
the Holder hereof but such accrued and unpaid interest (including Special
Interest) shall be payable on the next Interest Payment Date for such Exchange
Note to the Holder thereof on the related Regular Record Date. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Agreement, be paid to the Person in whose name this
Note is registered at the close of business on the Regular Record Date (the “Regular
Record Date”) for such interest which shall be the fifteenth (or, in the
case of a Regular Record Date for the Stated Maturity Date and the Interest
Payment Date immediately preceding the Stated Maturity Date, the fifth)
calendar day (whether or not a Business Day) of the calendar month in which
such Interest Payment Date occurs.

 

2.                                       Method
of Payment

 

The
Company shall pay interest on the Notes (except defaulted interest) to the
Persons who are registered holders of Notes at the close of business on the
June 15 or December 15 next preceding the Interest Payment Date (or, in the
case of the Stated Maturity Date and the Interest Payment Date immediately
preceding the Stated Maturity Date, January 5) even if Notes are canceled
after the record date and on or before the Interest Payment Date.  Holders must surrender Notes to a Paying
Agent to collect principal payments. 
The Company shall pay principal, Special Interest, if any, and interest
in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts.  The Company will make all money payments in respect of a certificated
Note (including principal and interest), at the office of the Paying Agent or,
at the option of the Company, by mailing a check to the registered address of
each Holder thereof; provided, however, that money payments on
the Notes shall be made, in the case of a Holder of at least $1,000,000 aggregate
principal amount at Maturity of Notes, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than
30 days immediately preceding the relevant due date for payment (or such
other date as the Trustee may accept in its discretion).

 

3.                                       Paying
Agent and Registrar

 

Initially,
The Bank of New York, a banking corporation organized under the laws of the
State of New York (the “Trustee”), will act as Paying Agent and
Registrar.  The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated
Wholly Owned Subsidiaries (other than any member of the BCI Group) may act as
Paying Agent, Registrar or co-registrar.

 

6

 

4.                                       Indenture

 

The
Company issued the Notes under an Indenture, dated as of  March 26, 2003 (the “Indenture”), by
and between the Company and the Trustee. 
The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
§§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”).  Terms defined in the Indenture and used but
not defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all terms and
provisions of the Indenture, and Holders (as defined in the Indenture) are
referred to the Indenture and the TIA for a statement of such terms and
provisions.

 

The
Notes are senior subordinated unsecured discount obligations of the Company
limited to $441,628,051.27 aggregate principal amount at Maturity at any one
time outstanding (subject to Section 2.07 of the Indenture).  This Note is one of the series of the
Initial Notes that are referred to in the Indenture issued in an aggregate
original principal amount at Maturity of $441,628,051.27.  The Notes include the Initial Notes and any
Exchange Notes issued in exchange for Initial Notes.  The Initial Notes and the Exchange Notes are treated as a single
class of Notes under the Indenture.  The
Initial Notes of each series and the Exchange Notes of the corresponding series
are treated as a single series of Notes under the Indenture.  The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, make certain Investments and other Restricted Payments, pay dividends
and other distributions, incur Indebtedness, enter into consensual restrictions
upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, issue or sell shares of Capital Stock of such Restricted Subsidiaries,
enter into or permit certain transactions with Affiliates and make asset
sales.  The Indenture also imposes
limitations on the ability of the Company to consolidate or merge with or into
any other Person or convey, transfer or lease all or substantially all of the
property of the Company.

 

The
Notes are guaranteed, on a senior subordinated basis, by all existing and
future Restricted Subsidiaries that are or shall become Guarantors in
accordance with the terms of the Indenture.

 

5.                                       Optional
Redemption

 

Except
as set forth in the last paragraph of this Section 5, the Notes shall not be
redeemable at the option of the Company prior to March 26, 2006.   Thereafter, the Notes are subject to redemption, at the election
of the Company, in whole or in part (in the principal amount at Maturity of not
less than $5,000,000 and integral multiples thereof), upon not less than thirty
(30) nor more than sixty (60) days’ notice by mail at the prices listed
below (expressed as a percentage of the Accreted Value of the Notes being
prepaid as of the Redemption Date) plus accrued interest to the Redemption Date
(each prepayment to be in an aggregate Accreted Value of Notes of not less than
$5 million):

 

7

 

	
  Redemption Date

  	
   

  	
  Redemption
  Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  26, 2006 - March 25, 2007

  	
   

  	
  108

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  26, 2007 - March 25, 2008

  	
   

  	
  106

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  26, 2008 - January 19, 2009

  	
   

  	
  104

  	
  %

  

 

On any Interest Payment
Date occurring on or prior to March 26, 2006, the Company may redeem all or any
part (in the principal amount at Maturity of not less than $5,000,000 and
integral multiples thereof) of the then outstanding Accreted Value of Notes
upon not less than thirty (30) nor more than sixty (60) days’ notice by mail at
a price equal to the sum of (x) 100% of the Accreted Value of such Notes being
redeemed as of the applicable Interest Payment Date plus (y) a Make Whole
Premium.  As used herein, the “Make
Whole Premium” means, as at any date, (a) an amount equal to the
present value of the remaining payments of interest on the Notes and the
Redemption Price of the Notes, assuming that on March 26, 2006 the entire
Accreted Value of the Notes then outstanding will be redeemed at 108% of the
Accreted Value thereof, together with accrued interest, and using an annual
discount factor (applied semi-annually) equal to the Treasury Rate plus 0.50%, less
(b) the Accreted Value of the Notes outstanding as at the day of
determination; provided, however, that in no case shall the Make
Whole Premium be less than zero.  For
purposes of this definition, the “Treasury Rate” shall mean a rate equal
to the then current yield to maturity on the most actively traded U.S. Treasury
security having a maturity on March 26, 2006. 
In the event there are not actively traded U.S. Treasury securities with
a maturity on March 26, 2006, then the yield to maturity shall be determined by
linear interpolation using the closest, but shorter, maturity for actively
traded U.S. Treasury securities and the closest, but longer, maturity for
actively traded U.S. Treasury maturities.

 

6.                                       Sinking
Fund

 

The
Notes are not subject to any sinking fund.

 

7.                                       Notice
of Redemption

 

Notice
of redemption will be mailed by first-class mail at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder’s registered address. 
Notes in denominations larger than $1,000 (in principal amount at
Maturity) may be redeemed in part but only in multiples of $1,000 (in principal
amount at Maturity).  If money
sufficient to pay the redemption price of and accrued and unpaid interest and
Special Interest, if any, on all Notes (or portions thereof) to be redeemed on
the Redemption Date is deposited with the Paying Agent on or before the
Redemption Date and certain other conditions are satisfied, on and after such
date, cash interest and Special Interest, if any, ceases to accrue on such
Notes (or such portions thereof) called for redemption.

 

8

 

8.                                       Repurchase
of Notes at the Option of Holders upon Change of Control and Sale of Assets

 

Upon
the occurrence of a Change of Control, each Holder of Notes shall have the
right, subject to certain conditions specified in the Indenture, to require the
Company to repurchase all or any part of the Notes of such Holder at a purchase
price in cash equal to 101% of the Accreted Value of the Notes to be
repurchased, plus accrued and unpaid interest thereon and Special Interest, if
any, in respect thereof to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due and
Special Interest, if any, on the relevant Interest Payment Date) as provided
in, and subject to the terms of, the Indenture.

 

In
accordance with Section 4.10 of the Indenture, the Company will be
required to offer to purchase Notes upon the occurrence of certain sales of
assets.

 

9.                                       Subordination.

 

The
Notes are subordinated to Senior Indebtedness, as defined in the
Indenture.  To the limited extent provided
in the Indenture, Senior Indebtedness must be paid before the Notes may be
paid.  Each of the Company and the
Guarantors agrees, and each Holder by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.

 

10.                                 Denominations;
Transfer; Exchange

 

The
Notes are in registered form without coupons in denominations of $1,000 (in
principal amount at Maturity) and multiples thereof.  A Holder may transfer or exchange Initial Notes in accordance
with the Indenture.  Upon any transfer
or exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorse­ments or transfer documents and to pay
any taxes required by law or permitted by the Indenture.  The Company shall not be required to make
and the Regis­trar need not register transfers or exchanges of Notes selected
for redemption (except, in the case of a Note to be redeemed in part, the
portion of the Note not to be redeemed) or any Notes for a period of
15 days prior to a selection of Notes to be redeemed.

 

11.                                 Persons
Deemed Owners

 

Except
as provided in paragraph 2 hereof, the registered Holder of this Note
shall be treated as the owner of it for all purposes.

 

12.                                 Unclaimed
Money

 

If
money for the payment of principal of or interest on the Notes has been
deposited with the Trustee or Paying Agent and remains unclaimed for two years
after such amount is due and payable, the Trustee or Paying Agent shall pay the
money back to the Company at its written request unless an abandoned property
law designates another Person.  After
any such payment, the Trustee and the Paying Agent shall have no further
liability for such funds and Holders entitled to the money must look only to
the recipient and not to the Trustee for payment.

 

9

 

13.           Discharge and
Defeasance

 

Subject
to certain conditions, the Company at any time may terminate some of or all its
obligations under the Notes and the Indenture if the Company deposits with the
Trustee money or U.S. Government Obligations for the payment of principal of
and interest on the Notes to redemption or maturity, as the case may be.

 

14.                                 Amendment,
Waiver

 

Subject
to certain exceptions set forth in the Indenture, (a) the Indenture or the
Notes may be amended without prior notice to any Holder but with the written
consent of the Holders of at least a majority in aggregate principal amount at
Maturity of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange for the Notes) and (b) any
default may be waived with the written consent of the Holders of at least a
majority in principal amount at Maturity of the outstanding Notes.  Subject to certain exceptions set forth in
the Indenture, without the consent of any Holder of Notes, the Company and the
Trustee may amend the Indenture or the Notes (a) to cure any ambiguity, omission,
defect or inconsistency; (b) to comply with Article 6 of the Indenture;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided, however, that the uncertificated
Notes are issued in registered form for purposes of Section 163(f) of the Code,
or in a manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code); (d) to add Guarantees of the Notes or to secure
Notes; (e) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power conferred on the Company in the
Indenture; (f) to comply with any requirement of the Commission in
connection with qualifying, or maintaining the qualification of, the Indenture
under the TIA;  (g) to make any
change that does not adversely affect the rights of any Holder; (h) to
provide for the issuance of the Exchange Notes which shall have terms
substantially identical in all material respects to the Initial Notes (except
that the transfer restrictions contained in the Initial Notes shall be modified
or eliminated, as appropriate), and which shall be treated, together with any
outstanding Initial Notes or the Exchange Notes, as a single issue of
securities; or (i) to change the name or title of the Notes.

 

15.                                 Defaults,
Remedies and Acceleration

 

If an
Event of Default (other than an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of 25% or more in principal amount at
Maturity of the outstanding Notes may declare the principal of and accrued but
unpaid interest on all the Notes to be due and payable.  Upon such a declaration, such principal and
interest shall be due and payable immediately. 
If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company occurs, the principal of and
interest on all the Notes shall become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.  Under certain circumstances, the Holders of
a majority in principal amount at Maturity of the Notes may rescind any such
acceleration with respect to the Notes and its consequences.  If an Event of Default has occurred and is
continuing, the Notes will accrue an additional interest at 3% per annum, until
such time as no Event of Default shall be continuing (to the extent that the
payment of such interest shall be legally enforceable); provided that 2.25% of such additional

 

10

 

interest shall be payable in cash and 0.75% of such
additional interest shall be added to the principal amount of the Notes as set
forth in the definition of Accreted Value.

 

Subject
to the provisions of the Indenture relating to the duties of the Trustee, in
case an Event of Default occurs and is continuing, the Trustee will be under no
obligation to exercise any rights or powers under the Indenture at the request
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable indemnity or security against any loss, liability or
expense.  Except to enforce the right to
receive payment of principal or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder
has previously given to the Trustee written notice stating that an Event of
Default is continuing, (ii) Holders of at least 25% in principal amount at
Maturity of the outstanding Notes have requested the Trustee in writing to
pursue the remedy, (iii) such Holder or Holders have offered to the
Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within
60 days after receipt of the request and the offer of security or
indemnity and (v) the Holders of a majority in principal amount at
Maturity of the outstanding Notes have not given the Trustee a direction
inconsistent with such request during such 60-day period.  Subject to certain restrictions, the Holders
of a majority in principal amount at Maturity of the out­standing Notes are
given the right to direct the time, method and place of conducting any proceed­ing
for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee.  The Trustee,
how­ever, may refuse to follow any direction that conflicts with law or the
Indenture or, subject to certain exceptions in the Indenture, that the Trustee
determines is unduly prejudicial to the rights of other Holders or would
involve the Trustee in personal liability.  Prior to taking any action under the Indenture, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.

 

16.                                 Trustee
Dealings with the Company

 

Subject
to certain limitations imposed by the TIA, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with and collect obliga­tions owed to it by the Company
or its Affiliates and may other­wise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee.

 

17.                                 No
Recourse Against Others

 

A
director, officer, employee or stockholder, as such, of the Company or any of
the Subsidiaries shall not have any liability for any obligations of the
Company or any of the Subsidiaries under the Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their crea­tion.  By accepting a Note, each Holder waives and
releases all such liability.  The waiver
and release are part of the considera­tion for the issue of the Notes.

 

11

 

18.                                 Authentication

 

This
Note shall not be valid until an author­ized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Note.

 

19.                                 Abbreviations

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as TEN
COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint
tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

 

20.                                 Governing
Law

 

THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

 

21.                                 Registration
Rights

 

Pursuant
to the Exchange and Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Note shall have the right to exchange this
Note for an Exchange Note, which has been registered under the Securities Act,
in like original principal amount at Maturity and having terms identical in all
material respects to this Note, other than that there shall be no provision for
Special Interest.

 

The Company will furnish to any
Holder of Notes upon written request and without charge to the Holder a copy of
the Indenture which has in it the text of this Note.

 

12

 

ASSIGNMENT FORM

 

To assign this
Note, fill in the form below:

 

I or we assign and
transfer this Note to

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s soc. sec. or tax I.D. No.)

 

 

and irrevocably
appoint                           agent
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

 

	
   

  	
   

  
	
  Date: 

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Sign exactly as your
  name appears on the other side of this Note.

  
						

 

13

 

CERTIFICATE TO BE
DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED NOTES

 

This certificate relates
to
$               principal
amount at Maturity of Notes held in definitive form by the undersigned.

 

The undersigned has
requested the Trustee by written order to exchange or register the transfer of
a Note or Notes.

 

In connection with any
transfer of any of the Notes evidenced by this certificate occurring prior to
the expiration of the period referred to in Rule 144(k) under the
Securities Act, the undersigned confirms that such Notes are being transferred
in accordance with its terms:

 

CHECK ONE BOX BELOW

 

	
   

  	
  o

  	
  (1)

  	
   

  	
  to the Company; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (2)

  	
   

  	
  to the Registrar for
  registration in the name of the Holder, without transfer; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (3)

  	
   

  	
  pursuant to an
  effective registration statement under the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (4)

  	
   

  	
  inside the
  United States to a “qualified institutional buyer” (as defined in
  Rule 144A under the Securities Act of 1933) that purchases for its own
  account or for the account of a qualified institutional buyer to whom notice
  is given that such transfer is being made in reliance on Rule 144A, in each
  case pursuant to and in compliance with Rule 144A under the Securities
  Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (5)

  	
   

  	
  outside the
  United States in an offshore transaction within the meaning of
  Regulation S under the Securities Act in compliance with Rule 904 under
  the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (6)

  	
   

  	
  to an institutional
  “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under
  the Securities Act of 1933) that has furnished to the Trustee a signed letter
  containing certain representations and agreements; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (7)

  	
   

  	
  pursuant to another
  available exemption from registration provided by Rule 144 under the
  Securities Act of 1933.

  

 

14

 

Unless one of the boxes
is checked, the Trustee will refuse to register any of the Notes evidenced by
this certificate in the name of any Person other than the registered holder
thereof; provided,
however, that if box (5), (6) or (7) is checked, the Trustee
may require, prior to registering any such transfer of the Notes, such legal
opinions, certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933.

 

	
   

  	
   

  	
   

  
	
   

  	
  Your Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
   

  	
   

  
	
  Signature must be
  guaranteed

  	
  Signature of Signature

  	
   

  
	
  by a participant in a

  	
  Guarantee

  	
   

  
	
  recognized signature
  guaranty

  	
   

  	
   

  
	
  medallion program or
  other

  	
   

  	
   

  
	
  signature guarantor
  acceptable

  	
   

  	
   

  
	
  to the Trustee

  	
   

  	
   

  
					

 

 

TO BE COMPLETED BY
PURCHASER IF (4) ABOVE IS CHECKED.

 

The undersigned
represents and warrants that it is purchasing this Note for its own account or
an account with respect to which it exercises sole investment discretion and
that it and any such account is a “qualified institutional buyer” within the
meaning of Rule 144A under the Securities Act of 1933, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned’s foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

 

	
  Dated: 

  	
   

  	
   

  
	
   

  
	
   

  	
  NOTICE:  To be executed by

  
	
   

  	
  an
  executive officer

  
				

 

15

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this
Note purchased by the Company pursuant to Section  4.09 (Change of
Control) or Section 4.10 (Application of Excess Proceeds from Sale of
Assets) of the Indenture, check the box:

 

	
  o

  	
   

  	
  o

  
	
   

  	
   

  	
   

  
	
  Limitation on Sales of Assets and
  Subsidiary Stock

  	
   

  	
  Change of Control

  

 

If you want to elect to have only
part of this Note purchased by the Company pursuant to Section 4.09
or 4.10 of the Indenture, state the principal amount at Maturity ($1,000
or a multiple thereof):

 

	
  $

  
	
   

  
	
   

  
	
  Date: 

  	
   

  	
  Your Signature: 

  	
   

  	
   

  
	
  (Sign exactly as your name appears on the other side of the
  Note)

  
	
   

  
	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
  Signature must be guaranteed by a participant in a
  recognized signature guaranty medallion program or other signature guarantor
  acceptable to the Trustee

  
								

 

16

 

EXHIBIT B

 

FORM OF FACE OF
EXCHANGE NOTE

[Global Notes
Legend]

 

 

UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO HOLDINGS OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.,
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL EXCHANGE NOTE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL EXCHANGE NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

The following
information is provided pursuant to Treas. Reg. Section 1.1275-3:

 

This debt
instrument is issued with original issue discount.

 

Treasurer (513-397-9900),
as a representative of the issuer, will make available on request to holder(s)
of this debt instrument the following information:  issue price, amount of original issue discount, issue date and
yield to maturity.

 

17

 

	
  No.
  [                   ]

  	
   

  	
  $

  

 

Senior
Subordinated Discount Note due 2009

 

[CUSIP No.
            ]

 

BROADWING INC., an Ohio
corporation, promises to pay
to                                    ,
or registered assigns, the principal amount at Maturity of
[                 ]
Dollars on January 20, 2009 (the “Stated Maturity Date”).

 

	
  Interest Payment Date

  	
   

  	
  Record
  Date

  
	
  June 30, 2003

  	
   

  	
  June 15, 2003

  
	
  December 31, 2003

  	
   

  	
  December 15, 2003

  
	
  June 30, 2004

  	
   

  	
  June 15, 2004

  
	
  December 31, 2004

  	
   

  	
  December 15, 2004

  
	
  June 30, 2005

  	
   

  	
  June 15, 2005

  
	
  December 31, 2005

  	
   

  	
  December 15, 2005

  
	
  June 30, 2006

  	
   

  	
  June 15, 2006

  
	
  December 31, 2006

  	
   

  	
  December 15, 2006

  
	
  June 30, 2007

  	
   

  	
  June 15, 2007

  
	
  January 20, 2008

  	
   

  	
  January 5, 2008

  
	
  January 20, 2009

  	
   

  	
  January 5, 2009

  

 

18

 

Additional provisions of
this Note are set forth on the other side of this Note.

 

IN WITNESS WHEREOF, the
parties have caused this instrument to be duly executed.

 

 

	
   

  	
  BROADWING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

The Bank of New York,
Trustee, certifies that this is one of the Notes referred to in the Indenture.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
  Dated:

  	
   

  
					

 

 

*/
If the Note is to be issued in global form, add the Global Notes Legend and the
attachment from Exhibit A captioned “TO BE ATTACHED TO GLOBAL EXCHANGE
NOTES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL EXCHANGE NOTE”.

 

19

 

FORM OF REVERSE
SIDE OF EXCHANGE NOTE

Senior
Subordinated Discount Note due 2009

 

1.                                       Interest

 

BROADWING
INC., an Ohio corporation (such corporation, and its successors and assigns
under the Indenture hereinafter referred to, being herein called the “Company”),
promises to pay cash interest at the Accreted Value at such date, in arrears,
on each of June 30 and December 31 of 2003 through 2006, commencing on June 30,
2003, and then on each of June 30, 2007, January 20, 2008 and on the Stated
Maturity Date (each, an “Interest Payment Date”), at the rate of 12% per
annum, compounded semi-annually, until the principal hereof is paid.  Such interest on the Notes shall accrue from
the most recent date to which interest has been paid or duly provided for or,
if no such interest has been paid or duly provided for, from March 26, 2003
until the principal hereof is due. 
Principal of the Notes will accrete as set forth in the Indenture.  Interest shall be paid in cash.  Any principal of, or premium or installment
of interest on this Note which is overdue shall bear interest at the rate equal
to 2.25% per annum above the cash interest rate from the date such amounts are
due until they are paid (to the extent that the payment of such interest shall
be legally enforceable), and such excess interest shall be payable on
demand.  In addition, the accretion of
principal on the Notes will increase as set forth in the Indenture.  Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Agreement, be paid to the Person in whose name this Note is registered at
the close of business on the Regular Record Date.  “Regular Record Date” for such interest shall be the
fifteenth (or, in the case of a Regular Record Date for the Stated Maturity
Date and the Interest Payment Date immediately preceding the Stated Maturity
Date, the fifth) calendar day (whether or not a Business Day) immediately
preceding such Interest Payment Date.

 

2.                                       Method
of Payment

 

The
Company shall pay interest on the Notes (except defaulted interest) to the
Persons who are registered holders of Notes at the close of business on the
June 15 or December 15 next preceding the Interest Payment Date (or, in the
case of the Stated Maturity Date and the Interest Payment Date immediately
preceding the Stated Maturity Date, January 5) even if Notes are canceled
after the record date and on or before the Interest Payment Date.  Holders must surrender Notes to a Paying
Agent to collect principal payments. 
The Company shall pay principal and interest in money of the
United States of America that at the time of payment is legal tender for payment
of public and private debts.  The
Company will make all money payments in respect of a certificated Note
(including principal and interest), of the Paying Agent or, at the option of
the Company, by mailing a check to the registered address of each Holder
thereof; provided,
however, that money payments on the Notes shall be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount at Maturity of
Notes, by wire transfer to a U.S. dollar account maintained by the payee with a
bank in the United States if such Holder elects pay­ment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).

 

20

 

3.                                       Paying
Agent and Registrar

 

Initially,
The Bank of New York, a banking corporation organized under the laws of the
State of New York (the “Trustee”), will act as Paying Agent and
Registrar.  The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically
incorporated Wholly Owned Subsidiaries (other than any member of the BCI Group)
may act as Paying Agent, Registrar or co-registrar.

 

4.                                       Indenture

 

The
Company issued the Notes under an Indenture, dated as of March 26, 2003 (the “Indenture”),
by and between the Company and the Trustee. 
The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
§§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”).  Terms defined in the Indenture and used but
not defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all terms and
provisions of the Indenture, and Holders (as defined in the Indenture) are
referred to the Indenture and the TIA for a statement of such terms and
provisions.

 

The
Notes are senior subordinated unsecured discount obligations of the Company
limited to $441,628,051.27 aggregate principal amount at Maturity at any one
time outstanding (subject to Section 2.07 of the Indenture).  This Note is one of the Exchange Notes referred
to in the Indenture issued in an aggregate principal amount at Maturity of
$441,628,051.27.  The Notes include the
Exchange Notes issued in exchange for Initial Notes.  The Initial Notes and the Exchange Notes are treated as a single
class of Notes under the Indenture.  The
Initial Notes of each series and the Exchange Notes of the corresponding series
are treated as a single series of Notes under the Indenture.  The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, make certain Investments and other Restricted Payments, pay dividends
and other distributions, incur Indebtedness, enter into consensual restrictions
upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, issue or sell shares of Capital Stock of such Restricted
Subsidiaries, enter into or permit certain transactions with Affiliates and
make asset sales.  The Indenture also
imposes limitations on the ability of the Company to consolidate or merge with
or into any other Person or convey, transfer or lease all or substantially all
of the property of the Company.

 

The
Notes are guaranteed, on a senior subordinated basis, by all existing and
future Restricted Subsidiaries that are or shall become Guarantors in
accordance with the terms of the Indenture.

 

5.                                       Optional
Redemption

 

Except
as set forth in the last paragraph of this Section 5, the Notes shall not be
redeemable at the option of the Company prior to March 26, 2006.  Thereafter, the Notes are subject to
redemption, at the election of the Company, in whole or in part (in the
principal amount at Maturity of not less than $5,000,000 and integral multiples
thereof), upon not less than ten (30) nor more than sixty (60) days’
notice by mail at the prices listed below (expressed as a

 

21

 

percentage of the Accreted Value of the Notes being
prepaid as of the Redemption Date) plus accrued interest to the Redemption Date
(each prepayment to be in an aggregate Accreted Value of Notes of not less than
$5 million):

 

	
  Redemption Date

  	
   

  	
  Redemption Price

  	
   

  
	
  March
  26, 2006 - March 25, 2007

  	
   

  	
  108

  	
  %

  
	
  March
  26, 2007 - March 25, 2008

  	
   

  	
  106

  	
  %

  
	
  March
  26, 2008 - January 19, 2009

  	
   

  	
  104

  	
  %

  

 

On any Interest Payment
Date occurring on or prior to March 26, 2006, the Company may redeem all or any
part (in the principal amount at Maturity of not less than $5,000,000 and
integral multiples thereof) of the then outstanding Accreted Value of Notes
upon not less than thirty (30) nor more than sixty (60) days’ notice by mail at
a price equal to the sum of (x) 100% of the Accreted Value of such Notes being
redeemed as of the applicable Interest Payment Date plus (y) a Make Whole
Premium.  As used herein, the “Make
Whole Premium” means, as at any date, (a) an amount equal to the
present value of the remaining payments of interest on the Notes and the
Redemption Price of the Notes, assuming that on March 26, 2006 the entire
Accreted Value of the Notes then outstanding will be redeemed at 108% of the
Accreted Value thereof, together with accrued interest, and using an annual
discount factor (applied semi-annually) equal to the Treasury Rate plus 0.50%, less
(b) the Accreted Value of the Notes outstanding as at the day of
determination; provided, however, that in no case shall the Make
Whole Premium be less than zero.  For
purposes of this definition, the “Treasury Rate” shall mean a rate equal
to the then current yield to maturity on the most actively traded U.S. Treasury
security having a maturity on March 26, 2006. 
In the event there are not actively traded U.S. Treasury securities with
a maturity on March 26, 2006, then the yield to maturity shall be determined by
linear interpolation using the closest, but shorter, maturity for actively traded
U.S. Treasury securities and the closest, but longer, maturity for actively
traded U.S. Treasury maturities.

 

6.                                       Sinking
Fund

 

The
Notes are not subject to any sinking fund.

 

7.                                       Notice
of Redemption

 

Notice
of redemption will be mailed by first-class mail at least 30 days but not
more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder’s registered address. 
Notes in denominations larger than $1,000 (in principal amount at
Maturity) may be redeemed in part but only in multiples of $1,000 (in principal
amount at Maturity).  If money
sufficient to pay the redemption price of and accrued and unpaid interest on
all Notes (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent on or before the Redemption Date and certain
other conditions are satisfied, on and

 

22

 

after
such date, cash interest ceases to accrue on such Notes (or such portions
thereof) called for redemption.

 

8.                                       Repurchase
of Notes at the Option of Holders upon Change of Control and Sale of Assets

 

Upon
the occurrence of a Change of Control, each Holder of Notes shall have the
right, subject to certain conditions specified in the Indenture, to require the
Company to repurchase all or any part of the Notes of such Holder at a purchase
price in cash equal to 101% of the Accreted Value of the Notes to be
repurchased, plus accrued and unpaid interest thereon and Special Interest, if
any, in respect thereof to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due and
Special Interest, if any, on the relevant Interest Payment Date) as provided
in, and subject to the terms of, the Indenture.

 

In
accordance with Section 4.10 of the Indenture, the Company will be
required to offer to purchase Notes upon the occurrence of certain sales of
assets.

 

9.                                       Subordination

 

The
Notes subordinated to Senior Indebtedness, as defined in the Indenture.  To the limited extent provided in the
Indenture, Senior Indebtedness must be paid before the Notes may be paid.  Each of the Company and the Guarantors
agrees, and each Holder by accepting a Note agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.

 

10.                                 Denominations;
Transfer; Exchange

 

The
Notes are in registered form without coupons in denominations of $1,000 (in
principal amount at Maturity) and multiples thereof.  A Holder may transfer or exchange Initial Notes in accordance
with the Indenture.  Upon any transfer
or exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorse­ments or transfer documents and to pay
any taxes required by law or permitted by the Indenture.  The Company shall not be required to make
and the Registrar need not register transfers or exchanges of Notes selected
for redemption (except, in the case of a Note to be redeemed in part, the
portion of the Note not to be redeemed) or any Notes for a period of
15 days prior to a selection of Notes to be redeemed.

 

11.                                 Persons
Deemed Owners

 

Except
as provided in paragraph 2 hereof, the registered Holder of this Note
shall be treated as the owner of it for all purposes.

 

12.                                 Unclaimed
Money

 

If
money for the payment of principal of or interest on the Notes has been
deposited with the Trustee or Paying Agent and remains unclaimed for two years
after such amount is due and payable, the Trustee or Paying Agent shall pay the
money back to the Company at its written request unless an abandoned property
law designates another Person.  After
any such payment, the Trustee and the Paying Agent shall have no further
liability for such

 

23

 

funds
and Holders entitled to the money must look only to the recipient and not to
the Trustee for payment.

 

13.                                 Discharge
and Defeasance

 

Subject
to certain conditions, the Company at any time may terminate some of or all its
obligations under the Notes and the Indenture if the Company deposits with the
Trustee money or U.S. Government Obligations for the payment of principal of
and interest on the Notes to redemption or maturity, as the case may be.

 

14.                                 Amendment,
Waiver

 

Subject
to certain exceptions set forth in the Indenture, (a) the Indenture or the
Notes may be amended without prior notice to any Holder but with the written
consent of the Holders of at least a majority in aggregate principal amount at
Maturity of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange for the Notes) and (b) any
default may be waived with the written consent of the Holders of at least a
majority in principal amount at Maturity of the outstanding Notes.  Subject to certain exceptions set forth in
the Indenture, without the consent of any Holder of Notes, the Company and the
Trustee may amend the Indenture or the Notes (a) to cure any ambiguity,
omission, defect or inconsistency; (b) to comply with Article 6 of the
Indenture; (c) to provide for uncertificated Notes in addition to or in
place of certificated Notes (provided, however, that the uncertificated
Notes are issued in registered form for purposes of Section 163(f) of the Code,
or in a manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code); (d) to add Guarantees of the Notes or to secure
Notes; (e) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power conferred on the Company in the
Indenture; (f) to comply with any requirement of the Commission in
connection with qualifying, or maintaining the qualification of, the Indenture
under the TIA; (g) to make any change that does not adversely affect the rights
of any Holder; (h) to provide for the issuance of the Exchange Notes which
shall have terms substantially identical in all material respects to the
Initial Notes (except that the transfer restrictions contained in the Initial
Notes shall be modified or eliminated, as appropriate), and which shall be
treated, together with any outstanding Initial Notes or the Exchange Notes, as
a single issue of securities; or (i) to change the name or title of the
Notes.

 

15.                                 Defaults,
Remedies and Acceleration

 

If an
Event of Default (other than an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of 25% or more in principal amount at
Maturity of the outstanding Notes may declare the principal of and accrued but
unpaid interest on all the Notes to be due and payable.  Upon such a declaration, such principal and
interest shall be due and payable immediately. 
If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company occurs, the principal of and
interest on all the Notes shall become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.  Under certain circumstances, the Holders of
a majority in principal amount at Maturity of the Notes may rescind any such
acceleration with respect to the Notes and its consequences.  If an

 

24

 

Event
of Default has occurred and is continuing, the Notes will accrue an additional
interest at 3% per annum, until such time as no Event of Default shall be
continuing (to the extent that the payment of such interest shall be legally
enforceable); provided that 2.25%
of such additional interest shall be payable in cash and 0.75% of such
additional interest shall be added to the principal amount of the Notes as set
forth in the definition of Accreted Value.

 

Subject
to the provisions of the Indenture relating to the duties of the Trustee, in
case an Event of Default occurs and is continuing, the Trustee will be under no
obligation to exercise any rights or powers under the Indenture at the request
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable indemnity or security against any loss, liability or
expense.  Except to enforce the right to
receive payment of principal or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder
has previously given to the Trustee written notice stating that an Event of
Default is continuing, (ii) Holders of at least 25% in principal amount at
Maturity of the out­standing Notes have requested the Trustee in writing to
pursue the remedy, (iii) such Holder or Holders have offered to the
Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within
60 days after receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount at Maturity of the
outstanding Notes have not given the Trustee a direction inconsistent with such
request during such 60-day period. 
Subject to certain restrictions, the Holders of a majority in principal
amount at Maturity of the out­standing Notes are given the right to direct the
time, method and place of conducting any proceed­ing for any remedy available
to the Trustee or of exercising any trust or power conferred on the
Trustee.  The Trustee, how­ever, may
refuse to follow any direction that conflicts with law or the Indenture or,
subject to certain exceptions in the Indenture, that the Trustee determines is
unduly prejudicial to the rights of other Holders or would involve the Trustee
in personal liability.  Prior to taking
any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.

 

16.                                 Trustee
Dealings with the Company

 

Subject
to certain limitations imposed by the TIA, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with and collect obliga­tions owed to it by the Company
or its Affiliates and may other­wise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee.

 

17.                                 No
Recourse Against Others

 

A
director, officer, employee or stockholder, as such, of the Company or any of
the Subsidiaries shall not have any liability for any obligations of the
Company or any of the Subsidiaries under the Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their crea­tion.  By accepting a Note, each Holder waives and
releases all such liability.  The waiver
and release are part of the considera­tion for the issue of the Notes.

 

25

 

18.                                 Authentication

 

This
Note shall not be valid until an author­ized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Note.

 

19.                                 Abbreviations

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as TEN
COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint
tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

 

20.                                 Governing
Law

 

THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

 

21.                                 CUSIP
Numbers

 

the
Company has caused CUSIP numbers to be printed on the Notes and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders.  No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

The Company will furnish to any
Holder of Notes upon written request and without charge to the Holder a copy of
the Indenture which has in it the text of this Note.

 

26

 

ASSIGNMENT FORM

 

To assign this
Note, fill in the form below:

 

I or we assign and
transfer this Note to

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s soc. sec. or tax I.D. No.)

 

and irrevocably
appoint                           agent
to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Sign exactly as your
  name appears on the other side of this Note.

  
						

 

27

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this
Note purchased by the Company pursuant to Section  4.09 (Change of
Control) or Section 4.10 (Application of Excess Proceeds from Sale of
Assets) of the Indenture, check the box:

 

	
  o

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  
	
  Limitation on Sales of Assets and Subsidiary Stock

  	
   

  	
   

  	
  Change of Control

  

 

If you want to elect to have only
part of this Note purchased by the Company pursuant to Section 4.09  or 4.10 of the Indenture, state
the principal amount at Maturity ($1,000 or a multiple thereof):

 

$

 

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
  (Sign exactly as your name appears on the other side of the
  Note)

  
	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
  Signature must be guaranteed by a
  participant in a recognized signature guaranty medallion program or other
  signature guarantor acceptable to the Trustee

  
							

 

28

 

Execution
copy

 

BROADWING INC.

 

Senior
Subordinated Discount Notes due 2009

 

 

INDENTURE

 

 

Dated as of March
26, 2003

 

 

THE BANK OF NEW
YORK,

 

Trustee

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS

  
	
   

  
	
  SECTION
  1.01.DEFINITIONS

  
	
  SECTION 1.02.INCORPORATION BY REFERENCE OF
  TRUST INDENTURE ACT

  
	
  SECTION 1.03.RULES OF CONSTRUCTION

  
	
   

  
	
  ARTICLE 2. THE NOTES

  
	
   

  
	
  SECTION 2.01.FORM AND DATING

  
	
  SECTION 2.02.EXECUTION AND AUTHENTICATION

  
	
  SECTION 2.03.REGISTRAR AND PAYING AGENT

  
	
  SECTION 2.04.PAYING AGENT TO HOLD MONEY IN
  TRUST

  
	
  SECTION 2.05.HOLDER LISTS

  
	
  SECTION 2.06.TRANSFER AND EXCHANGE

  
	
  SECTION
  2.07.REPLACEMENT NOTES

  
	
  SECTION
  2.08.OUTSTANDING NOTES

  
	
  SECTION 2.09.TEMPORARY NOTES

  
	
  SECTION 2.10.CANCELLATION

  
	
  SECTION 2.11.DEFAULTED INTEREST

  
	
  SECTION 2.12.CUSIP NUMBERS

  
	
   

  
	
  ARTICLE 3. REDEMPTION

  
	
   

  
	
  SECTION 3.01.NOTICES TO TRUSTEE

  
	
  SECTION 3.02.SELECTION OF NOTES TO BE
  REDEEMED

  
	
  SECTION 3.03.NOTICE OF REDEMPTION

  
	
  SECTION 3.04.EFFECT OF NOTICE OF REDEMPTION

  
	
  SECTION 3.05.DEPOSIT OF REDEMPTION PRICE

  
	
  SECTION 3.06.NOTES REDEEMED IN PART

  
	
  SECTION 3.07.TENDER OF NOTES IN EXERCISE OF
  WARRANTS

  
	
   

  
	
  ARTICLE 4. AFFIRMATIVE COVENANTS

  
	
   

  
	
  SECTION 4.01.PAYMENT OF NOTES.

  
	
  SECTION 4.02.COMMISSION REPORTS

  
	
  SECTION 4.03.PRESERVATION OF CORPORATE
  EXISTENCE

  
	
  SECTION 4.04.MAINTENANCE OF PROPERTIES

  
	
  SECTION 4.05.TAXES

  
	
  SECTION 4.06.COMPLIANCE CERTIFICATE

  
	
  SECTION 4.07.COMPLIANCE WITH LAW

  
	
  SECTION
  4.08.INSURANCE

  
	
  SECTION
  4.09.OFFER TO REPURCHASE UPON CHANGE OF CONTROL.

  
	
  SECTION 4.10.OFFER TO PURCHASE BY
  APPLICATION OF EXCESS PROCEEDS.

  
	
  SECTION 4.11.OTHER COVENANTS

  
	
  SECTION 4.12.FURTHER ASSURANCES

  
	
  SECTION 4.13.FUTURE GUARANTORS

  
	
  SECTION 4.14.APPROVALS

  

 

i

 

	
  ARTICLE 5. NEGATIVE COVENANTS APPLICABLE TO COMPANY AND ITS
  SUBSIDIARIES

  
	
   

  
	
  SECTION 5.01.STAY, EXTENSION AND USURY LAWS

  
	
  SECTION 5.02.RESTRICTED PAYMENTS

  
	
  SECTION 5.03.DIVIDEND AND OTHER PAYMENT
  RESTRICTIONS AFFECTING SUBSIDIARIES

  
	
  SECTION 5.04.INCURRENCE OF INDEBTEDNESS AND
  ISSUANCE OF PREFERRED STOCK

  
	
  SECTION
  5.05.ASSET DISPOSITIONS.

  
	
  SECTION 5.06.TRANSACTIONS WITH AFFILIATES

  
	
  SECTION
  5.07.LIMITATION ON LIENS

  
	
  SECTION 5.08.LIMITATION ON ISSUANCES AND
  SALES OF CAPITAL STOCK OF SUBSIDIARIES

  
	
  SECTION 5.09.PROHIBITION ON INCURRENCE OF
  SENIOR SUBORDINATED DEBT

  
	
  SECTION 5.10.CONDUCT OF BUSINESS

  
	
  SECTION 5.11.RESTRICTIONS ON DEALINGS WITH
  BCI GROUP

  
	
  SECTION 5.12.SALE OF ASSETS OF THE BCI
  GROUP

  
	
   

  
	
  ARTICLE 6. SUCCESSOR COMPANY

  
	
   

  
	
  SECTION 6.01.MERGER, CONSOLIDATION, OR
  SALES OF ASSETS OF THE COMPANY

  
	
  SECTION 6.02.SUCCESSOR COMPANY SUBSTITUTED

  
	
   

  
	
  ARTICLE 7. EVENTS OF DEFAULT; REMEDIES

  
	
   

  
	
  SECTION 7.01.EVENTS OF DEFAULT

  
	
  SECTION
  7.02.ACCELERATION

  
	
  SECTION
  7.03.OTHER REMEDIES

  
	
  SECTION 7.04.WAIVER OF PAST DEFAULTS

  
	
  SECTION 7.05.CONTROL BY MAJORITY

  
	
  SECTION
  7.06.LIMITATION ON SUITS

  
	
  SECTION 7.07.RIGHTS OF HOLDERS TO RECEIVE
  PAYMENT

  
	
  SECTION 7.08.COLLECTION SUIT BY TRUSTEE

  
	
  SECTION 7.09.TRUSTEE MAY FILE PROOFS OF
  CLAIM

  
	
  SECTION 7.10.PRIORITIES

  
	
  SECTION 7.11.UNDERTAKING FOR COSTS

  
	
   

  
	
  ARTICLE 8. SUBORDINATION

  
	
   

  
	
  SECTION
  8.01.AGREEMENT TO SUBORDINATE

  
	
  SECTION
  8.02.LIQUIDATION, DISSOLUTION, BANKRUPTCY

  
	
  SECTION 8.03.DEFAULT ON DESIGNATED SENIOR
  INDEBTEDNESS

  
	
  SECTION 8.04.ACCELERATION OF PAYMENT OF
  NOTES

  
	
  SECTION 8.05.WHEN DISTRIBUTION MUST BE PAID
  OVER

  
	
  SECTION
  8.06.SUBROGATION

  
	
  SECTION
  8.07.RELATIVE RIGHTS

  
	
  SECTION 8.08.SUBORDINATION MAY NOT BE
  IMPAIRED BY THE COMPANY

  
	
  SECTION 8.09.RIGHTS OF TRUSTEE AND PAYING
  AGENT

  
	
  SECTION 8.10.DISTRIBUTION OR NOTICE TO
  REPRESENTATIVE

  
	
  SECTION 8.11.ARTICLE 8 NOT TO PREVENT
  EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE

  
	
  SECTION 8.12.TRUST MONIES NOT SUBORDINATED

  

 

ii

 

	
  SECTION 8.13.TRUSTEE ENTITLED TO RELY

  
	
  SECTION 8.14.TRUSTEE TO EFFECTUATE
  SUBORDINATION

  
	
  SECTION 8.15.TRUSTEE NOT FIDUCIARY FOR
  HOLDERS OF SENIOR INDEBTEDNESS

  
	
  SECTION 8.16.RELIANCE BY HOLDERS OF SENIOR
  INDEBTEDNESS ON SUBORDINATION PROVISIONS

  
	
  SECTION 8.17.TRUSTEE’S COMPENSATION NOT
  PREJUDICED

  
	
   

  
	
  ARTICLE 9. TRUSTEE

  
	
   

  
	
  SECTION 9.01.DUTIES OF TRUSTEE

  
	
  SECTION 9.02.RIGHTS OF TRUSTEE

  
	
  SECTION 9.03.INDIVIDUAL RIGHTS OF TRUSTEE

  
	
  SECTION 9.04.TRUSTEE’S DISCLAIMER

  
	
  SECTION 9.05.NOTICE OF DEFAULTS

  
	
  SECTION 9.06.REPORTS BY TRUSTEE TO HOLDERS

  
	
  SECTION 9.07.COMPENSATION AND INDEMNITY

  
	
  SECTION 9.08.REPLACEMENT OF TRUSTEE

  
	
  SECTION 9.09.SUCCESSOR TRUSTEE BY MERGER

  
	
  SECTION 9.10.ELIGIBILITY; DISQUALIFICATION

  
	
  SECTION 9.11.PREFERENTIAL COLLECTION OF
  CLAIMS AGAINST THE COMPANY

  
	
  SECTION 9.12.APPOINTMENT OF CO-TRUSTEE.

  
	
   

  
	
  ARTICLE 10. DISCHARGE OF INDENTURE; DEFEASANCE

  
	
   

  
	
  SECTION
  10.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE

  
	
  SECTION
  10.02. CONDITIONS TO DEFEASANCE.

  
	
  SECTION
  10.03. APPLICATION OF TRUST MONEY

  
	
  SECTION
  10.04. REPAYMENT TO THE COMPANY

  
	
  SECTION
  10.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS

  
	
  SECTION
  10.06. REINSTATEMENT

  
	
   

  
	
  ARTICLE
  11. GUARANTEES

  
	
   

  
	
  SECTION
  11.01. GUARANTEES

  
	
  SECTION
  11.02. LIMITATION ON LIABILITY

  
	
  SECTION
  11.03. SUCCESSORS AND ASSIGNS

  
	
  SECTION
  11.04. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE GUARANTORS

  
	
  SECTION
  11.05. NON-IMPAIRMENT

  
	
  SECTION
  11.06. ENDORSEMENT OF GUARANTEES

  
	
   

  
	
  ARTICLE 12. SUBORDINATION OF THE GUARANTEES

  
	
   

  
	
  SECTION
  12.01. AGREEMENT TO SUBORDINATE

  
	
  SECTION
  12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY

  
	
  SECTION
  12.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS OF A GUARANTOR

  
	
  SECTION
  12.04. DEMAND FOR PAYMENT

  
	
  SECTION
  12.05. WHEN DISTRIBUTION MUST BE PAID OVER

  
	
  SECTION
  12.06. SUBROGATION

  
	
  SECTION
  12.07. RELATIVE RIGHTS

  
	
  SECTION
  12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A GUARANTOR

  
	
  SECTION
  12.09. RIGHTS OF TRUSTEE AND PAYING AGENT

  

 

iii

 

	
  SECTION
  12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE

  
	
  SECTION
  12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO DEMAND
  PAYMENT

  
	
  SECTION
  12.12. TRUSTEE ENTITLED TO RELY

  
	
  SECTION
  12.13. TRUSTEE TO EFFECTUATE SUBORDINATION

  
	
  SECTION
  12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF A
  GUARANTOR

  
	
  SECTION
  12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF A GUARANTOR ON
  SUBORDINATION PROVISIONS 

  
	
  SECTION
  12.16. DEFEASANCE

  
	
   

  
	
  ARTICLE
  13. AMENDMENTS

  
	
   

  
	
  SECTION
  13.01. WITHOUT CONSENT OF HOLDERS.

  
	
  SECTION
  13.02. WITH CONSENT OF HOLDERS

  
	
  SECTION
  13.03. COMPLIANCE WITH TRUST INDENTURE ACT

  
	
  SECTION
  13.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS

  
	
  SECTION
  13.05. NOTATION ON OR EXCHANGE OF NOTES

  
	
  SECTION
  13.06. TRUSTEE TO SIGN AMENDMENTS

  
	
   

  
	
  ARTICLE 14. MISCELLANEOUS

  
	
   

  
	
  SECTION
  14.01. TRUST INDENTURE ACT CONTROLS

  
	
  SECTION
  14.02. NOTICES

  
	
  SECTION
  14.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS

  
	
  SECTION
  14.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT

  
	
  SECTION
  14.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION

  
	
  SECTION
  14.06. WHEN NOTES DISREGARDED

  
	
  SECTION
  14.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR

  
	
  SECTION
  14.08. LEGAL HOLIDAYS

  
	
  SECTION
  14.09. GOVERNING LAW

  
	
  SECTION
  14.10. NO RECOURSE AGAINST OTHERS

  
	
  SECTION
  14.11. SUCCESSORS

  
	
  SECTION
  14.12. MULTIPLE ORIGINALS; COUNTERPARTS

  
	
  SECTION
  14.13. TABLE OF CONTENTS; HEADINGS

  
	
  SECTION
  14.14. INCORPORATION

  
	
  SECTION
  14.15. INTENT TO LIMIT INTEREST TO MAXIMUM

  

 

Appendix A   Provisions Relating to the Initial Notes
and the Exchange Notes

EXHIBITS:

 

	
  Exhibit A

  	
  –

  	
  Form of Initial Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  –

  	
  Form of Exchange Note

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  –

  	
  Form of Supplemental Guarantee

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
  –

  	
  Form of Notation of Guarantee

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  
	
   

  	
   

  
	
  Schedule 1.1(a)

  	
  Restructuring Charges included in
  Consolidated EBITDA

  
	
  Schedule 5.03

  	
  Agreements containing dividend
  restrictions

  

 

iv

 

	
  Schedule 5.06 –

  	
  Affiliate Transactions

  
	
  Schedule 5.11(b)

  	
  Existing Contractual Arrangements with
  BCI Group

  

 

v

 

EXHIBIT
C

 

 

FORM OF
SUPPLEMENTAL GUARANTEE

 

SUPPLEMENTAL
GUARANTEE (this “Supplemental  Guarantee”), dated as of
                      ,
between
                                     ,
(the “New Guarantor”), a direct or indirect Broadwing Inc. (or its
successor), an Ohio corporation (the “Company”), and The Bank of New
York, as trustee (the “Trustee”).

 

W I T N E S S E T
H

 

WHEREAS, the
Company and the Domestic Subsidiaries listed on the signature pages thereof
have each heretofore executed and delivered to the Trustee an Indenture (the “Indenture”),
dated as of March 26, 2003, providing for the issuance by the Company of its
Senior Subordinated Discount Notes due 2009 (the “Notes”); and

 

WHEREAS, Section 11.05
of the Indenture provides that under certain circumstances the Company is
required to cause the Guarantor to execute and deliver to the Trustee for the
benefit of the Holders a supplemental agreement pursuant to which the Guarantor
shall unconditionally guarantee all of the Company’s obligations under the
Notes pursuant to a Guarantee on the terms and conditions set forth herein;

 

WHEREAS, pursuant
to Section 13.01 of the Indenture, the Trustee, the Company and the
Guarantors are authorized to execute and deliver this Supplemental Indenture;

 

NOW THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the New Guarantor covenants and
agrees for the equal and ratable benefit of the Holders of the Notes as
follows:

 

1.             CAPITALIZED TERMS.  Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

 

2.             AGREEMENT TO GUARANTEE; EXCHANGE
AND REGISTRATION RIGHTS AGREEMENT.  The
New Guarantor hereby agrees, jointly and severally with all other Guarantors,
to unconditionally guarantee the Company’s obligations under the Notes on the
terms and subject to the conditions set forth in Article 11 and Article
12 of the Indenture and to be bound by all other applicable provisions of
the Indenture.  The Guarantor further
agrees to become a party to the Exchange and Registration Rights Agreement and
to be bound by all provisions thereof.

 

3.             RATIFICATION OF SUPPLEMENTAL
GUARANTEE; SUPPLEMENTAL GUARANTEES PART OF INDENTURE.  Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. 
This Supplemental Guarantee shall form a part of the Indenture for all
purposes, and every holder of Notes heretofore or hereafter authenticated and
delivered shall be bound hereby.

 

C-1

 

 

4.             NO RECOURSE AGAINST OTHERS.  No director, officer, employee, incorporator
or stockholder of the New Guarantor, as such, shall have any liability for any
obligations of the Company or any Guarantor under the Notes, any Guarantee, the
Indenture or this Supplemental Guarantee or for any claim based on, in respect
of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a Note waives
and releases all such liability.  The
waiver and release are part of the consideration for issuance of the
Notes.  Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of
the Securities and Exchange Commission that such a waiver is against public
policy.

 

5.             EFFECTIVENESS.  This Supplemental Guarantee shall be
effective upon execution by the parties hereto.

 

6.             RECITALS.  The recitals contained herein shall be taken as the statements of
the Company and the Guarantors assume no responsibility for their correctness.

 

7.             NEW YORK LAW TO GOVERN.  THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL GUARANTEE.

 

8.             TRUSTEE MAKES NO
REPRESENTATION.  The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Guarantee.

 

9.             COUNTERPARTS.  The parties may sign any number of copies of
this Supplemental Guarantee.  Each
signed copy shall be an original, but all of them together represent the same
agreement.

 

10.           EFFECT OF HEADINGS.  The Section headings herein are for
convenience only and shall not affect the construction hereof.

 

	
   

  	
  [New Guarantor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

C-2

 

EXHIBIT
D

 

FORM OF NOTATION
OF GUARANTEE

 

The undersigned
have guaranteed this Note on a subordinated basis as provided in the Indenture.

 

 

	
   

  	
  [GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

D-1

 

Schedule
1.1(a)

 

 

Restructuring
Charges Included in

Consolidated
EBITDA

 

	
  December 2001

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 2002

  	
   

  	
  $

  	
  4,100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 2002

  	
   

  	
  $

  	
  1,800,000

  	
   

  

 

 

Schedule 5.03

 

Restrictions on Transferability and
Dividend Payments as of 12-09-02

 

1.                                       The Operating Agreement dated December 31,
1998 between Cincinnati Bell Wireless Company and AT&T Wireless PCS Inc.,
together with the Related Agreements thereto contain limitations on the
transferability of the member interests and assets of Cincinnati Bell Wireless
LLC, and the payment of dividends.

 

2.                                       The Operating Agreement of Cincinnati Bell
Wireless Holdings LLC (“CBWH”) dated June 2, 2002 contains restrictions on the
ability of CBWH to transfer and obtain assets, and restrictions on affiliate
transactions.

 

 

Schedule 5.06

 

Affiliate
Transactions and Relationships with the BCI Group as of 12-09-02

 

1.                                       PENSION

 

The Company
and its Subsidiaries participate in the defined benefit pension plan (the
“Plan”) of the Company.  Each Subsidiary
is charged an expense related to its portion of the Plan, on a month-to-month
basis, based on the “all participants” allocation method, pursuant to which the
allocation of expenses of the Plan are calculated by independent actuaries.

 

2.                                       MANAGEMENT
FEE ARRANGEMENT

 

Corporate expenses of the
Company incurred on behalf of all of the Company’s Subsidiaries are allocated,
on a month-to-month basis, to the Subsidiaries based on the Massachusetts
Formula, a common method of expense allocation.   Services received by the Subsidiaries from the Company pursuant
to this arrangement include, but are not limited to treasury, tax, accounting,
finance, cash management, communications, legal and information technology.

 

3.             INTERCOMPANY PROMISSORY NOTE

 

BCI is a party to an
Intercompany Promissory Note dated as of June 26, 2001 (the “Note”), payable to
the Company and evidencing funds provided by the Company to BCI for its
operating, investing and financing needs. 
The Note bears interest at the rate applicable to borrowings by the Company
under the Credit Agreement, which rate is adjusted monthly.

 

4.                                       PAYROLL
AND ACCOUNTS PAYABLE PROCESSING

 

Cincinnati Bell Telephone
(“CBT”), a wholly-owned subsidiary of the Company, provides payroll and
accounts-payable processing services, on a month-to-month basis, for the
Company and its Subsidiaries.  The rate
payable for these services is based on a “per check” fee commensurate with
commercially available third party processing rates.

 

5.             PROVISION OF
SERVICES TO CINCINNATI BELL TELEPHONE

 

Broadwing Technology
Services provides subcontracting services to CBT for certain of CBT’s customers
who have contracted for managed internet and hardware services.  The subcontracting services are provided to
CBT on an arms-length basis.

 

 

Schedule 5.11(b)

 

Existing
Contractual Arrangements with BCI Group

 

1.             All
existing arrangements currently between Broadwing Inc. and its subsidiaries on
the one hand and BCI and its Subsidiaries on the other hand that become BRW
Sale Arrangements (as defined in the Credit Agreement on the date hereof) upon
effectiveness of the BCI Sale Agreement.

 

2.             Provision
by Broadwing Technology Solutions Inc. of subcontracting services for CBT
hosting/collocation customers provided on an arm’s length basis.

 

3.             Provision
by Broadwing Technology Solutions Inc. of helpdesk support services to
Broadwing Inc. and its subsidiaries provided on an arm’s length basis.

 

4.             Provision
by CBT of local access equipment and services for BCI subsidiaries provided on
an arm’s length basis.

 

5.             Shared
intercompany resources and supplies such as copiers, telephones, computers,
etc. the cost of which is fairly allocated between the users based on their
respective levels of utilization.

 

6.             Lease
of CBT data center space by Broadwing Technology Solutions Inc. for fair market
rent and separately identified as space of the lessee.Execution
Copy

 

Exhibit
4(c)(vii)

 

WARRANT AGREEMENT

 

Dated as of March
26, 2003

 

by and among

 

BROADWING INC.,

 

GS MEZZANINE
PARTNERS II, L.P.,

 

GS MEZZANINE
PARTNERS II OFFSHORE, L.P., and

 

OTHER PURCHASERS
NAMED HEREIN

 

 

WARRANT
AGREEMENT

 

TABLE
OF CONTENTS*

 

	
  SECTION
  1.

  	
  DEFINITIONS

  
	
   

  	
   

  
	
  SECTION
  2.

  	
  WARRANT
  CERTIFICATES

  
	
   

  	
   

  
	
  SECTION
  3.

  	
  ISSUANCE
  OF WARRANTS

  
	
   

  	
   

  
	
  SECTION
  4.

  	
  EXECUTION
  OF WARRANT CERTIFICATES

  
	
   

  	
   

  
	
  SECTION
  5.

  	
  REGISTRATION

  
	
   

  	
   

  
	
  SECTION
  6.

  	
  REGISTRATION
  OF TRANSFERS AND EXCHANGES

  
	
   

  	
   

  
	
  SECTION
  7.

  	
  TERMS
  OF WARRANTS; EXERCISE OF WARRANTS

  
	
   

  	
   

  
	
  SECTION
  8.

  	
  PAYMENT
  OF TAXES

  
	
   

  	
   

  
	
  SECTION
  9.

  	
  MUTILATED
  OR MISSING WARRANT CERTIFICATES

  
	
   

  	
   

  
	
  SECTION
  10.

  	
  RESERVATION
  OF WARRANT SHARES

  
	
   

  	
   

  
	
  SECTION
  11.

  	
  ADJUSTMENT
  OF NUMBER OF WARRANT SHARES

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Adjustments for Change in Common Stock

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Adjustment for Rights Issue

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Adjustments for Issuances

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Superseding Adjustment

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Adjustment for Other Distributions

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Current Market Price

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  No Amendments

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Voluntary Increases

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  When De Minimis Adjustment May Be Deferred

  
	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Consolidation, Merger, Reorganization or Recapitalization
  of the Company

  
	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Consideration Received

  
	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  When Issuance or Payment May Be Deferred

  
				

 

*                                       This
Table of Contents does not constitute a part of this Agreement or have any
bearing upon the interpretation of any of its terms or provisions.

 

i

 

	
   

  	
  (m)

  	
  Form of Warrants

  
	
   

  	
   

  	
   

  
	
   

  	
  (n)

  	
  Adjustment in Exercise Price

  
	
   

  	
   

  	
   

  
	
   

  	
  (o)

  	
  No Dilution or Impairment.

  
	
   

  	
   

  
	
  SECTION
  12.

  	
  VALUATION
  BY INDEPENDENT FINANCIAL EXPERT

  
	
   

  	
   

  
	
  SECTION
  13.

  	
  FRACTIONAL
  INTERESTS

  
	
   

  	
   

  
	
  SECTION
  14.

  	
  NOTICES
  TO WARRANT HOLDERS; RIGHTS OF WARRANT 
  HOLDERS.

  
	
   

  	
   

  
	
  SECTION
  15.

  	
  NOTICES

  
	
   

  	
   

  
	
  SECTION
  16.

  	
  SUPPLEMENTS
  AND AMENDMENTS

  
	
   

  	
   

  
	
  SECTION
  17.

  	
  SUCCESSORS

  
	
   

  	
   

  
	
  SECTION
  18.

  	
  TERMINATION

  
	
   

  	
   

  
	
  SECTION
  19.

  	
  GOVERNING
  LAW

  
	
   

  	
   

  
	
  SECTION
  20.

  	
  BENEFITS
  OF THIS AGREEMENT

  
	
   

  	
   

  
	
  SECTION
  21.

  	
  HEADINGS

  
	
   

  	
   

  
	
  SECTION
  22.

  	
  SUBMISSION
  TO JURISDICTION

  
	
   

  	
   

  
	
  SECTION
  23.

  	
  WAIVER
  OF JURY TRIAL

  
	
   

  	
   

  
	
  SECTION
  24.

  	
  SERVICE
  OF PROCESS

  
	
   

  	
   

  
	
  SECTION
  25.

  	
  COUNTERPARTS

  
	
   

  	
   

  
	
  EXHIBIT A.

  	
  FORM OF WARRANT CERTIFICATE

  
	
   

  	
   

  
	
  EXHIBIT B.

  	
  FORM OF TRANSFER

  
	
   

  	
   

  
	
  SCHEDULE A

  	
  ISSUANCE OF WARRANTS

  
				

 

ii

 

WARRANT AGREEMENT, dated
as of March 26, 2003, by and between Broadwing Inc., an Ohio corporation (the “Company”),
GS Mezzanine Partners II, L.P., a Delaware limited partnership (“GS
Mezzanine”), GS Mezzanine Partners II Offshore, L.P. (“GS Offshore”),
an exempted limited partnership organized under the laws of the Cayman Islands,
and any other affiliate of GS Mezzanine who purchases the Offered Securities
(as defined in the Purchase Agreement) being issued under the Purchase Agreement
at the Closing (as defined in the Purchase Agreement) (together with GS
Mezzanine, GS Offshore and one or more partnerships, corporations, trusts or
other organizations specified as a Purchaser in Schedule 1 to the Purchase
Agreement which controls, is controlled by, or is under common control with, GS
Mezzanine or GS Offshore, the “GS Purchasers”), and any other person
specified as a Purchaser in Schedule 1 to the Purchase Agreement (together with
the GS Purchasers, the “Purchasers”).

 

RECITALS

 

WHEREAS, the Company and the parties listed on the
signature pages thereof have entered into a Purchase Agreement, dated as of
December 9, 2002 (as amended, supplemented or modified from time to time, the “Purchase
Agreement”), with the Purchasers, pursuant to which the Company has agreed
to issue and sell to the Purchasers (i) $441,628,051.27 principal amount at
maturity of the Company’s Senior Subordinated Discount Notes due 2009 (the “Notes”),
to be issued pursuant to an Indenture, dated the date hereof, by and between
the Company and a trustee reasonably satisfactory to the Company and the
Purchasers (as amended, supplemented or modified from time to time, the “Indenture”)
and (ii) 17,500,000 warrants (such warrants and all warrants issued in
exchange, substitution or replacement therefor, the “Warrants”) to
purchase shares of common stock, par value $.01 per share, of the Company (the
“Common Stock”) at an exercise price of $3.00 per share (each Warrant
representing on the Closing Date the right to purchase one share of Common
Stock); and

 

WHEREAS, the parties hereto desire to enter into this
Agreement in order to set forth the terms and conditions of the Warrants.

 

NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1.                                          DEFINITIONS

 

As used in this Agreement, the following capitalized
terms will have the respective meanings:

 

“Agreement” and all references thereto means
this Agreement as it may from time to time be amended, supplemented or
modified.

 

“Applicable Share” shall have the meaning set
forth in Section 11(f).

 

“Board” means the Board of Directors of the
Company.

 

1

 

“Capital Stock” of any Person means any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such
Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.

 

“Closing” shall have the meaning set forth in
the Purchase Agreement.

 

“Closing Date” shall have the meaning set forth
in the Purchase Agreement.

 

“Commission” means the Securities and Exchange
Commission.

 

“Common Stock” shall have the meaning set forth
in the Recitals.

 

“Conversion Right” shall have the meaning set
forth in Section 7.

 

“Current Market Price” shall have the meaning
set forth in Section 11(f).

 

“Exercise Price” shall have the meaning set
forth in Section 7.

 

“Exercise Rate” shall have the meaning set
forth in Section 11.

 

“GS Mezzanine” shall have the meaning set
forth in the preamble to this Agreement.

 

“Company” shall have the meaning set forth in
the preamble to this Agreement.

 

“Expiration Date” means the tenth anniversary
of the Closing Date or, if such day is not a business day, the next succeeding
business day.

 

“Indenture” shall have the meaning set forth in
the Recitals.

 

“Independent Financial Expert” shall have the
meaning set forth in Section 12.

 

“Independent Expert” shall have the meaning set
forth in Section 12.

 

“Notes” shall have the meaning set forth in the
Recitals.

 

“Person” means any individual, corporation,
partnership, limited liability company, association, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or other entity.

 

“Purchase Agreement” shall have the meaning set
forth in the Recitals.

 

“Purchasers” shall have the meaning set forth
in the Recitals.

 

“Register Office” shall have the meaning set
forth in Section 6.

 

“Securities Act” means the Securities Act of
1933, as amended.

 

2

 

“Senior Financial Officer” means the chief
financial officer, principal accounting officer, treasurer or controller of the
Company.

 

“Transaction” shall have the meaning set forth
in Section 11(j).

 

“Transfer Agent” shall have the meaning set
forth in Section 10.

 

“Transfer Notice” shall have the meaning set
forth in Section 6.

 

“Value Report” shall have the meaning set forth
in Section 12.

 

“Warrant holder(s)” or “holders of Warrant
certificates” means, in each case, registered holders of Warrant
certificates.

 

“Warrants” shall have the meaning set forth in
the Recitals.

 

“Warrant Shares” means shares of Common Stock
issuable upon exercise of the Warrants or which have been issued upon the
exercise of the Warrants.

 

SECTION 2.                                          WARRANT
CERTIFICATES

 

The Warrant certificates to be issued and delivered
pursuant to this Agreement shall be in registered form only and shall be
substantially in the form set forth in Exhibit A attached hereto.

 

SECTION 3.                                          ISSUANCE OF
WARRANTS

 

The Company, simultaneously with the Closing, shall
deliver to each Purchaser duly executed Warrant certificates registered in the
name of each Purchaser for the purchase of the number of Warrant Shares set
forth opposite the name of such Purchaser on Schedule A to this
Agreement.

 

SECTION 4.                                          EXECUTION OF
WARRANT CERTIFICATES

 

Warrant certificates evidencing Warrants, each Warrant
to purchase initially one share of Common Stock, shall be duly executed, on the
Closing Date, by the Company and delivered to the registered holders of the
Warrants in accordance with the provisions of Section 3.  Warrant certificates shall be signed on
behalf of the Company by its Chairman of the Board, or its President or a Vice
President and by its Secretary or an Assistant Secretary under its corporate
seal.  Each such signature upon the
Warrant certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
certificates and, for that purpose, the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant certificates shall be delivered or disposed of such
Person shall have ceased to hold such office. 
In case any officer of the Company who shall have signed any of the
Warrant certificates shall cease to be such officer

 

3

 

before such Warrant certificates shall have been
delivered or disposed of by the Company, such Warrant certificates nevertheless
may be delivered or disposed of as though such Person had not ceased to be such
officer of the Company.  Any Warrant
certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Warrant certificate, shall be a proper
officer of the Company to sign such Warrant certificate, although at the date
of the execution of this Agreement any such Person was not such an officer.

 

SECTION 5.                                          REGISTRATION

 

The Company shall number and register the Warrant
certificates in a register as they are issued by the Company.  The Company may deem and treat the
registered holder(s) of the Warrant certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes, and the Company shall not be affected by any
notice to the contrary.

 

SECTION 6.                                          REGISTRATION OF
TRANSFERS AND EXCHANGES

 

The Company shall cause to be kept at its principal
office (the “Register Office”) a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Warrant certificates and of transfers or exchanges of Warrant
certificates at the Warrant holder’s option. 
The Company shall promptly register the transfer of any outstanding
Warrant certificates, upon the records to be maintained by it for that purpose,
upon surrender thereof.  Upon any such
registration of transfer, a new Warrant certificate shall be issued to the
transferee(s) and the surrendered Warrant certificate shall be canceled by the
Company.  Canceled Warrant certificates
shall thereafter be disposed of in a manner satisfactory to the Company in
accordance with any applicable laws. 
Whenever any Warrant certificates are surrendered for exchange, the
Company shall execute and deliver the Warrant certificates that the Warrant
holder making the exchange is entitled to receive.  All Warrant certificates issued upon any registration of transfer
or exchange of Warrant certificates in accordance with the provisions of this Section
6 shall be the valid obligations of the Company, evidencing the same
obligations and entitled to the same benefits under this Agreement, as the
Warrant certificates surrendered for such registration of transfer or
exchange.  Every Warrant certificate
surrendered for registration of transfer or exchange shall (if so required by
the Company) be duly endorsed, or be accompanied by a written instrument of
transfer in the form of Exhibit B attached hereto, duly executed by the
Warrant holder or its attorney duly authorized in writing.  No service charge will be made for any
registration of transfer or exchange upon surrender of Warrant certificates or
any issuance of Warrant certificates pursuant to Section 3 or this Section 6,
but the Company may require payment of a sum sufficient to cover any stamp or
other governmental charge or tax which may be imposed in connection with any
such transfer or exchange.  Any Warrant
certificate when duly endorsed in blank (with signature guaranteed) shall be
deemed negotiable.  The holder of any
Warrant certificate duly endorsed in blank may be treated by the Company and
all other Persons dealing therewith as the absolute owner thereof for any
purpose and as the Person entitled to exercise the rights represented thereby,
or to the transfer thereof on the register of Warrants maintained by the
Company, any notice to the contrary notwithstanding; but until such transfer on
such register, the Company may treat the registered Warrant holder as the owner
for all purposes.  In addition to any
other legend which may be required by applicable law, each

 

4

 

Warrant certificate representing Warrants and each
certificate representing Warrant Shares issued upon exercise of the Warrant
shall have endorsed, to the extent appropriate, upon its face the following
words:

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS
OF ANY JURISDICTION.  SUCH SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO
THE DISPOSITION OF SECURITIES, INCLUDING RULE 144, SUBJECT TO THE COMPANY’S
RIGHT, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO THIS CLAUSE (II),
TO REQURE THE DELIVERY OF AN OPINION OF COUNSEL.

 

Prior to any transfer or attempted transfer of any
Warrants, the holder of such Warrants shall give 10 days’ prior written notice
(a “Transfer Notice”) to the Company of such holder’s intention to
effect such transfer, describing the manner and circumstances of the proposed
transfer, and, if requested by the Company, obtain from counsel to such holder,
who shall be reasonably satisfactory to the Company, an opinion that the
proposed transfer of such Warrants may be effected without registration under
the Securities Act, unless such requirement is waived by the Company.  After receipt of the Transfer Notice and
opinion (unless waived by the Company), the Company shall, within five days
thereof, so notify the holder of such Warrants and such holder shall thereupon,
subject to compliance with the other restrictions on transfer contained herein,
be entitled to transfer such Warrants, in accordance with the terms of the
Transfer Notice.  Each Warrant issued
upon such transfer shall bear the restrictive legend with respect to the
Securities Act set forth above, unless, in the opinion of counsel to such
holder (which opinion must be reasonably satisfactory to the Company and its
counsel), such legend is not required in order to ensure compliance with the
Securities Act.  The holder of the
Warrants giving the Transfer Notice shall not be entitled to transfer such Warrants
until receipt of notice from the Company under this Section 6.

 

SECTION 7.                                          TERMS OF
WARRANTS; EXERCISE OF WARRANTS

 

Subject to the terms of this Agreement, the Warrants
may be exercised at any time after the date hereof and prior to the close of
business on the Expiration Date; provided, however, that holders
of Warrants will be able to exercise their Warrants only if the exercise of
such Warrants is exempt from the registration requirements of the Securities
Act, and the Warrant Shares are qualified for sale or exempt from qualification
under the applicable securities laws of the states or other jurisdictions in
which such holders reside.  Each
Warrant, when exercised in accordance with the terms hereof and upon payment in
cash (or by tendering the Notes, as

 

5

 

provided in the next succeeding paragraph) of the
exercise price of $3.00 (as adjusted pursuant to Section 11(n)) per
share for the Common Stock (the “Exercise Price”) will entitle the
holder thereof to acquire from the Company (and the Company shall issue to such
holder of a Warrant) one fully paid and nonassessable share of each of the
Company’s authorized but unissued Common Stock (subject to adjustment as
provided in Section 11).  No cash
dividend shall be paid to a holder of Warrant Shares issuable upon the exercise
of Warrants unless such holder was, as of the record date for the declaration
of such dividend, the record holder of such Warrant Shares.

 

A Warrant may be exercised upon surrender to the
Company at the Register Office of the certificate or certificates evidencing
the Warrants to be exercised with the form of election to purchase on the
reverse thereof duly filled in and signed, together with payment to the Company
of the Exercise Price for each Warrant Share issuable upon the exercise of such
Warrants.  To the extent any holder of a
Warrant surrenders with such Warrant any Note then held by such holder, such
holder shall be deemed to have paid that portion of the aggregate Exercise
Price for all Warrant Shares then exercised equal to 100% of that portion of
the Accreted Value (as defined in the Indenture) of such Note that the holder
thereof directs the Company to accept as payment of such aggregate Exercise
Price, which Note shall be cancelled and not reissued.  To the extent the Accreted Value of such
tendered Note is greater than the aggregate amount of the Exercise Price for
all Warrant Shares then exercised paid by surrender thereof, the Company shall
deliver a new Note to the tendering holder thereof, in accordance with the
provisions of the Indenture, dated the date of the original issuance of the
tendered Note, in the face amount which bears the same proportion to the face
amount of such tendered Note immediately prior to such redemption as the
unredeemed portion of the Accreted Value of such tendered Note bears to the
Accreted Value of such tendered Note immediately prior to such redemption.  At the time of the issuance of the Warrant
Shares pursuant to the exercise of the Warrants by any holder, the Company
shall pay all accrued and unpaid interest on any Note of such holder cancelled
pursuant to this paragraph up to but excluding the date of such issuance.

 

In lieu of payment of the Exercise Price pursuant to
the preceding paragraph, the Warrant holder shall have the right to require the
Company to convert the Warrants, in whole or in part and at any time or times
(the “Conversion Right”), into Warrant Shares by surrendering to the
Company the certificate or certificates evidencing the Warrant to be converted
with the form of notice of conversion on the reverse thereof duly filled in and
signed.  Upon exercise of the Conversion
Right, the Company shall deliver to the Warrant holder (without payment by the
holder of the Warrant of any Exercise Price) that number of Warrant Shares
which is equal to the quotient obtained by dividing (x) the value of the
number of Warrants being exercised at the time the Warrants are exercised
(determined by subtracting the aggregate Exercise Price for all such Warrants
immediately prior to the exercise of the Warrants from the aggregate Current
Market Price (determined pursuant to Section 11(f)) of that number of
Warrant Shares purchasable upon exercise of such Warrants immediately prior to
the exercise of the Warrants (taking into account all applicable adjustments
pursuant to Section 11) by (y) the Current Market Price of one
share of Common Stock immediately prior to the exercise of the Warrants.

 

Subject to the provisions of Section 8,
upon surrender of the Warrant certificate or certificates, the Company shall
issue and deliver with all reasonable dispatch, to or upon the

 

6

 

written order of the Warrant holder and in such name
or names as the Warrant holder may designate, a certificate or certificates for
the number of Warrant Shares issuable or other securities or property to which
such holder is entitled hereunder upon the exercise of such Warrants,
including, at the Company’s option, any cash payable in lieu of fractional
interests as provided in Section 13.  Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Exercise Price.  The Company may issue fractional shares of
Common Stock upon exercise of any Warrants in accordance with Section 13.

 

The Warrants shall be exercisable, at the election of
the holders thereof, either in full or from time to time in part and, in the
event that a certificate evidencing Warrants is exercised in respect of fewer
than all of the Warrant Shares issuable on such exercise at any time on or
prior to the Expiration Date, a new certificate evidencing the remaining
Warrant or Warrants will be issued, and the Company will duly execute and
deliver the required new Warrant certificate or certificates pursuant to the
provisions of Section 4 and this Section 7.

 

All Warrant certificates surrendered upon exercise of
Warrants shall be canceled by the Company. 
Such canceled Warrant certificates shall then be disposed of in a manner
satisfactory to the Company and in accordance with any applicable law.  The Company shall account promptly in
writing with respect to Warrants exercised and all monies received for the
purchase of the Warrant Shares through the exercise of such Warrants.  In the event that the Company shall purchase
or otherwise acquire Warrants, the Company may elect to have the Warrants
canceled and retired.  The Company shall
keep copies of this Agreement and any notices given or received hereunder
available for inspection by the registered Warrant holders during normal
business hours and upon reasonable notice at the Register Office.

 

SECTION 8.                                          PAYMENT OF TAXES

 

The Company will pay all taxes and other governmental
charges attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall
not be required to pay any such taxes or charges which may be payable in
respect of any transfer involved in the issue of any Warrant certificates or
any certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant certificates
unless or until the Person or Persons requesting the issuance thereof shall
have paid to the Company the amount of such taxes or charges or shall have
established to the satisfaction of the Company that such taxes or charges have
been paid.

 

SECTION 9.                                          MUTILATED OR
MISSING WARRANT CERTIFICATES

 

In case any of the Warrant certificates shall be
mutilated, lost, stolen or destroyed, the Company may in its discretion issue
in exchange and substitution for and upon cancellation of the mutilated Warrant
certificate, or in lieu of and substitution for the Warrant certificate lost,
stolen or destroyed, a new Warrant certificate of like tenor and representing
an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Company of such loss,

 

7

 

theft or destruction of such Warrant certificate and
indemnity and security therefor, if requested, also satisfactory (provided
that if the Warrant holder is a Purchaser or another Warrant holder with a
minimum net worth of at least $50,000,000, such Person’s own unsecured
agreement of indemnity shall be deemed to be satisfactory) to the Company.  Applicants for such substitute Warrant
certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.

 

SECTION 10.                                    RESERVATION OF
WARRANT SHARES

 

The Company will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock or its authorized Common Stock held in its treasury,
that number of shares of Common Stock sufficient for the purpose of enabling it
to satisfy any obligation to issue Warrant Shares upon the exercise of all
outstanding Warrants.

 

The transfer agent for the Common Stock (which may be
the Company if it is acting as transfer agent) (the “Transfer Agent”)
and every subsequent transfer agent for any shares of the Company’s equity
issuable upon the exercise of any Warrants will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall be
required for such purpose.  The Company
will keep a copy of this Agreement on file with the Transfer Agent for any
shares of the Company’s equity issuable upon the exercise of the Warrants.  The Company will supply such Transfer Agent
with duly executed stock certificates for purposes of honoring all outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement
and the Company will provide or otherwise make available any cash which may be
payable as provided in Section 13. 
The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto which are transmitted to each
Warrant holder pursuant to Section 14.

 

The Company covenants that all Warrant Shares which
may be issued upon exercise of Warrants have been duly authorized and will,
upon payment of the Exercise Price or upon the exercise of the Conversion Right
and issuance, be duly and validly issued, fully paid and nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.

 

SECTION 11.                                    ADJUSTMENT OF
NUMBER OF WARRANT SHARES

 

Each Warrant will initially be exercisable by the
holder thereof into one share of Common Stock. 
The number of Warrant Shares that may be purchased upon the exercise of
each Warrant (the “Exercise Rate”) will be subject to adjustment from
time to time upon the occurrence of the events enumerated in this Section 11.  For purposes of this Section 11, the Common
Stock shall mean shares now or hereafter authorized of any class of common
stock of the Company, however designated, that has the right (subject to any
prior rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount.

 

(a)                                  Adjustments for Change in Common Stock.  If at any time after the date of 

 

8

 

this Agreement the Company:

 

(1)                                  pays
a dividend or makes a distribution on its Common Stock exclusively in shares of
its Common Stock;

 

(2)                                  subdivides
its outstanding shares of Common Stock into a greater number of shares;

 

(3)                                  combines
its outstanding shares of Common Stock into a smaller number of shares;

 

(4)                                  issues
by reclassification of its Common Stock any Capital Stock of the Company; or

 

(5)                                  pays
a dividend or makes a distribution on its Common Stock in shares of its Capital
Stock other than Common Stock;

 

then the Exercise Rate in effect immediately prior to
such action shall be proportionately adjusted upon occurrence of such event so
that the holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of equity of the Company which such holder would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action (or, in the case of a dividend or distribution
of Common Stock, immediately prior to the record date therefor).  An adjustment made pursuant to this Section
11(a) shall become effective immediately after the distribution date,
retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of its equity, and shall
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification. 
If upon exercise of a Warrant after an adjustment to the Exercise Rate
pursuant to clauses (4) or (5) of this Section 11(a),
the holder of such Warrant may receive shares of two or more classes or series
of equity of the Company, the exercise rights and the Exercise Rate of each
class of equity shall thereafter be subject to further adjustment on terms
comparable to those applicable to the Common Stock in this Section 11.  The adjustment pursuant to this
Section 11(a) shall be made successively each time that any event
listed in this Section 11(a) above shall occur.

 

(b)                                 Adjustment for Rights Issue.  In case the Company shall issue to all
holders of Common Stock (other than a distribution covered by any of paragraphs
(a) or (c) of this Section 11), or shall make a dividend
or other distribution on the Common Stock, consisting exclusively of (i)
rights, options or warrants entitling the holders thereof to subscribe for or
purchase Common Stock (provided, however, that no adjustment
shall be made under Section 11(b) or (c) upon the exercise of such
rights, options or warrants) or (ii) securities convertible into or
exchangeable for Common Stock (including, without limitation, any rights
issuance concurrent with the issuance of Warrants) (provided, however, that no
adjustment shall be made under Section 11(b) or (c) upon the
conversion or exchange of such securities (other than issuances specified in
(i) or (ii) which are made as the result of anti-dilution adjustments in such

 

9

 

securities)) at a price per share (determined in the
case of such rights, options, warrants or convertible or exchangeable
securities, by dividing (x) the total consideration payable to the Company
upon exercise, conversion or exchange of such rights, options, warrants or convertible
or exchangeable securities, by (y) the total number of shares of such
class or series of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) less than the Current Market Price (as
determined in accordance with paragraph (f) of this Section 11)
on the date fixed for the determination of shareholders entitled to receive
such rights, options, or warrants or convertible or exchangeable securities
(other than in connection with the adoption of a shareholders rights plan by
the Company), the number of Warrant Shares for which each Warrant may be
exercised shall be determined (and the Exercise Rate shall be appropriately
adjusted) by multiplying the number of Warrant Shares issuable upon exercise of
such Warrant immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such rights, options or
warrants, or convertible or exchangeable securities, by a fraction (not less
than one) the numerator of which shall be the number of fully diluted shares of
Common Stock outstanding immediately after giving effect to such dividend or
other distribution (and assuming that such rights, options, warrants or
convertible or exchangeable securities had been fully exercised or converted,
as the case may be) and the denominator of which shall be the number of fully
diluted shares of Common Stock outstanding at the close of business on the date
fixed for the determination of shareholders entitled to receive such rights,
options, or warrants or convertible or exchangeable securities plus the number
of shares of Common Stock which the aggregate consideration (as determined in
good faith by the Board) that would be received by the Company for the
additional shares of Common Stock to be issued, purchased or subscribed for
upon exercise of such rights, options or warrants or upon conversion or
exchange of such convertible or exchangeable securities would purchase at the
Current Market Price (as determined in accordance with paragraph (f) of
this Section 11) on the date fixed for the determination of shareholders
entitled to receive such rights, options or warrants, or convertible or
exchangeable securities.  For the
purposes of this paragraph (b), the number of shares of Common Stock at any
time outstanding shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of Common Stock.

 

(c)                                  Adjustments for Issuances.  In case the Company shall issue (and no
prior adjustments for such issuance has been made under Section 11(a) or
Section 11(b)) Common Stock or rights, options or warrants entitling the
holders thereof to subscribe for or purchase Common Stock or securities
convertible into or exchangeable for Common Stock for a consideration per share
of Common Stock (determined in the case of such rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total amount
receivable by the Company in consideration of the sale and issuance of such
rights, options, warrants or convertible or exchangeable securities, plus the
total consideration payable to the Company upon exercise, conversion or
exchange thereof, by (y) the total number of shares of Common Stock
covered by such rights, options, warrants or convertible or exchangeable securities)
less than the Current Market Price (as determined in accordance with paragraph (f)
of this Section 11), the number of Warrant Shares for which each Warrant
may be exercised shall be determined (and the Exercise Rate shall be
appropriately adjusted) by multiplying the number of Warrant Shares issuable
immediately prior to the close of business on the date on which the Company
fixes the offering price of such additional shares by a fraction (not less than
one) the numerator of which

 

10

 

shall be the number of fully diluted shares of Common
Stock outstanding immediately after giving effect to such issuance (and
assuming, in the case of rights, options, warrants or convertible or
exchangeable securities that such rights, options, warrants or convertible or
exchangeable securities had been fully exercised or converted, as the case may
be) and the denominator of which shall be the number of fully diluted shares of
Common Stock outstanding at the close of business on the date on which the
Company fixes the offering price of such additional shares plus a number of
shares of Common Stock which the aggregate consideration (as determined in good
faith by the Board) that would be received by or payable to the Company for the
additional shares of Common Stock so issued or sold or to be issued, purchased
or subscribed for upon exercise of such rights, options or warrants or upon
conversion or exchange of such convertible or exchangeable securities would
purchase at the Current Market Price (as determined in accordance with
paragraph (f) of this Section 11) on the date on which the
Company fixes the offering price of such additional shares; provided
that, in the event that the Company issues equity securities as part of a share
with debt securities, the allocation of the purchase price shall be determined
in good faith by the Board.  The
increase in the number of Warrant Shares provided for in the preceding sentence
shall not apply upon (i) the issuance of securities in transactions
described in paragraphs (a),  (b) or (k) of this Section
11 or pursuant to the exercise, exchange or conversion of any such
securities issued under this paragraph (c); (ii) the issuance of Common
Stock or other equity securities of the Company in any merger or other
acquisition of a business approved by the Board; (iii) the issuance of
Common Stock in a bona fide underwritten public offering; (iv) the issuance of
Common Stock upon the exercise of Warrants; (v) the issuance of options or rights
to acquire Common Stock or Common Stock equivalents (including, without
limitation, pursuant to the exercise of such options or rights) pursuant to a
compensatory equity plan adopted by the Board; (vi) the issuance of options or
rights to acquire Common Stock or Common Stock equivalents (including, without
limitation, pursuant to the exercise of such options or rights) to (1) lessors,
financial institutions or similar entities in transactions approved by the
Board, the principal purpose of which is not raising capital through the sale
of equity securities, or (2) other Persons primarily for the purpose of joint
ventures, technology or other licensing or research and development activities,
or other transactions the principal purpose of which is not raising capital
through the sale of equity securities, provided that the number of Common Stock
equivalents exempted pursuant to this clause (vi) shall not exceed 10,000,000
shares of Common Stock (appropriately adjusted for stock splits, combinations
and the like); or (vii) conversion of Convertible Subordinated Notes (as
defined in the Indenture) into Common Stock at a conversion price and a
conversion rate set forth in the Convertible Subordinated Indenture (as defined
in the Indenture) as in effect on the date hereof.

 

(d)                                 Superseding Adjustment.  If, at any time (x) after any
adjustment in the number of shares issuable upon exercise of the Warrants shall
have been made pursuant to Section 11(b) or 11(c) on the
basis of the issuance of rights, options or warrants entitling the holders
thereof to subscribe for or purchase Common Stock or securities convertible
into or exchangeable for Common Stock, or (y) after new adjustments in the
number of shares issuable upon exercise of the Warrants shall have been made
pursuant to this Section 11(d),

 

(i)                                     the
right of conversion, exercise or exchange in such rights, options or warrants,
or convertible or exchangeable securities shall expire, and the right of

 

11

 

conversion, exercise or exchange in respect of any or
all of such rights, options or warrants, or convertible or exchangeable
securities shall not have been exercised, and/or

 

(ii)                                  the
consideration per share for which shares of Common Stock are issuable pursuant
to the terms of such rights, options or warrants, or convertible or
exchangeable securities shall be increased or decreased by virtue of provisions
therein or by virtue of the conversion rate or exchange rate of such security
being changed contained for an automatic increase or decrease in such
consideration per share upon the arrival of a specified date or the happening
of a specified event or by agreement between the Company and the holders of
such securities,

 

such previous adjustment shall be rescinded and annulled.  Thereupon, a recomputation shall be made of
the effect of such rights, options or warrants, or convertible or exchangeable
securities on the basis of

 

(iii)                               treating the number of
shares of Common Stock, if any, theretofore actually issued or issuable
pursuant to the previous exercise of such right of conversion, exercise or
exchange as having been issued on the date or dates of such exercise and for
the consideration actually received or receivable therefor, and treating the
rights, options or warrants, or convertible or exchangeable securities which
have expired and shall not have been exercised as if such securities had not
been issued, and

 

(iv)                              with
respect to securities as to which the consideration per share of Common Stock
has been changed, treating any such rights, options or warrants or convertible
or exchangeable securities which then remain outstanding as having been granted
or issued immediately after the time of such increase or decrease for the
consideration per share for which shares of Common Stock are issuable under
such rights, options or warrants or convertible or exchangeable securities, and

 

in each such case, a new adjustment in the number of
shares issuable upon exercise of the Warrants shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and
annulled.  No adjustment in the number
of shares issuable upon exercise of the Warrants pursuant to this Section 11(d)
shall change the number of or otherwise affect any shares of Common Stock
issued prior to such adjustment upon exercise of the Warrants.

 

(e)                                  Adjustment for Other Distributions.  In case the Company shall (i) make a
dividend or other distribution on the Common Stock (other than a distribution
covered by any of paragraphs (a), (b), or (c) of this Section 11),
or (ii) purchase or otherwise acquire for value any shares of Common
Stock, then the number of Warrant Shares for which each Warrant may be
exercised shall be determined (and the Exercise Rate shall be appropriately
adjusted) by multiplying the number of Warrant Shares issuable upon exercise of
such Warrant immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such distribution or the
date of such purchase by a fraction (not less than one) of which the numerator
shall be the Current Market Price (determined as provided in paragraph (f)
of this Section 11) on the date fixed for the determination of
shareholders entitled to receive such distribution on the date of such purchase
and the denominator of which shall be such Current

 

12

 

Market Price minus the result obtained by dividing the
aggregate amount of cash and the fair market value (as determined in good faith
by the Board) of any property distributed or paid to effect such distribution
or repurchase, as the case may be, by the number of shares of Common Stock
outstanding immediately prior to the date fixed for the determination of
shareholders entitled to receive such distribution on the date of such
purchase; provided that, any particular adjustment of the number of
Warrant Shares pursuant to this paragraph (e) shall be of no force and effect
if the Company pays in respect of a distribution or a purchase which gave rise
to such adjustment to each Warrant holder, upon exercise of such Warrant
holder’s Warrant(s), an amount of consideration to which such Warrant holder
would have been entitled in connection with such distribution or purchase had
such Warrant holder exercised its Warrant(s) immediately prior to the close of
business on the date fixed for the determination of shareholders entitled to
receive such distribution or the date of such purchase.

 

(f)                                    Current
Market Price.  For the
purpose of any computation under Section 7 or this Section 11,
the current market price (the “Current Market Price”) per share of
Common Stock of the Company or any other security (the “Applicable Share”)
on any date shall be deemed to be the average of the daily closing prices of
such Applicable Share on the principal national securities exchange on which
the Applicable Shares are listed or admitted to trading or, if the Applicable
Shares are not so listed, the average daily closing bid prices of such
Applicable Shares on the Nasdaq National Market System if the Applicable Shares
are quoted thereon, in any such case, for the twenty (20) consecutive
trading days ending on the day before the date in question.  If, on any date on which computation of the
Current Market Price is to be made hereunder, the Applicable Shares are not so
listed or quoted on a national securities exchange or the Nasdaq National
Market System, the Current Market Price (except as otherwise provided herein)
shall be determined by the Board in good faith; provided, that the Company
shall give written notice of such determination to the Warrant holders and, in
the event a majority in interest of such Warrant holders disagree with such
determination, then they shall have the right to invoke the provisions of
Section 12 hereof by written notice to the Company to that effect given not
later than thirty (30) days following the Company’s notice of the Board’
determination of the Current Market Price.

 

(g)                                 No Amendments.  The Company will not, through any
consolidation, merger, reorganization, transfer of assets, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Agreement, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrant holders thereof against dilution or other
impairment.  Without limiting the generality
of the foregoing, the Company (i) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue Common Stock on the exercise of the Warrants from time to time
outstanding and (ii) will not take any action which results in any adjustment
of the number of Warrant Shares if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock then authorized by the Company’s
articles of organization and available for the purposes of issue upon such
exercise.

 

(h)                                 Voluntary Increases.  The Company may, but shall not be obligated
to,

 

13

 

make such increases in the number of Warrant Shares,
in addition to those required by paragraphs (a) through (c)
of this Section 11, as it considers to be advisable in order that any
event treated for United States federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients, or if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event; provided that no such adjustment shall be made without the
consent of the holders of the Warrants if such adjustment would result in the
increase of income tax liabilities of such holders.

 

(i)                                     When De Minimis
Adjustment May Be Deferred. 
No adjustment in the number of Warrant Shares shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (i)) would require an increase or decrease of at least 1.0%
in the number of Warrant Shares; provided, however, that any
adjustments which by reason of this paragraph (i) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.

 

(j)                                     Consolidation,
Merger, Reorganization or Recapitalization of the Company.  (A) 
In case at any time the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the Company’s assets, liquidation or recapitalization of
the Common Stock, not subject to adjustment under any of the paragraphs (a)
through (h) of this Section 11) in which the previously
outstanding Common Stock shall be converted or changed into or exchanged for
different securities of the Company or Common Stock or other securities of
another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of the foregoing (each such transaction
being herein called a “Transaction”), then, as a condition of the
consummation of the Transaction, lawful and adequate provision shall be made so
that each holder of a Warrant, upon the exercise thereof at any time on or
after the consummation of the Transaction, shall be entitled to receive, and
such Warrant shall thereafter represent the right to receive, in lieu of the
Common Stock issuable upon such conversion prior to such consummation, the
securities, cash or other property to which such holder would have been
entitled upon consummation of the Transaction if such holder had exercised such
Warrant immediately prior thereto (subject to adjustments from and after the
consummation date as nearly equivalent as possible to the adjustments provided
for in this Section 11). 
Subject to the next succeeding paragraph, the Company will not effect
any Transaction unless prior to the consummation thereof each corporation or
entity (other than the Company) which may be required to deliver any securities
or other property upon the exercise of the Warrants as provided herein shall
assume, by written instrument delivered to each holder of the Warrants, the
obligation to deliver to such holder such securities or other property as in
accordance with the foregoing provisions such holder may be entitled to
receive, and such corporation or entity shall have similarly mailed or
delivered to each holder of the Warrants an opinion of counsel for such
corporation or entity, reasonably satisfactory to the holders of a majority of
the Warrants then outstanding, which opinion shall state that all of the
outstanding Warrants, including, without limitation, the provisions of this Section 11,
shall thereafter continue in full force and effect and shall be enforceable
against the Company and such corporation or entity in accordance with the terms
hereof and thereof, together with such other matters as such holders may
reasonably request.  The foregoing
provisions of this Section 11(j) shall similarly apply to
successive mergers, consolidations, sales of assets, liquidations and
recapitalizations.

 

14

 

(B)  In the
event of (1) a Transaction where consideration to all holders of the
Capital Stock of the Company in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of the Company, the
holders of the Warrants shall only be entitled to receive, upon surrender of
their Warrant certificates, such cash distributions (or, in the case of in-kind
distributions upon dissolution, liquidation or winding-up of the Company, such
other consideration as is being so distributed) on an equal basis with the
holders of Capital Stock, as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price. 
In the event of any such Transaction, the surviving or acquiring Person
and, in the event of any dissolution, liquidation or winding-up of the Company,
the Company, shall, immediately prior to the consummation of such Transaction,
deposit with the Transfer Agent the funds, if any, necessary to pay the holders
of the Warrants the amounts to which they are entitled as described above.  Concurrently with the consummation of such
Transaction, the Transfer Agent shall make payment to the holders of the Warrants
by making a wire transfer of immediately available funds in such amount as is
appropriate (or, in the case of in-kind distributions upon dissolution,
liquidation or winding-up of the Company, by delivering such other
consideration as is appropriate) to such Person or Persons as it may be
directed in writing by the holders surrendering the Warrants.

 

(k)                                  Consideration Received.  For purposes of any computation respecting
consideration received pursuant to this Section 11, the following shall
apply:

 

(1)                                  in
the case of the issuance of shares of Common Stock for cash, the consideration
shall be the amount of such cash, provided that in no case shall any
deduction be made for any commissions, discounts or other expenses incurred by
the Company for any underwriting of the issue or otherwise in connection
therewith;

 

(2)                                  in
the case of the issuance of shares of Common Stock for a consideration in whole
or in part other than cash, the consideration other than cash shall be deemed
to be the fair market value thereof (as determined in good faith by the Board);
and

 

(3)                                  in
the case of the issuance of securities convertible into or exchangeable for
shares, the aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such securities plus
the additional minimum consideration, if any, to be received by the Company
upon the conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of this
paragraph (k)).

 

(l)                                     When
Issuance or Payment May Be Deferred.  In any case in which this Section 11 shall require that an
adjustment in the Exercise Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record
date the Warrant Shares and other equity of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other equity of the
Company, if any, issuable upon such exercise on the basis of the Exercise Rate
and (ii) paying to such holder any amount in cash in lieu of a fractional
share pursuant to Section 13; provided, however, that
the Company shall deliver to such holder a due

 

15

 

bill or other appropriate instrument evidencing such holder’s right to
receive such additional Warrant Shares, other equity and cash upon the
occurrence of the event requiring such adjustment.

 

(m)                               Form of Warrants.  Irrespective of any adjustments in the
Exercise Price or the Exercise Rate or kind of shares or other assets
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares or other assets as are stated in the Warrants initially issuable
pursuant to this Agreement.  The
Company, however, may at any time in its sole discretion make any change in the
form of Warrant certificate that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of the Warrant certificate,
and any Warrant certificate thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant certificate or otherwise,
may be in the form as so changed.

 

(n)                                 Adjustment in Exercise Price.  Upon each adjustment in the number of
Warrant Shares for which a Warrant is exercisable pursuant to this Section 11,
the Exercise Price for such Warrant shall be adjusted to equal an amount per
share of Common Stock equal to the Exercise Price before such adjustment
multiplied by a fraction, of which the numerator is the number of Warrant
Shares for which a Warrant is exercisable immediately before giving effect to
such adjustment and the denominator of which is the number of Warrant Shares
for which a Warrant is exercisable immediately after giving effect to such
adjustment; provided, however, that in no event shall the
Exercise Price be reduced below the par value (if any) of the Common Stock for
which the Warrant is exercisable.

 

(o)                                 No Dilution or Impairment.  If any event shall occur as to which the
provisions of Section 11 are not strictly applicable but the failure to
make any adjustment would adversely affect the purchase rights represented by
the Warrants in a way that is contrary to the manifest and essential intent and
principles of Section 11, then, in each such case, the Company shall
appoint an Independent Financial Expert (as defined below), which shall give
its opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in Section 11 of this
Agreement to preserve, without dilution, such exercise rights.  Upon receipt of such opinion, the Company
will promptly mail a copy thereof to the holders and shall make the adjustments
described therein.  The Company will at
all times in good faith assist in the carrying out of the terms of this
Agreement.

 

SECTION 12.                                    VALUATION BY
INDEPENDENT FINANCIAL EXPERT

 

If requested by Warrant holders in accordance with the
provisions of Section 11(f), the Current Market Price of Applicable
Shares shall be equal to the Fair Market Value (as defined below) of such
Applicable Shares, and will be determined as follows (subject to the provisions
of Section 11(f)).  At any time
the Current Market Price of Applicable Shares is to be determined under this
Agreement, the Company and the Warrant holders holding Warrants representing a
majority of the Warrant Shares will each, within thirty (30) days of receipt by
the relevant party of such notice or within thirty (30) days after the date
fixed under this Agreement for such determination, (i) appoint a
nationally recognized investment bank with experience in transactions of
comparable size and magnitude (an “Independent Financial Expert”) to
determine

 

16

 

the Fair Market Value of such Applicable Shares, and (ii) cause
the Independent Financial Expert so appointed by it, as promptly as possible
after such appointment, to prepare and to deliver to the other party or parties
hereto a written report (a “Value Report”) specifying such Fair Market
Value within the time period specified below. 
Should one party (or the Independent Financial Expert selected by such
party) fail to act timely to appoint an Independent Financial Expert or cause
such Independent Financial Expert to deliver its Value Report within the time
period specified below, then the Independent Financial Expert appointed by the
other party shall alone determine the Fair Market Value of such Applicable
Shares, which determination shall be conclusive for all purposes hereof.  If the two Value Reports so delivered by
each Independent Financial Expert provide values such that the higher one is
not more than 20% greater than the lower one, the average of the two values
will be taken as the Fair Market Value of the Applicable Shares, which average
shall be conclusive for all purposes of establishing such Fair Market Value
hereunder.  If the valuations specified
in the two Value Reports differ by more than 20%, the Company and Warrant
holders holding Warrants representing a majority of the Warrant Shares will
jointly appoint an additional Independent Financial Expert (the “Independent
Expert”) to perform a third valuation and prepare a third Value
Report.  If the Company and such Warrant
holders are unable to agree on the selection of the Independent Expert, a body
agreed to by both parties or, on the failure of such agreement, the American
Arbitration Association will be requested by the Company and the Warrant
holders jointly to appoint another Independent Expert to perform a third
valuation.  Such Independent Expert
shall not have performed significant work for either the Company or the Warrant
holders during the immediately preceding one year.  In such circumstance, the Fair Market Value of the Applicable
Shares, will be equal to (i) if the Fair Market Value specified in the
Value Report prepared by the Independent Expert is in between the valuations
specified on the two other Value Reports, an amount equal to the average of the
two valuations that are closest in amount, (ii) if the Fair Market Value
specified in the Value Report prepared by the Independent Expert is equal to or
greater than the highest of the two valuations specified in the two initial
Value Reports, an amount equal to the highest of such two initial valuations
and (iii) if the Fair Market Value specified in the Value Report prepared
by the Independent Expert is equal to or lower than the lowest of the two
valuations specified in the two initial Value Reports, an amount equal to the
lower of such two initial valuations. 
The Company shall provide all Independent Financial Experts with the
same financial and operational information for conducting their valuation.  The Company shall use its best efforts to
ensure that the information shall be complete and accurate in all material
respects and that any forecasts shall be based on unbiased assessments made in
good faith.  The Company shall cooperate
fully with such Independent Financial Experts in the conduct of their
valuation, including making management reasonably available and offering access
to the premises of the Company to the Independent Financial Experts during
regular business hours and on reasonable notice.  The Independent Expert shall not be apprised by either party of
the two initial valuations prior to delivery of its own Value Report.

 

“Fair Market Value” of the Applicable Shares,
as of the date of determination shall mean the price that a willing buyer would
pay to a willing seller for the relevant Applicable Shares, in an arm’s length
transaction, with neither party being under any immediate obligation or need to
consummate the transaction, it being understood that the buyer and seller in
arriving at such price in determining the value of Applicable Shares would each
consider, among other

 

17

 

factors customarily considered by valuation professionals, the past and
prospective earnings of the Company, comparable stock market valuations, and
the absence or existence of liquidity for the Applicable Shares.

 

The Fair Market Value for the Applicable Shares, shall
be stated in U.S. dollars.  The Company
and the Warrant holders shall each be responsible for all compensation of the
Independent Financial Expert appointed by them and the costs of a third
Independent Financial Expert, if required, shall be borne by a party whose
valuation is not included in computing the final Fair Market Value.  The Independent Financial Experts shall
submit their valuations simultaneously to the Company and the Warrant holders
at 12:00 noon New York time on the thirtieth day after being jointly instructed
by the Company and the Warrant holders to initiate the valuation calculation
or, if such day is not a business day, on the next business day.  If a third valuation is required, the
Independent Expert shall submit its valuation to the parties within sixty (60)
days of its appointment or, if such day is not a business day, on the next
business day.

 

SECTION 13.                                    FRACTIONAL
INTERESTS

 

The Company shall not be required to issue fractional
Warrant Shares on the exercise of Warrants, although it may do so in its sole
discretion.  If more than one Warrant
shall be presented for exercise in full at the same time by the same holder,
the number of full Warrant Shares which shall be issuable upon the exercise
thereof shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of the Warrants so presented.  If any fraction of a Warrant Share would,
except for the provisions of this Section 13, be issuable upon the
exercise of any such Warrants (or specified portion thereof), the Company shall
notify the Warrant holder exercising the Warrants in writing of the amount to
be paid in lieu of the fraction of a Warrant Share and concurrently shall pay
to the Warrant holder an amount in cash equal to the Current Market Value per
Warrant Share, as determined on the day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction, computed to the
nearest whole cent.

 

SECTION 14.                                    NOTICES TO
WARRANT HOLDERS; RIGHTS OF WARRANT HOLDERS.

 

Upon any adjustment of the number of Warrant Shares
pursuant to Section 11, the Company shall promptly thereafter
(i) file with the Register Office a certificate of the Senior Financial
Officer of the Company (unless the Purchasers request a certificate of a firm
of independent public accountants of recognized standing selected by the Board
(who may be the regular auditors of the Company)) setting forth the number of
Warrant Shares (or portion thereof) issuable after such adjustment, upon
exercise of a Warrant and (ii) give to each of the registered holders of
the Warrant certificates at his or her address appearing on the Warrant
register written notice of such adjustments by first-class mail, postage
prepaid.  Where appropriate, such notice
may be given in advance and included as a part of the notice required to be
mailed under the other provisions of this Section 14.

 

In case:

 

(a)                                  the
Company shall authorize the issuance of any dividend or other

 

18

 

distribution on the Common Stock, whether in cash,
equity, or other securities, evidences of indebtedness or other property; or

 

(b)                                 the
Company shall authorize any tender offer or exchange offer by the Company for
Common Stock, or Common Stock open market repurchase program, in either case,
involving more than 3% of the outstanding Common Stock; or

 

(c)                                  of
the voluntary or involuntary dissolution, liquidation or winding up of the
Company;

 

then the Company shall cause to be filed with the
Register Office and shall give to each of the registered holders of the Warrant
certificates at the address appearing on the Warrant register, a written notice
delivered by any method provided in Section 15, at least twenty (20)
business days prior to the applicable record date hereinafter specified, or, in
the case of events for which there is no record date, at least twenty (20)
business days before the effective date of such event or the commencement of
such tender offer, exchange offer, or repurchase program.  Any written notice provided pursuant to this
Section 14 shall state (i) the date as of which the holders of
record of the Common Stock are entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the commencement
date of any tender offer, exchange offer or repurchase program for the Common
Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, reclassification, dissolution, liquidation or winding up
is expected to become effective or consummated, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to exchange
such shares for securities or other property, if any, deliverable upon such
consolidation, merger, conveyance, transfer, reclassification, dissolution,
liquidation or winding up.  The failure
to give the notice required by this Section 14 or any defect therein
shall not affect the legality or validity of any issuance, right, option,
warrant, distribution, tender offer, exchange offer, repurchase program,
consolidation, merger, conveyance, transfer, reclassification, dissolution,
liquidation or winding up, or the vote upon any action.

 

Nothing contained in this Agreement or in any of the
Warrant certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice of meetings of
shareholders or the appointment of managers of the Company or any other matter,
or any other rights of shareholders of the Company, including any right to
receive dividends.  In addition, the
holders of Warrant certificates shall have no preemptive rights and shall not
be entitled to share in the assets of the Company in the event of the
liquidation, dissolution or winding up of the Company’s affairs.

 

SECTION 15.
                       NOTICES

 

Any notice or demand authorized by this Agreement to
be given or made by the Company or by the registered holder of any Warrant
certificate to the Company shall be sufficiently given or made when deposited
in the mail, first class or registered, postage prepaid, addressed, or when
sent via facsimile, as follows:

 

 

19

 

Broadwing Inc.

 

201 East Fourth Street

Cincinnati, OH 
45202

(facsimile no.: 
(513) 397-4177)   

Attention:  Mark Peterson

 

with copies to:

 

Cravath, Swaine & Moore

825 Eighth Avenue

New York, NY  10019

(facsimile no.:  (212) 474-3700)

Attention:  William V. Fogg, Esq.

 

Any notice pursuant to this Agreement to be given by
the Company to the Purchasers shall be sufficiently given when deposited in the
mail, first-class or registered, postage prepaid, addressed (until another address
is provided in writing by the Purchasers to the Company) to the Purchasers, or
when sent via facsimile, as follows:

 

GS Mezzanine Partners II, L.P.

GS Mezzanine Partners II Offshore, L.P.

c/o Goldman, Sachs & Co.

85 Broad Street

New York, New York  10004

(facsimile no.:  (212) 902-3000)

Attention:  Kaca Enquist

 

with copies to:

 

Fried, Frank, Harris, Shriver & Jacobson

One New York Plaza

New York, New York  10004

(facsimile no.:  (212) 859-4000)

Attention:  F. William Reindel, Esq.

 

SECTION 16.                                    SUPPLEMENTS AND
AMENDMENTS

 

The Company may from time to time supplement or amend
this Agreement without the approval of any holders of Warrant certificates in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable and which shall not
in any way adversely affect the interests of the holders of Warrant
certificates.  Any amendment or
supplement to this Agreement that has an adverse effect on the interests of
holders of Warrant certificates shall require the written consent of registered
holders of fifty percent in interest of the then outstanding Warrants.  The consent of each holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of

 

20

 

Warrant Shares for or into which a Warrant may be exercised or
convertible would be decreased (other than in connection with a waiver of any
provisions of Section 10).

 

The Company may amend this Warrant Agreement without
the approval of any holders of Warrant certificates to appoint a warrant agent
(the “Warrant Agent”) to act as an agent for the Company for the
purposes of this Agreement.  In acting
under this Agreement and in connection with the Warrants, such Warrant Agent
will act solely as agent of the Company and does not assume any obligation or
relationship or agency or trust for or with any of the holders of Warrants or
beneficial owners of Warrants.

 

SECTION 17.                                    SUCCESSORS

 

All the covenants and provisions of this Agreement by
or for the benefit of the Company shall bind and inure to the benefit of their
respective successors and assigns hereunder.

 

SECTION 18.                                    TERMINATION

 

This Agreement shall terminate on the date on which
all Warrants have been exercised or lapsed.

 

SECTION 19.                                    GOVERNING LAW

 

THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

SECTION 20.                                    BENEFITS OF THIS
AGREEMENT

 

Nothing in this Agreement shall be construed to give
to any Person other than the Company and the registered holders of Warrant
certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company and the registered holders of the Warrant certificates.

 

SECTION 21.                                    HEADINGS

 

The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the
meanings or interpretation of this Agreement.

 

SECTION 22.                                    SUBMISSION TO
JURISDICTION

 

If any action, proceeding or litigation shall be
brought by the Purchasers, any holder of Warrants or the Company in order to
enforce any right or remedy under this Agreement, the parties hereto hereby
consent and will submit, and will cause each of its subsidiaries to submit, to
the jurisdiction of any state or federal court of competent jurisdiction

 

21

 

sitting within the area comprising the Southern District of New York on
the date of this Agreement.  The parties
hereto hereby irrevocably waive any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of forum  non
conveniens, which they may now or hereafter have to the bringing of any
such action, proceeding or litigation in such jurisdiction.

 

SECTION 23.                                    WAIVER OF JURY
TRIAL

 

THE PARTIES HERETO HEREBY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE WARRANTS.

 

SECTION 24.                                    SERVICE OF
PROCESS

 

Nothing herein shall affect the right of any holder of
a Security to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.

 

SECTION 25.                                    COUNTERPARTS

 

This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

 

22

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, as of the day and year first above written.

 

 

	
   

  	
  BROADWING INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark W. Peterson

  
	
   

  	
   

  	
  Title:

  	
  Vice President &
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GS MEZZANINE PARTNERS
  II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GS Mezzanine Advisors
  II, L.L.C.

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GS MEZZANINE PARTNERS
  II OFFSHORE, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GS Mezzanine Advisors
  II, L.L.C.

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						

 

23

 

EXHIBIT
A

 

Form of Warrant Certificate

[Face]

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS
OF ANY JURISDICTION.  SUCH SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO
THE DISPOSITION OF SECURITIES, INCLUDING RULE 144, SUBJECT TO THE COMPANY’S
RIGHT, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO THIS CLAUSE (II),
TO REQURE THE DELIVERY OF AN OPINION OF COUNSEL.

 

 

[Date]

 

	
  No.       

  	
   

  	
   

  	
   

  	
                   
  Warrants

  

 

Warrant Certificate

BROADWING INC.

 

This Warrant Certificate certifies that
                        ,
or registered assigns, is the registered holder of                
Warrants (the “Warrants”) to purchase an aggregate of
                     
shares of Common Stock (the “Common Stock”), of BROADWING INC., an Ohio
corporation (the “Company”). 
Each Common Stock Warrant entitles the holder upon exercise to purchase
from the Company at any time after the date hereof and prior to the close of
business on March 26, 2013 (or, if such day is not a business day, the next
succeeding business day) (the “Expiration Date”)
[                     
] fully paid and nonassessable shares of Common Stock (a “Warrant Share”)
upon surrender of this Warrant Certificate and payment in full for such Warrant
Share at the Register Office of the Company, subject to the conditions set
forth herein and in the Warrant Agreement referred to on the reverse
hereof.  The number of Warrant Shares
purchasable upon exercise thereof are subject to adjustment upon the occurrence
of certain events set forth in the Warrant Agreement.

 

Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof, which provisions
shall for all purposes have the same effect as though fully set forth at this place.

 

THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND

 

A-1

 

CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION
OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

IN WITNESS WHEREOF, Broadwing Inc., has caused this
Warrant Certificate to be signed by its duly authorized officer as of the date
first above written.

 

	
   

  	
  BROADWING INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-2

 

Form of Warrant Certificate

 

[Reverse]

 

The Warrants evidenced by this Warrant are part of a
duly authorized issue of Warrants entitling the holder on exercise to receive
shares of Common Stock of the Company (the “Common Stock”), and are
issued or to be issued pursuant to a Warrant Agreement, dated as of March 26,
2003 (the “Warrant Agreement”), between the Company and the other
parties thereto, which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words “holders” or “holder”
meaning the registered holders or registered holder) of the Warrants.  All terms not otherwise defined herein shall
have the meanings set forth in the Warrant Agreement.  A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.

 

Warrants may be exercised at any time after the date
hereof and prior to the close of business on the Expiration Date.  The holder of Warrants evidenced by this
Warrant Certificate may exercise such Warrants by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment to the Company of the Exercise
Price for each Warrant then exercised. 
In lieu of payment of the Exercise Price pursuant to the preceding
sentence, the holder of the Warrants may convert the Warrants, in whole or in
part and at any time or times, into Common Stock by surrendering to the Company
this Warrant Certificate with the form of notice of conversion set forth hereon
properly completed and executed.  In
addition, the holders of the Warrants may pay the Exercise Price by tendering
the Notes with the Accreted Value equal to the aggregate Exercise Price for all
Warrants then exercised.  In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued prior to the close of business on the Exercise Date to
the holder hereof or his assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.  No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.

 

The Warrant Agreement provides that upon the
occurrence of certain events the number of Warrant Shares may, subject to
certain conditions, be adjusted.  The
Company will not be required to issue fractional Warrant Shares on the exchange
of Warrants, although it may do so in its sole discretion.  If fractional shares are not issued, the
Company will pay the cash value of such fractional shares as determined in
accordance with the provisions of the Warrant Agreement.

 

Warrant certificates, when surrendered at the Register
Office of the Company by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant certificate or
Warrant certificates of like tenor evidencing in the aggregate a like number of
Warrants.

 

A-3

 

Upon due presentation for registration of transfer of
this Warrant certificate at the office of the Company, a new Warrant
certificate or Warrant certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.

 

The Company may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary. 
Neither the Warrants nor this Warrant certificate entitles any holder
hereof to any rights of a stockholder of the Company.

 

A-4

 

Form of Election
to Purchase

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant certificate, to receive
                       
shares of Common Stock and hereby tenders for payment for such shares to the
order of Broadwing Inc.,

 

 $                       
of Accreted Value of Note (as defined in the Warrant Agreement),

 

cash in the amount of
$                       ,

 

in accordance with the terms hereof.

 

The undersigned requests that a certificate for such
shares be registered in the name of
                                                                     ,
whose address is
                                                                     
and that such shares be delivered to
                                                               
whose address is
                                              .

 

If said number of Warrant Shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant certificate representing the remaining balance of such shares be
registered in the name of                                               ,
whose address is
                                              ,
and that such Warrant certificate be delivered to
                                              ,
whose address is                                               .

 

 

	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
   

  
				

 

A-5

 

Form of Notice of Conversion

 

(To Be Executed Upon Conversion of Warrant)

 

The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant certificate, to convert Warrants
represented hereby into
                   
shares of Common Stock in accordance with the terms hereof.

 

The undersigned requests that a certificate for such
shares be registered in the name of
                                                                     ,
whose address is                                                                      
and that such shares be delivered to
                                                                     
whose address is
                                                            .

 

If said number of Warrant Shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant certificate representing the remaining balance of such shares be
registered in the name of
                                              ,
whose address is
                                                                     ,
and that such Warrant certificate be delivered to
                                                           ,
whose address is
                                                                    .

 

 

	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
   

  
				

 

A-6

 

EXHIBIT B

 

Form of Transfer

 

(To Be Executed
Upon Transfer of Warrant)

 

FOR VALUE RECEIVED, the
undersigned registered holder of this Warrant certificate hereby sells, assigns
and transfers unto the Assignee(s) named below (including the undersigned with
respect to any Warrants constituting a part of the Warrants evidenced by this
Warrant certificate not being assigned hereby) all of the rights of the
undersigned under this Warrant certificate, with respect to the number of
Warrants set forth below:

 

	
  Name of Assignee(s)

  	
  Address

  	
  Social Security, EIN 

  or other identifying 

  number of assignee(s)

  	
  Number of Warrants

  

 

and does hereby
irrevocably constitute and appoint the Company as the undersigned’s attorney to
make such transfer on the register maintained by the Company for that purpose,
with full power of substitution in the premises.

 

Date:

 

	
   

  	
   

  
	
  (Signature of
  Owner)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (City)     (State)  (Zip Code)

  	
   

  

 

B-1

 

SCHEDULE
A

 

Issuance of
Warrant Shares

 

 

	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  GS MEZZANINE PARTNERS
  II, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  3,448,350

  
	
   

  	
   

  	
   

  
	
  GS MEZZANINE PARTNERS
  II OFFSHORE, L.P.

  c/o GS Mezzanine Partners L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  1,051,650

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  2,612,200

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000 OFFSHORE, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  949,150

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000 GMBH & CO. BETEILIGUNGS KG.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  109,200

  

 

1

 

	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000 EMPLOYEE FUND, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  829,450

  
	
   

  	
   

  	
   

  
	
  GOLDMAN SACHS DIRECT
  INVESTMENT FUND 2000, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  450,000

  
	
   

  	
   

  	
   

  
	
  GOLDMAN, SACHS &
  CO.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Richard Katz

  	
   

  	
  2,700,000

  
	
   

  	
   

  	
   

  
	
  TCW/CRESCENT MEZZANINE
  PARTNERS III, L.P.

  11100 Santa Monica Blvd., Suite 2000

  Los Angeles, CA 90025

  (310)235-5978

  Attention: James Shevlet

  	
   

  	
  2,026,500

  
	
   

  	
   

  	
   

  
	
  TCW/CRESCENT MEZZANINE
  TRUST III, L.P.

  11100 Santa Monica Blvd., Suite 2000

  Los Angeles, CA 90025

  (310)235-5978

  Attention: James Shevlet

  	
   

  	
  315,700

  
	
   

  	
   

  	
   

  
	
  TCW/CRESCENT MEZZANINE
  PARTNERS III NETHERLANDS, L.P.

  11100 Santa Monica Blvd., Suite 2000

  Los Angeles, CA 90025

  (310)235-5978

  Attention: James Shevlet

  	
   

  	
  82,800

  

 

2

 

	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  C-SQUARED CDO LTD.

  c/o Trust Company of the West

  200 Park Avenue, Suite 2200

  New York, NY  10166

  	
   

  	
  50,000

  
	
   

  	
   

  	
   

  
	
  WESTERN AND SOUTHERN
  LIFE INSURANCE COMPANY

  400 Broadway 

  Cincinnati, OH 45202

  Attention: Marianne Marshall

  	
   

  	
  900,000

  
	
   

  	
   

  	
   

  
	
  DOVER CAPITAL
  MANAGEMENT 2 LLC

  c/o Falcon Investment Group

  1180 Avenue of the Americas, Suite 1400

  New York, NY 10036

  Attention: Jon Ruff

  	
   

  	
  225,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL SECURITIES
  FUND, L.P.

  201 Main Street, Suite 2600

  Fort Worth, Texas  76102

  Attention: Chuck Irwin

  	
   

  	
  125,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL SECURITIES
  FUND II, L.P.

  201 Main Street, Suite 2600

  Fort Worth, Texas  76102

  Attention: Chuck Irwin

  	
   

  	
  250,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL CREDIT
  PARTNERS I, LIMITED

  201 Main Street, Suite 1910

  Fort Worth, TX 76102

  Attention: Ronna Hunt

  	
   

  	
  350,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL CREDIT
  PARTNERS II, LIMITED

  201 Main Street, Suite 1910

  Fort Worth, TX 76102

  Attention: Ronna Hunt

  	
   

  	
  275,000

  

 

3

 

	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  LERNER ENTERPRISES, L.P.

  c/o Oak Hill Asset Management Inc.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  450,000

  
	
   

  	
   

  	
   

  
	
  P&PK FAMILY LIMITED
  PARTNERSHIP

  c/o Oak Hill Asset Management Inc.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  50,000

  
	
   

  	
   

  	
   

  
	
  CARDINAL INVESTMENT
  PARTNERS I, L.P.

  c/o Oak Hill Advisors, L.P.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  150,000

  
	
   

  	
   

  	
   

  
	
  THE LELAND STANFORD
  JUNIOR UNIVERSITY

  c/o Oak Hill Advisors, L.P.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  100,000

  

 

4

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